Science and Research Committee on June 16th, 2022

[Dazawray Landrie-Parker]

The conversation has to start early. Indigenous nations have to be at the table early. It can't appear that this is a check box. I know we have a duty to consult and accommodate, and various different regulatory requirements that come into play when we talk about consultation. I talk about engagement being more inclusive than that. We're talking from the very beginning. The minute we start even thinking about a new project, we need to start engaging with those nations and those leaders.

[The Chair, Liberal, Kirsty Duncan]

Ms. Landrie-Parker, will you forgive me for interrupting? I suspect colleagues are going to want to pick up on this.

Thank you so much, Mr. Soroka.

We're now going to Mr. Collins for six minutes.

[Chad Collins, Liberal, Hamilton East—Stoney Creek, ON]

Thanks, Madam Chair. I'd like to start with Dr. Ramana.

Dr. Ramana, you're not the first witness who has raised the comment as it relates to there being no customers for SMRs. We have had a lot of witnesses in front of us, including a public institution here tonight that has sold the merits of the technology. The private companies that have come forward have illustrated that they're willing to invest and have invested quite a significant amount of their own private capital and resources into making the technology work. We were given some very clear deadlines here tonight—guesstimates—in terms of when the technology would be not only ready but in use.

How do you rationalize that in terms of the private sector continuing to put money into this technology and spending its own money to make it happen? I can't imagine a business trying to sell a product when there is no customer at the end of the day to purchase the product.

Can you rationalize that in terms of your study and try to make some sense in terms of what we've heard to date through the first several meetings?

[Dr. M. V. Ramana]

I have two responses.

First is the fact that most of these private companies are not just investing their own funding; they are looking for public funding. In every country where SMRs are going forward, the United States, Canada or the U.K., they are all looking for public funding for a lot of their research.

The second thing to note is that companies make investments based on their assessments, but their assessments can be wrong. You've seen this time and again in the nuclear sector. Many companies have invested in various designs that have never sold. For example, Westinghouse invested a huge amount of money in what was called the AP600 reactor, which was never sold. It was pursued for over a decade. Subsequently, Westinghouse went through an SMR process called the Westinghouse SMR. Then, in 2014, when it realized the United States Department of Energy was not going to give it any money, it pulled out of that effort. While pulling out, its CEO said that the problem was not with the technology; the problem was that there are no customers.

If you have this question, it is a question private investors can probably best answer. I can't be in their heads to understand what they are thinking.

[Chad Collins, Liberal, Hamilton East—Stoney Creek, ON]

Thanks, Dr. Ramana. I will move on to Mrs. Landrie-Parker.

Thank you for your previous answers. You heard Dr. Charbonneau's critique of the waste and how no first nations communities have endorsed SMRs or nuclear technology to date. What has your experience been with the communities so far, in terms of public outreach and opinions related to SMRs and nuclear?

[Dazawray Landrie-Parker]

Respectfully, I think indigenous communities have spoken in support of that, at least some of the ones I've been in. I think it comes back to one of my previous answers around energy literacy: providing all the information or a full picture, so they can make informed decisions.

The 2018 report referred to earlier showed there wasn't necessarily an outright “I don't support this across the board”, but rather “I want more information”. We are now where they are getting more information, and we are, as I said.... I've done numerous surveys across Saskatchewan and Ontario, specifically, over the last couple of years, and we have seen support rising. Those are indigenous community members and not necessarily leadership speaking out, but there have been instances, as well, where leadership has spoken out.

We also have indigenous communities that are not necessarily first nations, or we have Métis or Inuit communities that are still municipal communities but mostly indigenous. They have spoken out in support of nuclear technology as well.

[Chad Collins, Liberal, Hamilton East—Stoney Creek, ON]

Thank you for that answer.

In my previous life, I was a municipal councillor for over 20 years. One of the challenges I always faced, when somebody came to town with a new technology—normally, energy from waste—was convincing the community they weren't guinea pigs. It was always an issue to try to build public confidence.

Does the federal government play a role in terms of education, instilling some sense of public confidence in the technology and assuring people it is a proven technology? We had an institution here this evening—McMaster—that would certainly, I think, vouch for it, and others have been in front of us. What role can we play in assisting communities in making an informed decision, whether it's an indigenous community or otherwise?

[Dazawray Landrie-Parker]

This is where partnerships with indigenous businesses or individuals in this sector come in, whether through research or actual partnerships where they are leading energy literacy programs. That's where it is really important.

Some of the research I've done has been around trusted sources of information on nuclear. It has come out that industry and government are on the lower end of trusted sources, but researchers, scientists and family friends are a bit higher. Again, it comes back to that local, lived experience. Indigenous businesses have that already. They know who the community champion is, so to speak—the person who volunteers for everything and knows how to get people out to a meeting to start talking about these things and holding dialogues.

[The Chair, Liberal, Kirsty Duncan]

Thank you so much, Mr. Collins.

Thank you to the witnesses for those answers.

Go ahead, Mr. Blanchette‑Joncas. You have six minutes.

[Maxime Blanchette-Joncas, Bloc, Rimouski-Neigette—Témiscouata—Les Basques, QC]

Thank you, Madam Chair.

Allow me to welcome the witnesses joining us for the second hour of this meeting.

My first question is for Dr. Ramana.

Dr. Ramana, thank you for joining us at this very early hour. Proponents of small modular reactors argue that they can be made more cost‑effective through economies of scale that can be achieved by mass manufacturing in plants.

During the last few meetings of this committee, we met with several stakeholders in the nuclear industry, but none of them was able to give us an idea of how many small modular reactors would have to be sold to cover the costs of their development, plant construction and approval by the relevant authorities. I know you've been looking at this issue.

Earlier, we got an answer from a representative of Ontario Power Generation, who told us that 10 to 12 would have to be sold. That's the first time we've had an estimate.

What are your comments on that?

[Dr. M. V. Ramana]

This is a difficult question to answer empirically, because the empirical record on nuclear power around the world has been that costs have actually increased, not decreased, with more construction. In both France and the United States, the two countries with the most nuclear plants, the average cost of the nuclear plant increased as more and more plants were built. There's actually no empirical basis to assume or calculate the cost in terms of how many SMRs would have to be built in order to realize the economies of mass manufacturing and learning.

The second point is that to the extent that there is a limited amount of evidence for decreases in cost in very specific circumstances in certain countries where the same vendor, the same architect, is manufacturing and building multiple reactors, those cost declines have been very marginal. It's an increase of probably a few percentage points. If you were to assume something like 5% to 10%, extremely optimistic numbers, for learning rates, then what you find is that in order for the cost of SMRs on a per-kilowatt basis to match the cost of a large reactor on a per-kilowatt basis, you would have to build somewhere between several hundred and several thousand. In my opinion, 10 to 12 is completely impossible.

Remember that this is for the cost of SMRs on a per-kilowatt basis to come to equal that of large reactors, but large reactors themselves are not economical. If you're trying to compete with other, alternate sorts of energy, you would have to manufacture huge numbers of these SMRs, assume that everything goes really well, and have these very optimistic learning rates. I don't think that's very possible.

[Maxime Blanchette-Joncas, Bloc, Rimouski-Neigette—Témiscouata—Les Basques, QC]

Thank you, Dr. Ramana.

I'd like to talk about another topic, the energy transition, which you mentioned in your opening remarks. Obviously, we are all concerned about climate change. It's a real threat, and it's the most serious one we must face collectively. To reverse this trend, we need to rapidly decarbonize our energy production.

Small modular nuclear reactors are still a long way from being widely commercialized and able to play an important role in the energy transition. We know that the technology is not yet mature.

Can you tell us more about that? If we really want to meet the 2050 target, should we be relying on that technology?

[Dr. M. V. Ramana]

Small modular reactors are not new. The industry has been talking about this for decades at this point. In 2001 the U.S. Department of Energy commissioned a report that looked at different SMR designs. They concluded that one of these could be operational by the end of the decade, which means 2010. It's now 2022. There is not a single SMR design in the U.S. that is ready for commercial use.

The leading design, NuScale, when it was established as a company, promised to have its first reactors operational by 2015 to 2016. Now it is talking about 2029 to 2030. I think even that is optimistic. When the NuScale design, which was talked about as being very advanced, went to the U.S. Nuclear Regulatory Commission, they found a lot of problems with it. There were problems with the steam generators. There was a problem with a certain kind of reactivity insertion. Those are safety problems that will have to be addressed. It's not clear that NuScale will be able to meet all of those by the end of this decade.

If you look at these kinds of examples and at the other countries I mentioned, where they tried to build SMRs and, when the first one was not successful, didn't follow up, I don't think it is possible that we're going to be able to meet our climate goals by pursuing SMRs.

[Maxime Blanchette-Joncas, Bloc, Rimouski-Neigette—Témiscouata—Les Basques, QC]

Thank you, Dr. Ramana.

We often hear that investments in the nuclear sector would help create a lot of good jobs and in turn drive the economy.

What do you think about this?

[Dr. M. V. Ramana]

I mentioned this briefly in my remarks. The analogy I would give is that any investment will create jobs. The question is whether those jobs are sustainable.

Imagine, for example, you invest in a factory that's going to manufacture videocassettes. If you build that factory, of course it's going to create a number of jobs, but when the videocassettes come out, today nobody will be buying those videocassettes. What's the point of building that factory if nobody will buy these videocassettes, or if just a handful of people who like to preserve them for nostalgia buy them?

[The Chair, Liberal, Kirsty Duncan]

Dr. Ramana, thank you.

Thank you, Mr. Blanchette‑Joncas.

We will now go to Mr. Cannings for six minutes, please.

[Richard Cannings, NDP, South Okanagan—West Kootenay, BC]

Thank you, and thanks to the witnesses here. These are very interesting conversations.

I'll start again with Dr. Ramana.

Just to pick up on some of the previous comments, you said other countries that had produced SMRs—Russia, China and South Korea—had no customers. I'm just wondering if you could expand on that. Why were there no customers? Were there never any products built? Was the cost too high? Did it not work?

I would just like to know how we can compare that with the situation we're in right now, here in Canada.

[Dr. M. V. Ramana]

The three countries are slightly different. Both Russia and China did build their first SMRs.

The Russian design was a so-called floating power plant, where the nuclear reactor was located on a barge. It was meant to serve as a way to electrify remote communities in Russia, which were on the Arctic coast. This was built. It was over a decade late. It was about three times as expensive as the initial cost estimates. That's the primary reason they haven't had any customers. There are many countries that would say that they would like one of these things. Indonesia is one that I mentioned. They said they have large numbers of islands and it would be great to have a floating power plant, but when they see the experience and the cost, they don't really want to go there.

In China's case, they actually built a high-temperature, gas-cooled reactor, which was based on earlier experience in Germany. This reactor, too, was about four years late. The cost was estimated to be 40% higher than the cost of electricity from light-water reactors in China. As a result, the plans they had to build more of these high-temperature gas-cooled reactors are being shelved. They talk about trying to make it larger, so that they can try to reduce the cost through economies of scale, which basically means that they are no longer talking about small modular reactors, but of large reactors.

In the case of South Korea, its SMART design was licensed for construction in 2012. They looked around South Korea, and not a single utility wanted to build one of these. Therefore, South Korea is looking for export markets. They're talking about Saudi Arabia and Jordan, but none of them have actually bought one so far.

[Richard Cannings, NDP, South Okanagan—West Kootenay, BC]

On the next comment you made, I think you said that niche markets, such as remote mines, were limited.

In Canada, we have lots of mines. Why would that market be limited? Is the time that the mine is operational too short to make it worthwhile? What would make that market limited?

[Dr. M. V. Ramana]

The main reason is that if you total up all the demand from all of these different mines, even if every mine and every remote community were to purchase one of these reactors, you're talking about a total demand of about 600 megawatts.

If you want to try to translate the 600 megawatts into the number of orders you would get because of that and compare that with what a company ought to be looking at when they are thinking about investing the hundreds of millions of dollars that would be required for setting up one of these factories, it's not clear that they will match. That's the main issue.

The second problem we found is that the cost of electricity from one of these could be as high as 10 times that of diesel. The question is whether a mine is going to say that it will buy power at 10 times the cost it is paying now, even though it may want to get rid of diesel.

Instead, we found that the cheapest way for them to try to reduce their reliance on diesel would be to invest in renewables and lower their diesel demand.

[Richard Cannings, NDP, South Okanagan—West Kootenay, BC]

How much time do I have?

[The Chair, Liberal, Kirsty Duncan]

You have a minute and a half, Mr. Cannings.

[Richard Cannings, NDP, South Okanagan—West Kootenay, BC]

Okay, I will turn to Ms. Landrie-Parker.

I believe you are in the Yukon, or you're studying at Yukon University. One of the classic communities in the Yukon that I think of that would benefit from something like this would be Old Crow. It's a remote community where everything has to be driven in on an ice road in the winter, or flown in. It's a completely indigenous Gwich'in community.

What's the process and what is the timeline for going through all the consultation, education and training necessary to convince Old Crow, first of all, that they would need such a reactor, and second, that they could build and operate it themselves?

I must admit I'm just a little skeptical of that whole thought experiment. I've been to Old Crow, and it just seems unlikely.

[Dazawray Landrie-Parker]

When we're looking at very specific communities, they are going to make their own decisions. A community like Old Crow, where they have implemented their own energy systems that they are in control of—and that local control is very important to them—may not necessarily ever be ever in the situation of wanting to see...in this case probably a microreactor in their community. I don't know, because we would have to have those discussions with them, but it really does come down to just empowering them to make that decision.

Again, as you know, Old Crow has demonstrated—

[The Chair, Liberal, Kirsty Duncan]

Mrs. Landrie-Parker, I'm sorry.