Idaho Samizdat: Nuke Notes: Where’s the focus on AECL’s future?

Wednesday, December 2, 2009

Where’s the focus on AECL’s future?

A Canadian think tank says it knows - there isn’t one - at least for now

Atomic Energy Canada Ltd. (AECL) has not had an easy time over the past several years. Despite record levels of financial support from the central government, it has managed to repeatedly disrupt North American medical isotope supplies with unplanned outages at the now 50-year old Chalk River reactor. Record cost over-runs at the Port Lepreau reactor refurbishment project have set the rest of the Canadian reactor world on edge.

Worse, AECL can’t even win a major contract at Darlington in its home province of Ontario that would have secured its place in domestic energy markets and set the basis for revived exports abroad.

The Centre for International Governance Innovation (CIGI), also located in Ontario, has given some deep thought to AECL’s future and issued a report on it in November. The think tank’s findings are very clear and unvarnished in their stark appraisal of what’s wrong and what needs to be done.

At the heart of the group’s finding is the issue of the “loss of domestic political consensus” about the need for and use of nuclear energy in Canada’s economy. The result is like the line from a song by folk singer Jeremy Fisher, “if you don’t stand for something, you’ll fall for anything.” Note the origin of this widely-cited proverb is in dispute.

Here are the additional key findings by CIGI.

The Ontario decision to delay indefinitely its plans for the construction of new nuclear reactors is emblematic of this loss and indicative of the obstacles confronting the Canadian nuclear industry;
Fragmented federal-provincial energy policy jurisdictions and political gamesmanship result in domestic market inertia effectively thwarting any prospects for a Canadian nuclear revival;
Without a revival in the domestic market for nuclear energy, AECL is unlikely to be successful marketing and selling reactors internationally;
Privatization of AECL will do little to improve the company's prospects and will mean the end of the CANDU reactor technology.

These observations are a useful condensation of what many observers have been saying for some time about AECL’s prospects for the future. The Darlington tender became a political football and the Harper government’s repeated statements about selling off part or all of AECL undermined public confidence in the organization. AECL has dim prospects for exporting its new ACR1000 reactor if it can’t convince anyone at home to buy it. Finally, selling off the crown corporation simply breaks up the firm. There is no upside from the sale for the company or its employees.

The report does not layout a clear agenda for AECL's future. The root cause of AECL's angst, lack of domestic political consensus, requires a firm response from the central government based on the principle that having a domestic source of carbon emission free power has strategic value in a world challenged by the threat of greenhouse gases.

The Canadian government needs to realize there are some things government must do, and one of them involves getting past denial about its responsibilities to address global warming. Until then AECL will continue to twist in the winds of political change.

Canada’s Agreement with India

While the future of AECL looks bleak, that hasn’t stopped the Harper government from seeking a nuclear energy cooperation agreement with India. On Nov 28 the two countries agreed (Reuters) that Canada would export uranium to India at a rate of about seven million pounds annually and also offer its new ACR1000 reactor to India to meet the energy needs of its rapidly growing economy.

India needs the uranium and reactor technologies because it plans to build 20 GWE of new civilian nuclear reactors to generate electricity by 2030. The Harper government told the Globe & Mail it estimates the value of the agreement to be worth $25-50 billion (cdn) over the next 20 years.

The agreement is also the springboard for a novel idea by energy analyst Ron Banerjee who wrote in the National Post Nov 19 that if you are going to offer AECL to the highest bidder, why stop at exports? His view is that Canada should just sell all of AECL to the Indian government lock, stock, and barrel.

He argues that the combination of a sluggish economy in Ontario and the niche position of CANDU reactor technology, which India has embraced on a significant scale, makes the sale an ideal resolution of AECL’s future. On the other hand, he says, any other reactor firm buying AECL would have less incentive to advance the technology since they already have their own designs.

The rest of the article and the accompanying comments lay out the pros-and-cons for just packing up AECL in a steamer trunk and shipping it to Mumbai on the next cargo vessel outbound through the St. Lawrence Seaway. It is a fascinating article argued in a readable and articulate manner by Banerjee who clearly has done his homework with a well-honed sense of history.

Prior coverage of AECL on this blog