Proceedings of the Standing Senate Committee on
Energy, the
Environment and Natural Resources
Issue 18 - Evidence, May 11, 1999
OTTAWA, Tuesday, May 11, 1999
The Standing Senate Committee on Energy, the Environment and Natural Resources met this day at 9:05 a.m. to examine such issues relating to energy, the environment and natural resources generally in Canada.
Senator Ron Ghitter (Chairman) in the Chair.
The Chairman: Welcome back, Mr. Oulton. The last time you were with us you got halfway through your presentation and then we ran out of time.
[English]
Please proceed.
Mr. David Oulton, Head, Climate Change Secretariat, Natural Resources Canada: It is a pleasure to be here again to try to complete what I started on March 24. I think senators have before them a copy of the presentation dated May 11. It is similar to the one I had last time, but it is updated with some information that senators requested when we last met.
Today, I will focus on sections C and D of that presentation. However, before I do that, I will do an aide-mémoire. In reference to slide A.1, entitled "Kyoto Challenge -- Addressing the Gap," recall that we have been tasked to work with the provinces and territories to put together a national strategy on how to follow through on Kyoto and on how to reduce Canadian emissions of greenhouse gases.
As the baseline indicates, our emissions in 1990 were just under 600 megatonnes. Our last measured emissions, in 1996, were 671 megatonnes. That is forecast to rise to close 750 megatonnes in 2010, which is about 25 per cent over our target of 563 megatonnes, which is the minus 6 per cent on the baseline referred to in the Kyoto Protocol.
When I talk about a strategy to fill the gap, it is that gap between business as usual, which would take us to emissions of close to 750 megatonnes, and the Kyoto target of 563 megatonnes, or a reduction in total, if we were at the top end of our estimate, of close to 185 megatonnes or a 25 per cent reduction.
The purpose of the strategy is to come up with ways of accomplishing that over the period from 2000 to 2010.
Slide A.3 shows emissions from each of the provinces or regions. The last time I was here, one senator asked whether I had the information by individual province for the Atlantic region. The answer is that we did not have it then but we will have it by June. Natural Resources Canada has told us that they will likely have the breakouts for the individual Atlantic provinces available by then and we will provide it.
This chart shows that, as you would expect, the bulk of our emissions are in Ontario, where the bulk of population and industry is, and in Alberta, largely because of the nature of the industry there. There is a great concentration on hydro carbon production -- coal, natural gas and oil.
Alberta also has, of course, industries based on processing those resources, such as the production of electricity from coal or natural gas and the production of petrochemicals from natural gas and oil.
You can see a great difference in terms of individual regions. It tells you that, if you are to have a national strategy, you will not have simply one strategy that fits the entire country, as is true of many of our policies. You will need some base strategies that perhaps are reflected across the country but also individual strategies that make sense in individual provinces and reflect their industrial and population bases.
The Chairman: How do you measure that? Senator Cochrane asked that question at our last meeting with regard to individual provinces. How reliable is the information as to where these emissions are coming from?
Mr. Oulton: You will notice that there is quite a time lag in that first chart that I referred you to. You will notice the last date we had them was 1996. We will shortly have figures for 1997. The reason for the time lag is that most of the data from which you have to derive your estimate comes from the consumption of hydrocarbon-based energy. When you have an accurate measure of how much energy demand was used and how much of that demand was met by the different hydrocarbon sources, then you can estimate what the emissions are from each source, so it is an indirect estimate.
How accurate is it? As with all statistics, I would not claim absolute accuracy. There is a certain error rate. By and large, however, the techniques we used are techniques that are accepted internationally. They have to be so that every country does its estimations on the same basis. It is not pinpoint accuracy, but the data are considered quite reliable. That is the reason we have such a long lag in it. It is to ensure that the data, which are inferred data from energy consumption, are as accurate as possible, and we have roughly two years to attain that accuracy.
I would now like to turn your attention to slide A.5. When I referred to our effort, I referred to it as a national strategy. Indeed, we are doing something that is born of the Kyoto meeting back in December almost two years ago and a first ministers meeting that immediately followed the Kyoto meeting. At that meeting, the first ministers agreed that there needed to be a national effort in order to follow through on Kyoto, to look at the implications of following through on our Kyoto undertakings, to come up with a strategy that would allow for the estimation of those implications, and to allow for how we would put in place a strategy that would be acceptable to all parts of the country.
In essence, we are engaged in a kind of joint partnership with the provinces and territories that was kicked off by that first ministers meeting, which in essence told us to put together a strategy for them to look at by the end of 1999. We were given the better part of two years to try to work as a team with the provinces to put together a joint national strategy. We are now about two-thirds of the way through that.
The first ministers gave energy and environment ministers the responsibility for following through on that, and we are hoping to have the elements of a draft strategy for them to examine and discuss by around year-end. Of course, we meet with them periodically to report our progress. We are targeting the November-December-January period to have a first pass at a strategy. Then we hope to follow through after we get their comments and use the year 2000 as an opportunity to perfect it and to have further public consultations on it.
This diagram, which I call a wiring diagram, simply shows where the responsibilities lie, the mandate from first ministers to energy and environment ministers. The National Air Issues Steering Committee is the committee of deputy ministers from the provinces, territories and the federal government on both the energy and environment sides. They set up a national secretariat, which I co-chair with a colleague from Alberta. That national secretariat has the responsibility for stewardship over this process and for putting together the strategy.
The other element you can see are the issue tables. We have industry, electricity, agriculture, forestry -- a variety of industry tables that are sectorally oriented. We also have some that we call horizontal, which look at measures cutting across all parts of the country or all parts of industry sectors.
Not just energy and environment ministers will be looking at some of the strategies that are put forward. As you can see on the left-hand side of the diagram, other federal-provincial councils, such as agriculture, transportation and forestry ministers, will also be looking at their components of the strategy.
Senator Cochrane: I do not mean to interrupt you, but tell me about the first ministers. Are they all on the same wavelength? What about when ministers change portfolios? Are there problems with that? If we are going to meet the Kyoto time-frame, we need to have the first ministers on the same wavelength.
Mr. Oulton: I think it is fair to say that when the first ministers met in December 1997, they were not necessarily all on the same wavelength. Western first ministers, in particular, had various levels of concerns about what following through on Kyoto might mean for industries located in the West, particularly energy-based industries. An understanding emerged among first ministers that Kyoto was a global effort and that Canada simply could not stand aside from a global effort and not participate in it. It was indeed seen to be a global priority. Therefore, even though there were concerns about what Kyoto might mean, it was agreed that we should put together a strategy for how we would follow through on it. We would look at the implications and the costs and benefits of that strategy in environmental, economic, health and social terms. Then, with a plan in place that properly balances benefits and costs, we will be able to draw a judgment -- which all countries will have to draw sometime in the next few years -- as to whether we are in a position to be able to ratify and accept the legal obligation of following through on Kyoto.
Essentially, my observation is that, over the last year and a half, through the federal-provincial effort, all jurisdictions are saying that they will wait until they see the strategy before they draw a judgment as to whether this is something that makes good sense and is good policy. People are holding back and saying, "Let's see the facts and what the strategy will be, and what the puts and takes will be in terms of benefits and costs." Individual provinces, such as Alberta, for example, have moved internally in developing their own strategy. Alberta, frankly, is one of the more proactive jurisdictions in following through and looking at what Kyoto might mean for Alberta. Quebec is doing so as well.
Senator Cochrane: What about Ontario?
Mr. Oulton: Ontario is doing so, too. They seem to be planning now to set up some provincial consultations from the summer through to the fall of this year internally. It looks as if the national effort is helping to spawn provincial efforts, which is what is required. You need to have both national and provincial work going on in tandem and in parallel in the key provinces. It is not uniform but it is starting to take place.
It is fair to say that first ministers have held judgment until they see what facts will come out of the strategy and what the puts and takes are. Is there a sensible way in which we can follow through on a strategy that moves us toward the target without doing damage to our competitive position, and without doing damage to the other objectives we might have for the economy or for other economic sectors? That remains to be proven. It is one of the things we have to bring forward.
I did not want to go through section B because we touched on it before. However, a senator last time asked about access to the foundation papers. I mentioned that our issue tables had each worked on foundation papers, which they completed earlier this year. Most are up on a Web site, which you will find on chart B.1 in this new slide deck. We have 17 of the 21 foundation papers now posted on the Web site. We post them as we finish the translation, so they are posted in both languages at the same time. There are another four to come, but 17 of the 21 are there so that people can refer to them. We expect that the others will be there shortly.
We have added another element. There is a new Appendix 5 because one of the questions that we had asked from a senator last time was about the Climate Change Action Fund. This is the fund the government announced in the 1998 budget, $150 million over three years. We started making expenditures from that fund on certain projects in the area of technology and public education and outreach.
To date, we have announced approximately $11.2 million worth of projects from the technology and public education outreach parts of the fund.
People have asked, "Can you give us a sense of what those projects are and a rate by province?" Appendix 5 gives that provincial array. As you can see, we have not quite covered them all, but we are just starting. It is an indication that we are starting to get some good regional coverage, but we still have not covered some regions fully yet.
The Chairman: When I read the transcript and looked at the breakdowns, I wondered what program you would find acceptable. Public education is kind of a panacea for everything. Specifically, in Alberta, I notice 439. Would you give us a few examples of what they are doing?
Mr. Oulton: I will use public education as a specific area. It is one of the most fruitful areas. It involves projects, usually with federal and provincial government money, often with an environmental group. In Alberta, the Pembina Institute, for example, is often involved. The type of project it puts forward usually focuses on education and developing educational modules that can be used at various levels in schools about greenhouse gases and climate change. Ideas are developed in Alberta about education modules. The concept is to try it in Alberta schools, pilot it, and then use it nationwide, bearing in mind that there are provincial differences. Public education, involving outreach, happens to be a popular area in terms of projects.
The Chairman: I am a little sceptical because I look at the gap you have to deal with. You are educating kids on recycling or something, but the challenge you have in front of you to bring down that gap by 2010 will not be satisfied by public education.
Mr. Oulton: No, it will not. If you look at how you need to go about doing your strategy, there are two parts, or perhaps this is being simplistic.
One part must be technology. You need to bring in new technologies that use greenhouse gases, often energy, much more efficiently, or that are less carbon intensive, such as natural gas instead of coal in terms of generating power. It is carbon-based but less intensive in certain circumstances.
The other part is to then make the new technologies commercial, to make them ubiquitous in the market quickly. In order to make something commercial, you need demand for it. In order to have demand for products, whether intermediate and demanded by an industry or a final product demanded by a consumer, you need to create a desire on the part of the public for that particular product.
I will use the example I alluded to last time I was here, dealing with a different phenomenon back in the 1970s and 1980s when energy conservation was very much something to which people paid attention. At that time, it was because of the security of energy supply. Products came on to the market, things like smaller automobiles with more energy-efficient engines, and there was a demand for the product. A product coming onto the market has no value unless there is an effective consumer demand for it. In order to build a consumer demand for a product, whether it is new houses that are tighter and more energy efficient or new automobiles, the only way to go about affecting consumer preference is through education over an extended period of time. You need to build sensitivity to the issue.
You must start sometime. We are not just starting at elementary school. You need to do it in high schools and universities, and of course there must be a broader public program as well.
People are sceptical about the results you can get from public education and outreach. However, on environmental issues in the past, regardless of whether it is greenhouse gases or lead in gasoline, you need both the technology, such as unleaded gasoline, and the demand from the consumer public for it, either for health reasons or for environmental consciousness reasons. Technology and public awareness go hand in hand, and education is one of the fundamental elements of public awareness.
You point out that it is a challenge to maintain public awareness over the long term, not the short term. Ten years is a relatively short period of time in terms of changing public attitudes toward energy consumption, but you have to start somewhere.
The Chairman: You should spend a little money on the Hill, judging by the way they have watered down the environmental bill that is coming to us.
Mr. Oulton: As I covered Section B the last time I was here, I will skip over that and go directly to Section C, which gives the path ahead in more detail.
Section C.1 describes the nature of the product we hope to give to Energy and Environment Ministers and first ministers. We see two key components. The first is alternate future paths that will meet the minus 6 per cent Kyoto target. That includes environmental health, economic and social assessments of each of the paths. When I talk about a path, I mean a scenario, a grouping of options that will get you to minus six.
The second thing we hope to give them is a work plan and time line. This is not something you will work at just once and do in December 1999. It is something you will need to return to and refine as a strategy as you work to 2010 in an annual evaluation. You can then check on progress at key decision points and make course corrections and a program evaluation on how well we are doing.
The first part of the package will try to give ministers two or three broad approaches to how to get to the minus six target. The second part will take you to the front end of what I will call the three-year business plan, which says, "We have given you the 10-year strategy, but what you do in the first three years is important." We are suggesting that in that period all jurisdictions -- federal, province and municipal -- must be prepared to start taking actions in 2000. We set out a menu of options that they would be prepared to take over in the first three years of the strategy. That is the part we call the business plan.
Senator Kenny: Mr. Oulton, I have had the opportunity to deal with you in the past, and you have been helpful to me. I have a great deal of respect for you as an individual. However, I must say, having sat through the last briefing and sitting through this briefing, I am puzzled. I am not sure whether you are describing to us a government plan or a wish list or an overview. I do not get any sense that this is reality. I do not get a sense of municipalities sitting down in the year 2000 to look at a menu. Even the words trouble me.
How do you see yourself and the role of your group? Are you observers who are keeping track of what is going on? Are you leaders who are providing some direction? Are you cheerleaders?
I get the feeling that we have an elaborate document that we are working our way through, and it is pointing to a whole range of issues for which we do not have handles and that, by and large, most people are not interested in addressing. You are talking about issues that do not have a political will associated with them and that will not make the cut with this government or with any government in the country over the next decade.
Mr. Oulton: Our mandate is fairly clear. We are mandated to put together -- with the provinces and territories, so it is not just a federal government piece of paper -- a national strategy on how to get to the minus six target.
I was trying to describe here what the elements of that strategy would be when completed in the year 2000.
Frankly, in the end, as you are pointing out, governments must buy into that strategy. The people putting this strategy together are the federal and provincial bureaucrats who are trying to put together a way for Canada to get to the minus six target. Our intent is to have a plan that will be mature in the year 2000 so that governments can then decide if we have something sensible here, something they are prepared to work with on all three levels. That will obviously have to guide the federal government in terms of the decisions it makes in our international negotiations and elsewhere.
Those political decisions and that commitment have to be a fundamental part of it. Indeed, in the end, when we have finished our work, it will go back to the energy and environment ministers -- and we report to them regularly on updates -- and ultimately to first ministers. They will have to determine whether they think we have put together a sensible document as a way forward and whether there is the necessary political commitment to do this. We do this in the international context where other countries are trying to come to grips with this, as we are. Every country has a different process, but they are all working through this in the same way. Internationally, by the time they have the sixth conference of the parties, which is three after Kyoto, at the end of 2000 or the beginning of 2001, the community of nations will be able to draw a judgment that indeed Kyoto is serious, and that the mechanisms will be put in place to make it work. After that, nations will then be able to decide whether to ratify legally or not.
Our obligation, as the bureaucrats working on this at the secretariat, is to position Canada as best we can. Canada should know what its domestic strategy will be when it gets into those international discussions. It should know what the puts and takes, the benefits and costs, are, so that the political judgments can be made, both by the federal government on its own and collectively with the provinces and territories.
Senator Kenny: I was going to ask you whether you went home at night and said that this is all a waste of time because nobody is listening, but that is not a fair question, so let me put it differently.
Can you contemplate a situation in which the resources and focus that would be required to have the impact that your slide presentation calls for could ever be generated in the next five or six years? Do you see any signs at all that this package of proposals could move forward to reality?
Mr. Oulton: There are two areas that I look in for that. One is the international domain. All countries are looking over each other's shoulder to find out if everyone else is serious about this. The European nations seem to be moving seriously in this direction. They are having their own internal struggles. As with our provinces, there are different country positions and they each have strengths and weaknesses, but they are trying to come to grips with an overall European strategy in the same way we are trying to come to grips with a national one. It is not simple; they are having trouble with it, but they seem to be making progress on moving in that way. Individual countries, such as the U.K., France, Netherlands and Germany, seem to be taking steps, although admittedly small ones, compared to what will be needed in the end, but they are starting.
The U.S. is our biggest puzzle. We live on the same continent and it is hard for us to have policies that are greatly out of step with U.S. policies, when we are linked in transportation and so on. On the one hand, the administration is talking as if its intent is to follow through on Kyoto, and they are passing budget measures in the areas of energy efficiency and renewable energy, particularly in the technology area but not uniquely there, that would indicate they are prepared to be serious. Again, these are small steps compared with what is needed in the end but they are prepared to follow through.
On the other hand, there is the conundrum that the U.S. Congress is certainly sitting back saying that it is not prepared to ratify Kyoto until they see countries like China, India or Pakistan, the big future emitters, on board. The developing countries are sitting back saying that until they see that the developed nations like the U.S. are serious and are prepared to transfer technology, why should they get serious about it?
There is a dynamic in the U.S. that makes it uncertain as to how they will proceed. Many people are waiting to see what comes out of the next U.S. election, in terms of the balance of power in Congress. That will tell us how quickly they will move on Kyoto. That will have some implication for how we move.
If you look at what the U.S. is doing, they are trying to position themselves so that they can follow through sensibly with the technologies and other things that they think might make sense in what I call a Kyoto world.
From the Canadian perspective, we need to look at in the same way that the U.S. does. There are great opportunities in the Kyoto agreement, in terms of energy efficiency and renewable energy, where we have some strengths. Admittedly, there are other areas, in terms of transition, that we will have to deal with. But we have strengths in technology, both in energy efficiency and renewable energy, that we can be playing to. We have strengths in research and development as well, and in transportation. A sensible strategy should try to build on those strengths and deal with the transition issues.
Frankly, I take heart from what is occurring in Alberta. If I went back to the time of the first ministers conference in 1997, there was naturally great concern on Alberta's part about what it might mean for the province and its energy industries. It has not put aside its concerns, but it is one of the more proactive provinces now in terms of trying to come up with sensible policies within that province to deal with a Kyoto kind of world. Quebec is doing the same thing. Many provinces are coming on board.
It is a long-term game. It is not something that we will be able to wrestle to the ground this year or next. I sense, however, that there is commitment out there, in terms of provincial governments within Canada and the national government. Our $150-million Climate Change Action Fund is serving as seed money for a lot of our national effort, working with provinces, trying to get technology development going. Some small steps are being taken, although they are modest and more will be needed. The proof of the pudding will be down the road when we get beyond CoP6, beyond 2000, beyond the U.S. election, to see where everyone else is moving.
The climate secretariat's ambition is to try to ensure that we have done our homework on the domestic strategy over the period of 1998 to 2001 so that we are well positioned to take part in those international discussions. Then we can find out what the political commitment is internationally and nationally.
Senator Kenny: Mr. Chairman, I share your skepticism about the bill coming to us. I think Mr. Oulton is a conscientious and capable public servant. However, I have the sinking feeling that he is giving political cover for lack of activity. People can perhaps point to his secretariat and say we should look at the terrific things they are doing, but I do not see any commitment of resources. I do not see any commitment of the order of magnitude that the witness's brief would call for. I find myself sitting here getting more skeptical by the minute.
The Chairman: I have to say I share your concern, Senator Kenny. When we last met, you talked of an energy crisis and the need for smaller cars, pricing of course being part of that. That is the way you reduce emissions. There is no will to do any of that for political reasons on the part of various jurisdictions protecting their interests. I understand that and I am sure you understand it a lot better than I. It seems that it is a marshmallow we are pressing here. Would it be fair to say that it is almost like puffery, as we used to say in law? The words are there but I do not see the action. I am not pointing at you, Mr. Oulton. I appreciate the parameters in which you must work.
As to commitment, when I look at my own province, yes, there is commitment, but it is out of self-interest. They are moving things around to look at other alternatives, and I respect them for it.
However, 2010 is just around the corner. I share Senator Kenny's skepticism about being able to do it. If we do not do it, as a party to an agreement, can we not be sued for not meeting those objectives? The American Congress was concerned about signing the agreement and not getting there and being sued by environmental groups. As a country, are we in that position as well? Can environmental groups say, "You signed an agreement. You are legally obliged. You have not met the targets. We are suing you"? I do not have a sense of action here.
Mr. Oulton: I should try to answer your technical question and speak a bit more to the action one.
On the technical question, the legal obligation will arise once we have ratified the protocol. At the moment, none of the OECD countries have ratified the protocol. A number of the small island states have. We signed the protocol, which says that we will do what I am doing, which is due diligence to determine what you need in order to be able to follow through and make a ratification decision. Most people are assuming that Canada, the U.S., the Europeans, Japan, et cetera, will look at making ratification decisions sometime in the 2001-2002-2003 period once it is clear that the protocol will work. Key elements are still being negotiated.
On the skepticism about commitment, internationally as well as within each member country and each party, a kind of a proving up process is going on. The protocol is not complete yet. It does not contain all the elements that would allow it to work. One of the tests is determining whether that protocol actually can work. The international proving up process will hopefully culminate in 2001, and that will tell us whether we have a live international protocol that will work and which countries are prepared to sign to by ratifying. Canada, like others, will need to make a decision.
At the same time, in Canada and in most other countries, proving up processes are going on domestically. That is really doing the background homework and saying, "What options do we have for implementing this protocol, and what are the implications of putting those options in place for our industries? How do we go about handling that in terms of sensible policy?" We, the U.S. and Europe are all roughly in the same position. We are trying to do what I would call due policy diligence and are trying to figure out those implications now.
To the extent that countries are taking action, the actions they are taking are similar to the ones that we are taking under that Climate Change Action Fund that the government set up one year ago. We are just starting to take positioning actions, ones that allow you to do the national process, do due policy diligence, and start trying to take advantage. In public education and outreach, where you have a long gestation period, you need to start taking action now. These are all preliminary actions, but they are setting you up to hopefully make good policy decisions in 2000 and forward when you know what the international context will be and you know what other countries will be doing.
You are right. There is a period that could be frustrating. It is due diligence. Countries are not investing huge resources in policy changes yet because they are looking at what will happen internationally and at their policy framework internally. There has been a two- or three-year hiatus while people are proving out, and I do not think Canada is any farther behind. In some sense, it is ahead of many of the countries that are engaged in policy process and are trying to put together good sensible policy.
The proof will come when the international framework is clear and when countries need to make ratification decisions and implementation decisions. You will not jump the gun and implement before you know what the international context is. I am sorry to be long-winded, but this is an important part of the discussion.
Senator Cochrane: According to page B.2, 38 projects had been announced and completed by April 1999. Has there been any valuation or assessment of these projects to determine whether they are worthwhile to continue?
Mr. Oulton: When we do projects now, we do an evaluation framework at the same time that we start implementing the project. All of them are just being implemented now. Their evaluation time frame will come once they have been implemented, which is normally about a year down the road.
Senator Cochrane: That will be done in the year 2000.
Mr. Oulton: Yes.
Senator Cochrane: Could you be a bit more specific in regard to Appendix 5 and the public education and outreach. What types of things are you doing or are you thinking about doing?
Mr. Oulton: There is quite a range. I will give the committee a complete list of the projects that have been announced to date so that you are not just depending upon my memory.
Most of the projects in public education and outreach fall into two or three general areas. One is the one I spoke to earlier, which is strictly education about the issue of climate change at all ranges of schooling right from elementary through to university, and it is working on modules in that area.
Senator Cochrane: Is this done as a pilot right now?
Mr. Oulton: Yes, there are a number of pilots now to find out what works, and they are being done in one or two provinces at the same time because of different provincial education systems. We want to determine what will work and then look at implementing it nationally.
There are also projects involving communicating to the public in general about the issue of climate change and trying to personalize the issue. Earlier, security of supply worked as a motivator because people understood the policy concern and the risk and were able to translate that into their own personal action.
Senator Cochrane: What type of medium are you using?
Mr. Oulton: A proposal has been put forward to put together a computer program that would allow people to do a personal calculation of what you emit in our own routine daily life in greenhouse gases. It says, "Here are areas where you could make improvements," whether it is in the energy efficiency of your house, driving habits, or how you use the products that you use within your house. It is meant to be what I would call personal sensitization to the issue: how it affects you and how your own living habits affect greenhouse gas emissions.
Senator Cochrane: Do you think people will be interested in doing that?
Mr. Oulton: This is a test. We are trying to find out if it will work as a way of sensitizing people to the issue. There are a number of different proposals for how you would go about doing it. We are piloting a number of proposals to see what works and what does not. For the successful ones, you then look at whether you could roll that out as a broader kind of project. Many of those are on a pilot basis to figure out what will work.
Senator Cochrane: You have no precedents to go on?
Mr. Oulton: We are doing an awful lot of what I would call initial spade work.
Senator Cochrane: This is hit or miss.
Mr. Oulton: You can look at what has worked in other similar kinds of issues and use that to decide where you think you might have the most success. You would then try to build your projects in that area. It is not an area that is proven. I think of greenhouse gases as more of an elite issue rather than as something that speaks immediately to the individual public. That is one of the conundrums with which we are trying to deal.
Senator Cochrane: Newfoundland, Prince Edward Island and New Brunswick are not included in those pilot operations.
Mr. Oulton: I noticed that. We are in the early days yet. Our ambition is to ensure that we have projects going in each province.
Senator Wilson: You said that public education is an important element, yet there is no indication of what your strategy is, or whether you have one. It seems to me that Canada has a long history of public education for social change. I am thinking of the Antigonish movement, for example. We do need things to put in computers but rather things to nurture the political will of the public towards these objectives. I would hope that you will issue a strategy paper for public participation at some point before this goes through.
You mention that Ontario will do some work over the summer. I know you have no control over Ontario. However, July and August are not prime times in which to consult with the public when so many people have gone fishing.
Finally, on page D.3 of our presentation, I see that at the end of the process you have built in public consultations. Having been involved in many public consultations, I am very skeptical of them. Is this to improve the strategy? Is it all fixed in time? Is this to say that you have consulted the public? What is it all about?
Mr. Oulton: One of the 15 issue tables I mentioned is public education and outreach. We have asked them to come up with proposed suggestions for a strategy. This is a multi-stakeholder table of about three dozen people, including provinces, municipalities, as well as a wide range of environmental groups and industries. It is a broadly representative table and we have asked it to make proposals for a strategy.
When it completes its work, and we hope to have those proposals by the early summer, then that element will be something that will be discussed with the other provinces as part of the national strategy. Indeed, there will be a public education outreach strategy as an element of the overall one. It will have gone through a fairly broad public discussion process before it becomes part of the strategy.
Even though our issue table process is a broad, publicly available process, we are advising ministers that that does not mean that the final product will have had adequate public discussion. Once the ministers think we have a good draft product, then our recommendation will be that the next step is to have broader public consultation to see whether it still makes sense. After that public consultation, we should come back with a final product. That is the intent of the advice we will give to ministers. They will be looking at that toward the end of this year, or the beginning of next year, to decide whether they will accept it as advice.
Senator Gustafson: On page A.3 you detail growth in emissions by 2000. The most significant growth will be in B.C. and Saskatchewan. You are aware that both provinces have recently announced a major expansion in sawmills. Perhaps these are political announcements preceding forthcoming elections. Perhaps Senator Taylor would like to speak to what would happen if five new sawmills are opened up across the northern part of the boreal forest. Is that included in your calculations?
Mr. Oulton: I would not promise that they are because these are dated as of fall of last year. However, the figures are being renewed as we speak. I suspect those would not be included in these numbers. We renew these estimates about every year or so.
We have tried to build in expected growth in particular key industries. Thus, there probably was allowance for some of that growth. I suspect that it did not allow for all of it.
One of the dilemmas, which is not unique to Canada, is that most countries assume that what they need is an expanding economy into the future in order to meet increased population and other aspirations. One conundrum is how to accommodate a growing economy while at the same time deal with reductions in the emissions of greenhouse gases. This is not just improving efficiency of use as you go along; it is also accommodating an absolute reduction at the same time as your economy is growing.
We are not unique. All countries must face that. However, Canada, because of the nature of our country and because of our carbon intensity, has a particular challenge in that area.
Saskatchewan is an interesting case in point. Because of the agricultural sector, and because of moving to things like zero till and other innovations, Canadian agricultural soils over time, and frankly perhaps very soon, will become net absorbers of carbon rather than net producers. It will not offset all economic activity. However, I use it as an example to say that you can use technology or improved and changed practices in one industry to help offset growth in another. It is a mistake to look at it statically, if you will, or just at one particular industry segment, because you will often find one industry segment will offer solutions that offset what might be happening in another industry sector.
Senator Taylor: In our forestry committee we have run into the idea that our boreal forest will change drastically with climate change. I am sure that the concentration in Alberta is on hydrocarbons because that industry has made the most noise. I do not know whether it is you I should congratulate or not, but I have seen the public attitude, particularly of the legislators in Alberta, move ahead light years. They were back in the time of the Crusades when the Kyoto agreement was brought out. Politicians are now leaping on to the bandwagon. I have now noticed a complete reversal in that they are beginning to understand that they can make money out of it. There is nothing that changes the attitude quicker than making money out of an environmental change.
There has been little debate on forestry. Could you divert some of the searchlight of your knowledge into the dark corners of forestry to do the same thing there as you have done with energy? If our temperature increases a few degrees in the next 50 years, there will be one awful change in forestry in northern Alberta, Saskatchewan and Manitoba. Would you care to comment, sir?
Mr. Oulton: I cannot claim to have particular expertise in that area, although I did meet with a number of people from the forestry sector in the last week. The forestry sector as a whole is interesting. I say that because in terms of their emissions, they have either been net reducing or net stabilizing. That is partly because they have been one of the most innovative industries in terms of how they have used wood waste, pulp liquors and other things in terms of energy consumption instead of drawing, if you will, power offline. Frankly, in looking at some of the material that has been coming forward from the forest sector in terms of room for innovation in manufacturing and wood use practices, as well as energy use practices, I am convinced that there is a lot of room for them to continue to make considerable improvements.
If you were to break out the forestry sector from the industry sector, you would see that they are one of the relative success stories in Canada. It is an industry which, while growing, has been managing reduced energy use and reduced greenhouse gas emissions over that period by dint of how they have gone about using energy and their own waste. They convinced me that there is still room for considerable profitable innovation in that area.
Senator Taylor: That was not the road I wanted you to go down. At one time, when you drove down a road you could see the sawdust burners at work. No one has seen those for a number of years.
You must also remember that the forestry industry probably supplies more jobs and incomes to provincial governments than does the oil and gas industry. The oil and gas industry has seen the advantage of bringing down their carbon dioxide levels.
I have seen no mention of the tremendous loss that would occur in our boreal forest harvests if the Kyoto deadlines are not met. After all, global warning will move that harvest north and our evergreen forests will change. It is a sleeper issue. People do not realize the income and employment that comes to Quebec and Yukon from forestry. It far exceeds any other industry in Canada, yet no one is mentioning the danger if we do not bring ourselves in line with Kyoto. It is not the odd Alberta gas well that will shut down. A whole industry is at risk here and no one is discussing this.
Could you start doing a little more in that line? You may be able to grow bananas because of climate change in Senator Gustafson's area or my area, but what will that do to the forests of the northern part of the provinces, which are our biggest money earner right now?
Mr. Oulton: When I talk about national strategy, I tend to talk about the part that we call mitigation, reducing emissions, because that is where most of the focus is when you talk about a target of minus 6 per cent. The other two parts of the strategy are improving our climate science so that we understand what is going on, and improving our understanding of implications and what we call adaptation. In other words, we want to understand regionally, more specifically than we do now, what the implications of climate change will be on particular industry sectors and we want to know what we should be doing now.
I understand from scientists that the climate change that we are seeing now and that we will see for the next 30 years is largely already determined. We cannot do anything about it. That already reflects past emissions. In terms of forest practices and policies, we will have to forecast what the implications are over the next 30 to 50 years and start putting in place policies now that will allow us to adapt to that. It is easier to do in some industries, such as agriculture. Agriculture is good at adaptation. New seed types can be developed relatively readily. Growing new forests that adapt to changing climate conditions is a much greater challenge.
Senator Taylor: It is a 40-year crop.
Mr. Oulton: There are challenges there. It is fair to say that we have not done enough homework. We are not unique in that. Part of that is because the climate science has not been precise enough in terms of specific effects. We are focusing on that now. The intent is to try to have an outline for an adaptation strategy as part of our plan. We must start to look at the individual effects and start asking how we will deal with those. I do not think we will have nailed it all down but we will have started on it by the time we get to 2000.
The Chairman: Mr. Oulton, I am not sure I understand your role and the secretariat's role. You do not have autonomy, so you are there at the minister's wish or whim. I am not sure whether you are an activist, a catalyst, a mediator, or all of the above. When you see something occurring in Canada, such as the automobile industry and the trucks without proper emission controls that are increasing the emissions, or when you see something happening in the forestry area that is obviously contrary to the targets you must meet, should you be out there saying very loudly that this should not be going on, or do you have to take a back seat? I am not sure what your role is.
Mr. Oulton: We report federally to the Environment Minister and, federally and provincially, to all energy and environment ministers. We have a specific mandate, which is to put together a strategy. We do not have a role such as that of the Commissioner for Sustainable Development, who serves as an independent watchdog and indeed does try to point out independently when he is of the view that there are deviations from policy or practices that he would advocate. Our role is to put together a strategy, allow ministers to judge whether that strategy is adequate or not, and then follow through. We go into a different mode. If ministers agree that this is the strategy we should be following, then the secretariat would enter into the role of monitoring for the ministers and saying either, yes, we are following through on the strategy and we are on line to make the reductions, or, no, we are not and we will need to make course adjustments. We are not in that mode yet. If the ministers accept the strategy from us, then we will report to them on the adequacy of implementation. Until we have a strategy, we are not commenting on that. We are not in that watchdog kind of role that I believe you are characterizing. We are in the mode of putting together a strategy and then letting ministers decide whether it is adequate. We will then be the tool of the ministers to follow through and report on it.
The Chairman: Would we not be better served if you had that broader role? You talked of global strategy, and of waiting for the outcome of the United States election. I do not accept those arguments because I look to Canada to provide leadership. Let other countries look to us. We should not wait for presidential elections or for the Congress of the United States to determine our strategy. I do not like that being Canada's role. Would we not be better served by having you and the secretariat use your talents in a more activist manner and by giving you more breathing room so you can speak up on these issues rather than feeling collared, or are you happy with the position you are in?
Mr. Oulton: To be fair, it really is not appropriate for me to comment on the adequacy of the mandate I have. We have to carry it through and follow through on it.
To be frank, I think the most important thing for ministers is that they should have -- and this comes back to Senator Kenny's comment -- the opportunity to make the judgments on whether they are prepared to follow through and make the commitment to a strategy, both federally and provincially. We are better off keeping our focus on trying to develop a product, which they can decide to accept or not. That should be our proper focus, because until you have that, you do not have a course to follow through on. Indeed, anything we come up with will not succeed if it is just a federal government effort. It needs to be a broader, national effort. We are better off, to use the old phrase, sticking to our knitting and providing that strategy. Then ministers can decide what sort of model they need after that to ensure we are following through on that strategy appropriately.
Senator Cochrane: I am still curious about the membership of those federal and provincial advisory boards, especially knowing that Ontario and Alberta are the provinces with the largest gas emissions. Do we have enough representation on those boards from Atlantic Canada to ensure that the interests of the smaller numbers of consumers are protected? As you know, the problems and the solutions and the trade-offs are different in Atlantic Canada from those in, say, Senator Taylor's region. Do we have enough members to express these regional concerns?
Mr. Oulton: We have good membership on most of the 15 issue tables from all interested provinces, but not every province wants to be on every issue table, if it was not effective or efficient for them to be there. We have good representation from the Atlantic provinces. In order to achieve that, we have been in essence providing additional funding so that if provincial officials or environmental and other groups wanted to participate, we would try to pick up the costs of their participation. We have tried to put in place the normal measures to ensure we get adequate representation from all parts of the country. Having said that, am I entirely satisfied that we have as many as we should have? No, I am not. We do not have as many as we would like from all parts of the country.
Part of the limitation is size. Most the tables can only be effective with 25 to 30 participants and they must cover industry, environmental groups, some provinces and the federal government. There are limitations on how many people you can put around the table.
Part of the limitation is in resources. They do not have the large governmental mechanisms and the same ability as the larger provinces to send officials to participate in meetings.
Ultimately, though, the recommendations from those tables will go through a federal-provincial mechanism at three levels -- a group chaired by me, a group of energy and environment deputies, and then ultimately a group of ministers. There is a check to ensure that the regions feel that the strategy properly reflects the overall national interest.
In the end, I am not entirely sure that we have all that we would want from stakeholders in each of the regions of the country. We have done our best to get adequate representation and I think it is adequate. It is just not as good as I would like it to be. We have checks and balances. One criterion for evaluating the strategy is whether it deals with all regions in a reasonable way. Even if we had inadequate representation, we try to ensure that judgments on policy reflect those regional perspectives.
Senator Cochrane: I would ask that you continue to focus on that problem. It has been a concern of mine not just over the environment but in many areas of my region. The smaller provinces do not have the same say that the larger ones have. That concern should be recognized. We should deal with it and make it a focus of every strategy that we have.
Mr. Oulton: I understand your point and I accept it.
The Chairman: Mr. Oulton, we still have not completed your presentation but the dialogue has been excellent. I am certain we will ask you to return to tell us of your progress. We support your efforts, but things never seem to happen quickly enough. Thank you for coming.
Our next witness panel is ready.
Please proceed.
Ms Kristen Ostling, National Coordinator, Campaign for Nuclear Phaseout: The Campaign for Nuclear Phaseout, which has been in existence since 1989, is a national network of environment and safe energy groups. Our steering committee includes many national environmental groups such as the Sierra Club of Canada, Energy Probe, and the Canadian Coalition for Nuclear Responsibility. There are, as well, a number of regional organizations such as the Concerned Citizens of Manitoba, the Inter-Church Uranium Committee based in Saskatchewan, and the Action Group on Nuclear Issues in New Brunswick.
Over 300 organizations from across Canada, which represent a wide spectrum of sectors, have endorsed the Campaign for Nuclear Phaseout. Our current focus is on the issues of plutonium fuel, CANDU exports, nuclear subsidies, nuclear waste issues and, through a project which we have been working on called the Radioactive Inventory Project, we have been publishing and distributing a publication called the Atomic Atlas. This includes a nuclear map of Canada, copies of which will be circulated later.
I wish to thank you for this opportunity to meet with you today. At all levels, there is a need for government to diversify its sources of information on nuclear power. At the federal level, in particular -- and this is the case with the Prime Minister and the Minister of Natural Resources -- there is a tendency to listen primarily to the nuclear industry when making policy on nuclear issues. The problem with this is that it is the equivalent to listening to the tobacco industry on the dangers of second-hand smoke. We definitely need more public and parliamentary debate on nuclear issues.
Since its inception, the nuclear industry has been shrouded in secrecy, primarily because the initial reason for developing nuclear power was for its military applications. Canada contributed to the war effort to develop nuclear weapons through technical know-how and the contribution of uranium and plutonium.
All of the uranium for the World War II atomic bomb was refined at Port Hope, Ontario, and during World War II, Canada was on the cutting edge of plutonium research. Top scientists from England, France and Canada worked at a secret lab in Montreal to demonstrate the most efficient methods for producing and extracting plutonium. Chalk River nuclear labs were developed in secrecy as part of the allied nuclear weapons program under the National Research Council and, until 1976, Chalk River sold plutonium to the U.S. bomb project.
Although there is growing public awareness on nuclear issues, perhaps the current lack of openness, transparency and debate on nuclear power issues relates back to the initial need for military secrecy. As a society, we now know more about the socio- economic and environmental impact of nuclear power. This awareness began in particular with the nuclear disasters of Chernobyl and Three Mile Island. More recently, the shutdown of Ontario Hydro reactors at Pickering and Bruce nuclear power plants in August 1997, as a result of operational and safety problems, also led to increased public awareness.
The problems at Ontario's nuclear plants point to the urgent need for a sustainable energy alternative for Canada. It is time to acknowledge that Canada's experiment with nuclear power has been a costly mistake, both for our economy and our environment. I will now turn to a number of issues which need to be addressed as part of a national public examination of nuclear issues in Canada.
First, I shall deal with the economics of the nuclear industry. Since 1996, we have been tracking the subsidies to the nuclear industry and, in November of 1998, we released a study which showed that, when calculated in real 1998 dollars, total subsidies to AECL for the last 46 years amount to $15.8 billion. AECL has intensified its focus on reactor exports and the goal is to export 10 reactors in the next 10 years. Even if AECL could meet this target, it could not possibly recoup the $15.8 billion subsidy.
Moreover, the financial risks of reactor exports are high, with taxpayer loans of $1.5 billion to China, another $1.5 billion promised if AECL wins the Turkey bid, and Romania is now negotiating for another $1-billion loan for the completion of a reactor.
Another major economic question is the cost associated with the management of nuclear waste. AECL estimated that its proposed deep geologic disposal concept would cost $13 billion. Between 1978 and 1996, AECL and Ontario Hydro spent $700 million to develop the concept. In February 1998, a federal environmental assessment panel charged with reviewing the concept issued a report stating that the safety of the concept had not been adequately demonstrated, and that the concept does not have the required level of acceptability to be adopted as Canada's approach for managing nuclear fuel waste.
I believe that Senator Wilson will be addressing the committee tomorrow and giving further background on this panel's findings.
The changes to Ontario Hydro also raise important economic questions. The Ontario government announced, in the lead-up to the break-up of Ontario Hydro, that the utility would be relieved of $23 billion of debt. That is known as "stranded debt." By the way, two-thirds of Ontario Hydro's $30-billion debt is the result of its nuclear operations. This represents the biggest bail-out of the nuclear industry in our history. It will mean consumers, even those who opt to buy green energy, must pay for Ontario Hydro's nuclear debt. When my 11-year-old son heard this on the radio last summer as I was driving him and his friend to camp, he said to his friend, "You mean they want us to pay for something we did not even do," to which his friend replied, "That really sucks." That interchange really nailed it on the head. It crystallizes the issue. We are leaving a huge nuclear debt as a legacy for future generations.
In addition to the legacy of the nuclear debt, future generations are inheriting the nuclear industry's nuclear waste problem. There are now 200 million tonnes of sand-like uranium tailings in Canada, mostly located in Ontario and Saskatchewan. The volume of nuclear waste is also staggering. As of December 1998, according to the Atomic Energy Control Board, there are over 1 million spent-fuel bundles in storage, both in wet and dry storage. In terms of weight, this represents over 26 million kilos of nuclear waste.
It is important to understand that the spent fuel contains over 200 deadly radioactive elements. The radioactivity in these elements is measured in half-lives. A half-life is the amount of time it takes for the material to lose half of its radioactivity. For example, the plutonium contained in nuclear waste has a half-life of 24,000 years.
As mentioned previously, there is still no acceptable disposal solution for this waste. An immediate priority should be to stop the problem at the source by halting the production of nuclear waste. Effectively, this means phasing out nuclear power.
Due to safety, environmental and economic concerns, no new reactor sales have been made anywhere in North America since 1979. Part of the nuclear industry's survival strategy has been to aggressively pursue the export of CANDU technology by offering large and risky loans financed through the Canada Account in exchange for the so-called purchase of CANDU reactors.
In addition to risking taxpayer funds, CANDU exports carry inherent proliferation risks. Purchasers can simply ignore their commitments to use the technology solely for peaceful purposes, as India and Pakistan have done, for example. Moreover, all of Canada's past and present CANDU customers, such as China, India, Pakistan, Taiwan, Romania, Argentina and South Korea, have at one time or another pursued nuclear weapons programs.
In addition, the countries that AECL targets for selling CANDU reactors are also renowned for their human rights abuses and lack of democracy. Although AECL says that nuclear power is the power of choice, in most of their targeted markets the people do not have the power to choose whether they want to embark upon the nuclear energy path.
One of the issues you may have heard about recently is the plutonium fuel import scheme. It has received a great deal of media attention recently because of a test that will be conducted this summer. AECL and Ontario Hydro put forward a plan to import 100 tonnes of weapons plutonium from the United States and Russia over the next 25 years. This plutonium will be in the form of something called "mixed oxide" fuel. It is a mixture of plutonium oxide and uranium oxide and would be used in CANDU reactors if the plan goes forward. Without any public consultation or parliamentary debate, Prime Minister Jean Chrétien declared support for the importation of plutonium fuel into Canada for use in CANDU reactors.
The nuclear industry and the government promote the plutonium fuel scheme as a disarmament initiative. However, this justification is wrong-headed. Instead, the project will help to launch a deadly plutonium economy by increasing the accessibility and potential for proliferation of this nuclear explosive.
As you may be aware, in December of 1998 the House of Commons Standing Committee on Foreign Affairs and International Trade found that the government's plutonium import plan was totally unfeasible and recommended that the whole plan be scrapped. However, in March 1999, it was disclosed that, despite this recommendation, Jean Chrétien informed Bill Clinton that he still supported the plan; and, on April 19, the Chrétien government publicly rejected the committee's recommendation.
Permission has already been granted to import plutonium fuel for the purposes of a test burn at Chalk River nuclear labs in Ontario. The test burn is planned for some time this summer, and we will be looking at about 300 grams to be imported, 150 each from Russia and the U.S. The test burn opens the door and sets an institutional momentum for the whole project.
I think that the test burn and subsequent import plan should not go forward for a number of reasons. First, it will not to turn swords into ploughshares. Instead, it will launch this global plutonium economy and increase the accessibility and potential for the proliferation of plutonium.
The plutonium fuel scheme is primarily about propping up Canada's declining nuclear industry and its unsustainable means of generating electrical power. It is another part -- as are our CANDU exports and the plan to promote the idea that burying nuclear waste in the Canadian shield is safe -- of the nuclear industry's survival strategy. Under the plutonium fuel plan, Canada would be committed to running specific reactors for decades into the future, even if they need expensive repairs or cheaper and safer energy alternatives are available.
The security measures necessary to safeguard the plutonium for the fuel project would affect the civil liberties of Canadians. Shipments of plutonium will require security measures equivalent to those needed for the transport of nuclear weapons.
Canada's nuclear non-proliferation policy is intended to isolated the Canadian nuclear industry from the nuclear weapons programs of other countries, but this plan will integrate the Canadian civilian nuclear industry with the U.S. and Russian military parts of the nuclear industry.
Another important reason for not going forward with this plan is that it will not eliminate the weapons plutonium. There will still be between 40 and 70 per cent of the original amount of weapons plutonium in the spent fuel.
One of the most important reasons to not go forward with this plan is that there are alternatives that do not involve the long distance transportation of plutonium. The U.S. Department of Energy, DOE, is pursuing a two-track strategy. One is to look at the possibility of using MOX fuel in nuclear reactors. The other is a strategy called immobilization, which would involve mixing the plutonium with liquid high-level nuclear waste and molten glass. The Rand Corporation, for example, even states that this option would be less expensive than the plutonium fuel option. Even though this option is a promising alternative, it would still require great vigilance to ensure that the plutonium does not enter the environment or enter the hands of people such as terrorists or those who want to make bombs.
Ultimately, to increase global security, to protect the environment and public health, all plutonium separation should be stopped. Civilian use of plutonium fuel should be forbidden, and existing plutonium should be guarded under a strict international security regime.
An important issue to consider when dealing with the nuclear industry is that it is very much an industry in decline. This is the case not just in Canada but globally. It is primarily the high costs of nuclear power that have most damaged its marketing prospects. Most nuclear power plants have been built by monopoly utilities, and the costs were passed through to consumers, regardless of how high they were. Governments around the world are now, for the first time, opening electric markets to competition, and nuclear power must stand on its own.
According to a study released by the World Watch Institute in March of 1999, after growing more than 700 per cent in the 1970s, and 140 per cent in the 1980s, nuclear generating capacity has increased less than 5 per cent during the 1990s so far. Even in France there is a moratorium on nuclear plant construction, and other European countries are debating how quickly to shut down their nuclear plants. It is only in the protected markets of the Far East, for example, China and Japan, that any additional plants are being ordered. In North American, Wall Street analysts and the Washington international energy group project that as many as one-third of U.S. and Canadian reactors are vulnerable to shut down in the next five years. The U.S. Department of Energy projects that there will be a sharp decline in nuclear power generation in the next two decades.
The good news is that there are viable and sustainable energy alternatives to both nuclear power and fossil fuels.
Another important part of the nuclear industry survival strategy is to argue that nuclear power is the solution to climate change. However, according to the World Watch Institute, few governments are seriously considering nuclear power as an alternative to fossil fuels.
Nuclear power is indeed part of the climate change problem. Fossil fuels are linked to nuclear power generation, for example, in Ontario as with other regions dependent on nuclear reactors, when coal plants are used to meet peaks and demands when nuclear reactors are not working.
Energy efficiency and renewable energy are the solutions to climate change. A U.S. study showed that for every dollar that is invested in energy efficiency, we can displace seven times as much greenhouse gases as that same dollar invested in nuclear power.
There is growing investment worldwide in new energy technologies such as solar energy and wind power. For example, last year, alongside the global decline of nuclear capacity, wind capacity rose by 2,100 megawatts. Worldwide, solar power has grown an average of 16 per cent since 1990, and wind power by an average of 26 per cent.
A sustainable energy future is possible for Canada. Canada's unwise investment in nuclear power has skewed the energy market. However, there are many promising alternatives available that will strengthen our economy, protect our environment and improve our health.
In conclusion, I believe the issues I have outlined here deserve to be part of a national discussion on energy issues. I hope that one day all Canadians will be given the opportunity to be part of this debate.
Mr. Norman Rubin, Director, Nuclear Research, and Senior Policy Analyst, Energy Probe: Honourable senators, I have been working on this subject for almost 21 years. It will be a few weeks before I hit that anniversary.
As I make my presentation, I want you to keep certain thoughts in mind that I believe will make some of the conclusions more understandable.
First, nuclear energy is an inherently toxic technology. Most people know that, in order to make nuclear energy as we are doing it, one must create, literally, incredible quantities of poisons. Second, it is an inherently hazardous technology. That, by the way, may not be true of all theoretical reactor designs, but it is certainly true of all large reactor designs in use now. It is certainly true of the CANDU. Third, of all the ways to make the lights go on or to create energy, nuclear energy is the only process that inherently creates a short cut to weapons of mass destruction.
When you think of those three considerations in a factory, business or investment, one of the first thoughts that might come to mind if you ever consider placing investments of your own is: What an amazing way to try to make a buck. Talk about having your hands tied behind your back.
The second thought that may come to mind when you put yourself in the shoes of the poor nuclear industry facing those realities and the natural response that people with common sense or people risking their own money might have to such an array of problems, is that perhaps honesty is not the best policy. That leads to one of the fundamental problems with public acceptability of nuclear power in virtually all of its aspects: a fundamental lack of trust. I would maintain that this lack of trust is contributing to what outside of Ottawa, at least, is perceived as a lack of trust in government, because it is very hard to distinguish statements made by the nuclear industry in Canada from statements made by the federal government. That includes the regulator of the Atomic Energy Control Board whose trust is hard to find in the public domain.
This honesty problem is a serious one and relates to some of the challenges faced by this committee. Where will you find impartial sources? I noticed when the Canadian Nuclear Association was here, you asked them for suggestions and they lined up their usual witnesses. Most of them were either from Ottawa or were representatives of the international organizations to which Ottawa and Chalk River send representatives. Several senators kept asking for independent and different opinions. I would maintain that none was forthcoming.
That makes it a special pleasure for me as well as Ms Ostling to be here today. I would thank you for paying my fare to Ottawa which is something the Atomic Energy Control Board still will not do and, as a result, they do not get the kind of balanced presentations at their meetings in general that you will get.
In 1981, I warned Ontario Hydro's directors, in a series of three monthly letters on the days of their monthly meetings, of the financial risks to Ontario Hydro of continuing to build nuclear capacity. At the time, the Pickering B generating station was still being completed, the Bruce B generating station had four more reactors that were, roughly, half-built, and the Darlington nuclear station was becoming a hole in the ground.
Needless to say, they did not follow my advice. They did not even accept my offer, as someone with independent international expertise, to meet with them. The chairman wrote a letter to me saying that they had all the expertise they needed.He said he viewed my letter as a case of "using statistics as scare tactics." He did not agree that the forecast debt would materialize, and even if it did, their assets would be worth significantly more than their debt.
If honourable senators wish, I could produce that correspondence. It is a remarkable testament as to how we got to where we are today.
I have brought some slides to help show you where we are today. These slides will show why statements by the nuclear industry and the Canadian government claiming that nuclear power is competitive or economical should be greeted not with criticism, but derision.
These slides are from an Ontario finance ministry document. I have the whole document here, which is called the Ontario Financing Authority Bulletin, dated April 1 of this year. It is a recent document.
The first slide outlines the financial bottom line in the recent restructuring of what used to be called Ontario Hydro.
For those who are not familiar with the situation, there is no longer an organization entitled "Ontario Hydro." The wicked witch is dead. There are five successor entities, including two large businesses. The new owner of the generating capacity, including all of the nuclear reactors, is now OPGI, Ontario Power Generation Incorporated, and the new holder of the transmission capacity and several other assets is Ontario Hydro Services Company.
I direct your attention to a column entitled "stranded debt," in the top box. It places the total debt and liabilities of the former Ontario Hydro at $38.1 billion.
As a footnote, I do not believe that does represent the total debt and liabilities. It falls far short on the nuclear waste and decommissioning liabilities side. That figure includes something in the order of $2.5 billion in that category. Ontario Hydro says it will cost about $15 or $16 billion in today's money to do that job. However, they do not think it makes sense to recognize that on their books. The government agreed with them. Therefore, there is only a small portion represented in their books and in the $38.1 billion figure.
In calculating how much of this debt cannot be sustained by the new companies, what we call "stranded debt," they subtract the value of the new generation and services companies, which they estimate at $17.2 billion, leaving a stranded debt of almost $21 billion. I believe it is widely understood that that debt is stranded almost exclusively, less a few billion dollars here and there that we can discuss later, if you wish to do so. Almost all of it is due to one technology and one investment decision, which I warned them about in 1981, namely, to bet the farm on the CANDU reactor.
The Chairman: How can there be value if it is stranded? I do not understand the $17.2 billion as having value if you cannot use it.
Mr. Rubin: The $17.2 billion is government's estimate of how much the transmission lines, Niagara Falls, the coal-fired plants, hydro's head office building, and so on, are worth. They are not worth as much as the amount that was borrowed to create them, but they are not worthless. According to the Government of Ontario, the valuation of the new companies and all of the assets that they have inherited is $17.2 billion. You subtract that from the debt to find out how much of the debt is stranded.
If you bought a house and its value dropped enough, you would find that the house is worth less than the mortgage and you would have to do a similar calculation, perhaps on your way into bankruptcy. The bank would do a similar calculation in deciding whether it wanted to take over your house if you fail to pay the mortgage.
The Chairman: Yes, but this is not a house. In California, when they had stranded assets, there was no value to them. When they went into electrification and closed down nuclear plants, they paid these companies for their stranded assets in California to compensate them. There was no value because it had nothing to do with it. Are you saying there is another use for these assets?
Mr. Rubin: This may become clearer when I get to the second slide.
However, one point is clear: Few vendors or industries have created a $20-billion loss for one of their customers; and there are even fewer who would then have the cheek to appear before you and claim that their product is competitive. If I get down to the breakdown between the parts, perhaps you will see how this works.
Senator Taylor: You are using voodoo economics.
Mr. Rubin: No. This is Ontario government economics and the real world, because we are comparing how much was spent and how much the investment is worth. That is what we are comparing. That is how you arrive at the $20.9-billion figure. It is the difference between what was spent and what the auditors, outside experts and financiers have decided it is actually worth. Anything else theoretical.
I will highlight a couple of numbers that are the key to understanding this. The second row on the left reads "OPGI," Ontario Power Generation Inc. Its assets, in the first column, include all the electricity generating assets of the former Ontario Hydro. They are valued at $8.5 billion. That is the generation share of the total $17.2 on the previous slide. The generating assets of Ontario Hydro, including Niagara Falls and all the other hydro electric resources -- that is, the coal-fired plants; the Darlington Nuclear Generating Station, for which we paid $14.4 billion; Bruce A and Bruce B; Pickering A and Pickering B -- all summed, are taken by the government's financiers and the government financial experts as being worth $8.5 billion.
The rest of this page merely shows how money was swapped around, debt for equity swaps, and what will happen. Basically, this is the Ontario government's and the former Ontario Hydro's confirmation that the value of the nuclear investment has largely vanished. Most people to whom we speak estimate, and Energy Probe's own estimate is that the hydro electric resources of the former Ontario Hydro are, themselves, worth quite close to $8 billion. The fossil fuel plants are worth something -- perhaps more than $1 billion -- and the only way to come up with these numbers is by valuing the nuclear assets at zero to a first approximation. We can quibble about whether it is plus or minus a billion, or whatever.
I would also hasten to add that these numbers are after the historic clean up liabilities -- that is, the environmental liabilities for decommissioning and waste disposal -- have been stripped from the new companies. All the costs to clean up after everything that has happened until now does not show up in this balance sheet or in the previous one.
The case for competitiveness that you heard from Murray Stewart, the head of the Canadian Nuclear Association, was based on two claims. First, he claims that all of the nuclear plants now operating and all of the approximately 30 that are still on the books as being under construction, whether they will be finished or not, were built strictly for economic reasons. Second, he supports a theoretical study by NRCAN on the basis of what they called LUEC, the levelized unit energy cost.
Mr. Stewart has the first point wrong. Not one nuclear generating station in the world that was built for what I call "economic reasons." Many were built for empire building and bureaucratic advancement, and about a third were built out of force of habit by organizations that had become nuclear construction companies. I can speak best about Ontario Hydro, having watched them for the last 21 years. As far as I can see, economics only entered into it as a debating ploy. Let me say it another way that may be clearer: Not one nuclear generating station operating today was built on the basis of investment by willing investors planning to make a profit.
I am confident that none of us here today, and probably none of our children, will live long enough to see the day when willing investors build a nuclear generating station. They may pick up one for scrap or they may pick up one cheaply -- and, that has already happened and will continue to happen -- but to pay the full cost and risk losing $20 billion is not something that anyone would do with their own money.
The studies of levelized unit energy cost are easy to find and hard to put faith in. It is easy to prove theoretically that a future nuclear generating station might be virtually competitive, almost competitive, or whatever, with alternative generating capacity. Ontario Hydro did it all the way into bankruptcy. Major hearings were being held in 1990 and 1991 on Ontario Hydro's expansion plans, when the Darlington Nuclear Generating Station had cost overruns to the point where it could never repay its $14.4-billion mortgage. It does not matter how well Darlington runs, it simply cannot repay its mortgage. Its output is not valuable enough. That was clear in the demand-supply hearing, as we called it, in Ontario. During that hearing, Ontario Hydro updated its earlier rosy forecast about the theoretical cost of power from a theoretical new nuclear generating station. During that time, when Darlington's costs had gone through the roof and Darlington was about to start generating the most expensive power in Canada, Ontario Hydro decided, on the basis of a theoretical study of levelized unit energy cost, that the next theoretical nuclear generating station had become a little cheaper. That is the difference between theory and reality.
In reality, there are a million ways to lose your shirt on a nuclear investment, and very few ways to come out even. In theory, if everything turns out and the world stops turning, you can do well.
Mr. Stewart, head of the Canadian Nuclear Association, referred to the CANDU reactor as a source of security of supply. Obviously, he does not care as much about his coffee maker and his lights working in the morning as I do.
It is fairly obvious to us in Ontario that the CANDU reactor is not a source of security of supply.
The only good part about our energy mix is that Ontario Hydro went so nuts in building generating capacity that we now can afford to lose virtually all of our nuclear capacity and still have the lights go on. That is a good thing because every once in a while we do lose virtually all of the nuclear capacity.
The next slide shows why you people have not seen ads recently claiming that six of ten or five of ten or ten of ten of the world's top reactors are CANDUs. That is because it is not so, and it has not been so for years.
I have a document we recently received from Ontario Hydro through freedom of information, to which they are no longer exempt. We submitted an eleventh-hour request, and this is one of the documents that came back. It shows where Ontario Hydro's CANDU reactors fall on a reliability basis as compared to the world's reactors. Lifetime, they rank from 4th to 333rd. There is one in the top 10, not five, six, sevenor numbers you have seen in ads.
For the latest year they produced to us -- which was 1996 for some reason -- you can see that the numbers rank into the middle 300s. As you heard from the nuclear association, there are about 400 reactors. On average, many more of Ontario Hydro's reactors are in the bottom hundred than we seem to have in double digits.
The Chairman: I do not understand this at all, Mr. Rubin.
Mr. Rubin: This slide refers to all 400 reactors and ranks them with respect to how close they came to 100 per cent full output, running at full tilt for 24 hours a day, 365 days a year.
A generating station is a factory. It makes one valuable product and a bunch of nasty products. The valuable product is electricity. If it does not make electricity, the owners go broke paying the mortgage because they have nothing of value to show for their efforts. The trick to paying the mortgage is to produce a product that has value.
Senator Taylor: Does that mean Darlington NGS Unit 2 will have a loss for 333 years?
Mr. Rubin: No. It came 333 in the ranking, from 1 to roughly 400, first to last.
Senator Taylor: What is the difference between the two columns?
Mr. Rubin: The first column represents an average over a lifetime, and the second column represents a single year, 1996. This ranking represents how we did one year, and how have we done since the reactors started, compared to the rest of the world.
Senator Taylor: What does the number 79 mean in 1996 for Darlington?
Mr. Rubin: It means that reactor came in 79th among the world's 400 reactors.
Senator Taylor: It requires what per cent of its capacity?
Mr. Rubin: I have those numbers and I can give them to you. I have not prepared a slide out of them.
Senator Taylor: I just want to know what you are demonstrating on the current slide.
Mr. Rubin: What I have there is not a per centage, senator. What I have up there shows rankings.
Senator Taylor: Darlington NGS Unit 2 ranks 79th in its ability to produce 100 per cent of its output.
Mr. Rubin: That is correct, in that year.
Senator Taylor: What does "333" mean?
Mr. Rubin: That number relates to a lifetime ranking of all the world's reactors for their lifetime output, compared to 100 per cent output, from when they started until the end of 1996.
Senator Taylor: This reactor has been doing poorly. I see. However, it picked up in 1996 because the number is only 79.
Mr. Rubin: That is correct. The year 1996 was a good one for that reactor. Obviously it had a bunch of rotten years, or it would not have such a rotten lifetime ranking. Some have gone the other way.
Senator Taylor: Unit 8 is has done well over its lifetime, but it was a real dog in 1996; is that it?
Mr. Rubin: That is correct. In general, you will find that the 1996 rankings are worse -- higher numbers in this case -- than the lifetime rankings.
Ontario Hydro's reactors generally look better in their lifetime statistics than in current rankings, and that would be true also of 1997 and 1998. It is like saying that I expect my average time in the 100-yard dash to be well over half an hour for several years after I die, but my current speed will not be impressive at all.
The Chairman: Could it be that the maximum capacity is inefficient?
Mr. Rubin: As I use the words, it could not. "Efficiency" is often used poorly to describe output and its comparison to 100 per cent of full output. That is really not efficiency. It is what I would call "reliability." I would define "efficiency" the way engineers define it, as the ratio between the useful product -- the electricity -- that comes out and the heat produced in the reactor. On that score, when they are running, they all run at 30 per cent, plus or minus about 1 per cent.
The Chairman: The purpose of this is to illustrate to us that, in your view, the reactors in the province of Ontario are really of low quality.
Mr. Rubin: The purpose is to point out that one of the myriad of ways one can lose one's shirt investing in CANDU reactors is to not have the reactors run reliably. If they do not produce income, if they do not produce electricity, and if they rank over 300 in a field of 400, they will not produce enough output to pay their mortgages.
Darlington Unit 3, even when it is running fourth in the world, still cannot pay its mortgage. However, that is only because it cost so much.
Senator Taylor: Is Chernobyl reflected in these statistics?
Mr. Rubin: It may be. It has the bottom ranking sown up, but it is not alone in the bottom for 1996. Several of these reactors were shut down through 1996. That is why they are at the bottom. They are in competition for 400th place with other reactors that have been shut down.
At present, eight Ontario Hydro CANDU reactors generate no electricity. In fact, they are using a few hundred thousand dollars worth of electricity a year, according to this same document.
The Chairman: How many Ontario Hydro reactors are operating today?
Mr. Rubin: Eight are shut down. There are 20 in total, so 12 are more or less operating, but perhaps not today. In general, a few are always shut down at any one given time. Twelve are operating this year.
I brought you a picture that may or may not be worth a thousand words. This next slide depicts one of the better generating stations. It represents one page of what is called a "power history chart." Ontario Hydro produces these more or less every month for every generating station. The four broad lines represent four reactors at Pickering NGS-B. This chart is for the year 1996.
The big black bars you see, which start in early April and run either to mid-June or to mid-November, are explained in the upper right-hand corner as "Forced deratings & outages." In other words, those black bars represent periods of zero output that were a surprise to the owner of those stations.
The Chairman: It was not because it was summer and they were using less power.
Mr. Rubin: That is correct. It was certainly not because it was summer. Anyone who invests billions of dollars in a nuclear generating station and then decides to turn it down instead of turning down something that is fuel intensive, probably could not find enough money to make it to work that day.
This happened because of a "booboo." Frankly, it was because of the combination of inherently toxic materials and inherently hazardous technology, as well as human imperfection. Had I brought the chart for Pickering A, the four older reactors at the same site, we would have seen the black bars extending starting at the same moment. All eight reactors shut down at the same time. I want you to keep this picture in mind when the issue of security of supply is in your mind. How secure is our supply? Are we not glad that we were not relying on this station for our power?
Senator Taylor: Why were there all these booboos? Was it because it was during the summer?
Mr. Rubin: This was in April, senator. I do not know why that pipe broke in April. I do not believe the nuclear engineers know why it broke in April either. However, a pipe broke in April. It scared the bejesus out of the regulators and the owners. They shut down all eight reactors until they could figure out what had happened. The floor of the building was full of heavy water, radioactive to boot, and they did not know why. It turned out to be the result of a spectacularly incompetent bit of engineering done at Chalk River for Ontario Hydro. They sent it back once, but they were not smart enough to send it back the second time. That was one of the many problems that was discovered in the Atomic Energy Control Board's excellent follow up to that incident.
The Chairman: Does what we are looking at now represent four months?
Mr. Rubin: What you are looking at there for that reactor is the total outage which starts in early April and ends in early July.
Senator Taylor: Do you have this kind of data on all 20 reactors?
Mr. Rubin: I did not bring all of it with me. However, yes, I have it.
Senator Taylor: That is obviously the worst one.
Mr. Rubin: No, it is not. Eight have not run at all for the last year. I have brought you a strikingly bad few months of what is, in general, a well-performing reactor. I have not actually compared this with the previous slide, but I will do that now.
Pickering NGS Unit 7 is 19th in the world. It is represented on the third line on this chart. It is what you would call a good nuclear reactor. The question is: Do you want to rely on it to brew your morning coffee, to turn your lights on or, God forbid, to run your iron lung?
This is not what I call "security of supply" or "reliability." Anyone who uses those terms to describe this particular technology uses a different definition from the one I use. If we had co-generation facilities in every factory in Ontario, the probability of losing 100 per cent in one moment would be zero to a first approximation, and zero to a second approximation. When you are dealing with eight huge reactors which are all next to each other and which all share the same design, the same foibles, the same operator and the same engineers, the possibility of losing everything is not only credible but historic. One does not have to play what-if scenarios for me to tell you it might happen. There is no debate; it has happened. I have here the photographic evidence, and Pickering A looks a lot like Pickering B during this period. Nothing came out of that entire investment during those months.
Senator Cochrane: Do you have proof of the broken pipes?
Mr. Rubin: Yes. That was well covered in the media at the time.
Senator Cochrane: What about Unit 8?
Mr. Rubin: They were all shut down as a precaution because they all share a basic design. A combination of things was happening at the time. One was that an inherently hazardous technology had exhibited an unexpected failure of unknown cause. When that happens, it is only prudent, whether you are the owner or the regulator, to say, "Let's shut them down first and ask questions later. We cannot afford to have these things operating if we do not know why they are falling apart."
As you can see by the duration of the outages, the fact that it took months would indicate that what they found was fairly serious and was common to these reactors. If my memory serves me well, the accident itself happened on one of the reactors at Pickering that is not shown on this graph. As I recall, it happened at Unit 2, although I could be wrong about that.
It is not just the reactor that has an accident that loses output and productivity when an accident occurs; it is everything that walks or talks similarly. I might add also that, if these were marshmallow factories we were talking about, there would have been no need to shut down the one that had the accident, much less the ones next door. These were shut down because they are not full of marshmallows, they are full of some of the most toxic material that humans have ever created. The designs are inherently hazardous, meaning that the material wants to get out unless actively prevented from getting out. Put those together, and you have a challenge for the owners, the regulators and the neighbours.
I wanted to go into a number of high-level waste issues, and a number of specific corrections to things that you have been told by the Canadian Nuclear Association, but it may be best at this point to open the floor for discussion. Thank you for your time.
The Chairman: Thank you, Mr. Rubin. If you were to leave us with specific recommendations as to concerns we can pass on, what would your recommendations be?
Mr. Rubin: Obviously, high on the agenda of the Canadian Nuclear Association is getting access to public funds of some kind.
The Chairman: For what purpose?
Mr. Rubin: So that their industry can survive. If you understand and believe one-tenth of the official government numbers I presented to you, you can understand how important the ongoing federal subsidies to design CANDU reactors and market them are to that industry, and how important something like a clean development mechanism that might funnel more money at their industry might be.
I would urge you to give some sober second thought to any plan to throw more money at this particular technology. I believe that the debts that foreign governments are incurring to buy our reactors may be declared odious debts before the reactors are decades old.
I also believe that there is a significant risk that Canada will be held responsible for the money that we are lending to China for a technology that we know is unreliable. It has already bankrupted Ontario Hydro. How can we claim to be surprised when China comes back to us in 10 or 15 years and says, "Sorry, we are not making any money on the CANDU reactors to pay back your $1.5 billion of Canadian taxpayer-guaranteed loans"?
In the same way, how could we be surprised when Turkey comes back to us with a similar problem or, for that matter, Korea or Romania? How can we claim ignorance of the facts when they have been published in official documents?
If there are changes of governments in those countries, I believe the new governments will be able to say, "Wait, these were not legitimately incurred debts. That was a repressive regime that was investing for its own prestige in things that even the vendor knew were bad investments. Eat it."
That scenario could certainly use sober second thought.
I believe I heard Senator Wilson saying she will be on the agenda tomorrow, so she will deal with this more than I will, but I believe that virtually all of the differences between the high-level-waste panel's recommendations and what the government is actually doing are important, and that what we are getting is worse than what the panel recommended.
One recommendation that comes to mind offhand is that there be a thorough review of AECB's regulations and policies on radioactive waste disposal with full public input. The government did not respond to that. They did not say they were rejecting it, but they said that it is sort of happening anyway, which, in my experience, is the government's favourite way of rejecting a recommendation. The recommendation says, "Do more." The government says, "We are already doing more," as if the panel did not understand what it was already happening. It is classic.
I would direct you to those areas. One of the most important things about the high-level-waste situation in Canada is that there is still no money to deal with it. We all agree that the polluter must pay; and the panel was very clear on that. We all agree our kids should not have to pay for this, that innocent third parties should not have to pay for it. Where is the money? It has not been set aside. It does not exist and, frankly, I am not confident that the federal government, in its oversight role, will ensure that it is collected fast enough.
The secret cabinet document which I released a few months ago only reaffirms my fears. In that document, it is obvious that the biggest fear that the government, the cabinet, the bureaucrats -- whoever wrote that document -- had was this: If that waste is orphaned, if the owners of the waste do not put up enough money to dispose of it properly, the federal government might have to bear liability for it. In that entire document, they never mention who should bear responsibility for it if the owners do not put up enough money. They never say it is important that someone put up the money. We do not want it blowing in the wind. What are we talking about here? Someone has to step up and be responsible if the parties that created the mess will not or cannot take care of it. That is never discussed in the entire document. All that is discussed is the legal manoeuvring. They say they have to have the Justice Department look at this and ensure that the final guarantor is not the federal taxpayer. There is absolutely no mention of who it should be.
Those are, I believe, very important areas that could use some sober second thought.
Senator Cochrane: Are you concerned about the pollution that is produced by other sources of energy? If we still need a certain amount of energy, what would you say to the Ontario government? Fire up your coal engines some more? We all know the problems we have in Nova Scotia with the coal industry. What would you do there?
Mr. Rubin: Thank you for that question. Energy Probe, by the way, is a member of the Ontario Clean Air Alliance, which includes the Ontario Medical Association and almost everyone else, it seems, in Ontario. It was formed in large part in opposition of Ontario Hydro's firing up of their coal-fired stations as the alternative to their unreliable nuclear stations.
I am old enough to remember when most people in Ontario took seriously Ontario Hydro's claim that the only alternatives were coal and nuclear. I have lived long enough, I am pleased to say, to enter a time when I do not believe there are many people in Ontario with an IQ in three digits who still believe that. The problem that the monopoly formerly called Ontario Hydro faced was having too many competitors, and none of them wanted to go with coal or nuclear. There are too many attractive ways of generating electricity far more cheaply, reliably and cleanly, of which the winning contender in Ontario is co-generation, combined cycle co-generation in many cases, at extremely high efficiency, usually over 90 per cent, using the term the way I use it, burning natural gas.
The Canadian Nuclear Association told you that combined cycle with natural gas can cut CO2 emissions in half -- and they understated that significantly. The reduction is approximately 70 per cent with combined cycle gas generation compared to coal. The reduction with co-generation, in which the heat output is also used to displace other fuel burning, is roughly 80 per cent. That is a five-fold reduction in CO2 emissions to meet the same demand by getting rid of coal and coal electricity and replacing it with natural gas co-generation. I agree with them that it does not go all the way. It goes very far, but the renewables go all the way.
In many parts of the world competition is permitted between renewables and conventionals for the generation of electricity. The United States comes to mind, and Ontario will soon be in that category. In those areas, renewables, wind farms and small hydro, find an easier time attracting investors and customers than coal and nuclear. No investors are building new nuclear generating stations anywhere, and it is rare to find investors building a new coal-fired plant. It is not rare to find them building new renewables, even where they are not subsidized. The term "renewables" covers a lot of ground, and Ms Ostling touched on part of it.
Senator Cochrane: Do you see solar power and wind power as being realistic sources of energy?
Mr. Rubin: I could ask you if you think CANDU nuclear electricity is realistic. It is all relative. It is certainly realistic when there are new sources of electricity in a competitive framework, where customers can choose where they buy their power. That is the world we are entering into in Ontario. By some time next year, probably 13 or 14 months from now, I will have a choice of the sources from whom I buy my electricity. I am pretty sure I am not going to buy it from a coal-fired or nuclear generator. I do not know yet whether I will buy it from an entity that is using renewables. It depends on the price. I have my limits.
Senator Cochrane: Will they be able to sustain the amount of energy that you need?
Mr. Rubin: Electricity, as I am sure you know, is an interesting commodity. It is fed into a grid. The energy, in the form of electrons, flows where it will. We do not actually know the connection between specific sources and specific end users. We often used to ask Ontario Hydro to tell us which customers were served by which generating station. It is literally impossible to say.
I would not look forward to having my lights go on only when the wind is blowing, any more than I would like to have my lights go on only when Pickering is running. Those are both good ways to freeze in the dark. I showed you the charts. I could show you the charts for wind and, believe me, they make Pickering look bad. During those three months that all eight reactors of Pickering were out, there were lots of windy days, but there were no good Pickering days.
Senator Cochrane: That depends on where you are living.
Mr. Rubin: Yes, indeed. Wind energy is being fed into the grid. There are customers now in Alberta who are willingly paying a premium for wind electricity. There are four or five windmills in place as a result of this marketing. It is treated as what is called a "zero dispatch cost option." The dispathcer -- in Ontario, it is called the "independent market operator"-- always dispatches it when it is available.
Another supplier is pushed off the grid when wind is available and, when it is available, its fuel cost is free. When it is not available, something else must meet the demand.
I do not think anyone will be buying electricity which is 100 per cent wind-generated, but people will be buying electricity that is 100 per cent renewable. Time will tell how much of a premium we will be paying in Ontario for that. Some evidence is already in from Alberta and elsewhere that people are willing to pay for it. I doubt that even members of the Canadian Nuclear Association will be paying a premium for nuclear energy. Perhaps they will. May the best technology win.
Senator Cochrane: When do you expect this totally renewable energy package to be available to individual consumers in Ontario?
Mr. Rubin: Probably on the day that competition becomes available there will be some kind of package. I am not sure how much new capacity will be on line by then.
In Toronto, there is Toronto Wind Energy Co-op, or TWEC, which is attempting to site and finance a good-sized wind generator by selling shares as a co-op. So far they have had much more success finding share purchasers than finding a site.
Assuming they find a site and assuming that they can surmount the hurdles, people will "virtually" be relying on 100 per cent wind. That is, the windmill will generate more power than its shareholders use when the wind is blowing and significantly less when the wind is not blowing. Power will be bought and sold and the financial reality will swing back and forth at the end of each billing period.
The sale of electricity has always been a kind of virtual reality. In the financial reality, a consumer is buying from a specific generator, but, in the physical reality, the consumer is buying from a grid of interconnected wires with no idea where the specific energy is coming from.
Senator Cochrane: Will that grid extend to other parts of Canada besides Ontario?
Mr. Rubin: The provinces are interlinked somewhat, but the interconnections between provinces are nowhere near as great as the grid connections within the provinces. If we could put drops of dye into the electricity, we could follow it to wherever it goes. Obviously proximity is important. The people who live in Pickering get most of their power from the Pickering nuclear generating station when it is running. People distant from that station do not get much from there, but the interconnections do exist.
The contractual and financial realities in electricity have always been somewhat different from the physical ones.
The Chairman: Ms Ostling, should we be worried? You say we have 200 million tonnes of tailings and 1 million spent-fuel containers in Canada today in storage. Should we be worried about that, from your point of view?
Ms Ostling: We should definitely be concerned. We must adequately address the decommissioning of the nuclear waste problem from the point of view of the high-level nuclear waste, the spent fuel and the uranium tailings.
Other wastes come out of the whole nuclear cycle. For example, at the end of the lifetime of a nuclear power plant, the whole plant must, somehow, be decommissioned.
We have not found clear solutions to any of these problems yet. We should be concerned about this. We need to analyze the solutions.
The Chairman: It does not seem appropriate that, while we have that situation, we are allowing the importation of plutonium for storage purposes.
Ms Ostling: Yes. We have not addressed the nuclear waste problem in Canada, so why are we importing weapons plutonium? Moreover, why are we doing that when we know it will not eliminate the plutonium? Why does Canada want to try to gobble up the Cold War leftovers of a former superpower? It is not a solution to the problem. Everyone would agree that we definitely want to deal with the issue of weapons plutonium.
Senator Taylor: Is it not part of our START I Treaty to bring down the nuclear arms of Russia and the U.S. which, of course, contain plutonium? I thought all nations with atomic reactors had agreed to use the decommissioned plutonium. This is the only way to do it, otherwise, it would be stored. Plutonium can be burned in reactors, which would lead to lower input of U235, to the chagrin of some of the uranium miners.
The START II Treaty is coming up. This weapons plutonium has to be put some place. It can be stored in the ground or, even better, it can be burned in nuclear reactors and converted to a waste which is much less potent than the waste of plutonium itself. In other words, we are burning up plutonium. I thought we agreed to take that plutonium in and so cooperate with nuclear disarmament.
Ms Ostling: I do not believe that is part of the START I Treaty process.
Mr. Rubin: Senator, you may be thinking of an agreement between a number of countries, including Russia and the United States, concerning high-enriched uranium, or HEU, which also was nuclear weapons material. Russia found itself with a large stockpile of HEU. The agreement was that Russia would gradually blend it down with either natural uranium or depleted uranium; that is U238, the less active, less fissionable part of uranium. They would blend it down so it would be useful for conventional nuclear power reactors.
That agreement is in force. I might add that, after high-enriched uranium is blended down to reactor-grade uranium, it is extremely difficult to undo that dilution. It involves isotopic separation of uranium, which is a tricky and very expensive technology. Therefore, that material is no longer considered a proliferation risk.
The plutonium discussed here is very different. The plutonium would also be blended down with uranium or depleted uranium, but it is chemically different. It is a different element. It needs no more than high school chemistry to separate it. This material is therefore strategically useful. The U.S. National Academy of Sciences said that the MOX fuel -- the plutonium-based fuel that includes a certain per centage of nuclear weapons plutonium and the rest uranium -- must be safeguarded according to the stored nuclear weapons standard.
Senator Taylor: My understanding is that, by using the plutonium in our nuclear plants, it will be gone. Admittedly, as you mentioned, it could be hijacked between the weapons and the plant and then used to blow up the a nation, or something like that, although I think we may be underrating the bomb-making capacity that already exists in the world. I believe many more people can make them than are making them. It seems to me we are doing the right thing, taking the plutonium and burning it in our plants to destroy it. The alternative is to store it, and it could be used to make bombs.
Ms Ostling: It is a misconception we have seen often in the media, that is, that the weapons plutonium will be eliminated by running this MOX fuel through a CANDU reactor. What really happens is that it will be mixed with the high-level waste, and it will become more difficult to access, for example, for terrorists or people who wish to make bombs, because it will be in this form of spent fuel.
It seems on the surface that it is a good thing to do, however, when you look more deeply at the issue you see it involves all kinds of problems. For example, it will send a signal to other CANDU-owner countries that it is fine to use plutonium in reactors. As we know, plutonium is an important element for the building of nuclear weapons.
Senator Taylor: Once it is used you cannot make a bomb out of it.
Ms Ostling: You can in fact. That is also another important misconception. You can use the plutonium that is contained in spent fuel to make bombs. I have some documentation on that.
Mr. Rubin: We are talking about the relative ease of misuse. To solve what I call the "middle-term problem" here, the goal that disarmament people and the National Academy of Science and others have come up with, there is the spent fuel standard. Spent fuel containing plutonium is much more difficult to misuse because, for example, you will die if you handle it. It is much more difficult to extract plutonium from it to make nuclear weapons than to take the pits from warheads and turn them into warheads. That is much too easy.
Senator Taylor: What is your solution?
Mr. Rubin: The alternative solution that Ms Ostling and I both prefer is the one she mentioned, which is also the alternative solution for the U.S. Department of Energy and the National Academy of Science in the States, and that is skipping the reactor and just taking the wastes that were basically left behind when the plutonium was separated out and mixing them back in together. That turns out -- I know this is counter intuitive -- to be cheaper even when you count the value of the plutonium as fuel.
Senator Taylor: You are defying logic. You have all this plutonium around the world that they wish to get rid of and you now have a cheap method of doing that.
Mr. Rubin: That is the error. You now have an expensive method that AECL is proposing instead of the cheap one.
Senator Taylor: All these nations of the world are using the most expensive method of getting rid of plutonium but really all they need to do is write you a letter and you would be able to tell them how to do it cheaper?
Mr. Rubin: No one is getting rid of nuclear weapons plutonium using MOX fuel, senator. Some countries are involved in civilian MOX reprocessing because they have contractual relationships with the reprocessors. They are not coming out ahead either, although they seem to be getting rid of a nuclear waste problem, at least for a while.
That is a very complicated situation. If you consider what has happened in Germany, for example, when the current German government wanted to phase out its nuclear power, it was told by the reprocessors of plutonium that they would sue. The reprocessors wish to reprocess. Their job is extracting plutonium. In Europe they have business doing it, they have business from Japan. None of that seems to make economic sense. For CANDUs it absolutely never has made economic sense, and it looks like it never will.
n looking at the cost comparisons -- Ms Ostling referred to them before -- for the two ways of polluting or contaminating the plutonium. Neither way gets rid of significant quantities of plutonium. They both make it so hot that you cannot get near it. One way is to mix in the hot stuff, the other way is to make it into fuel and run it through the reactor. Reactors, as we know, create a variety of hot material. Comparing those two ways, the studies which have been done so far indicate that, even when you net out the fuel value of the mixed oxide fuel route, it still costs more.
This is not an ordinary $20 bill that has been left on a sidewalk. This is a $20 bill that is glued down so well that it takes you 50 bucks worth of effort to peel it off. This is not a resource it would be a waste not to use. This is an impractical way to fuel reactors that we now know should not have been built in the first place. However, even if we run those reactors, it is more efficient, easier, quicker, cheaper to contaminate the plutonium from the warheads. You will have 10 or 20 or 30 per cent more plutonium in the mix, but that is not a key variable. You can use uranium fuel in the reactors until you shut them down.
There is a difference in emphasis between Ms Ostling and me. We agree on what we should do and should not do; however, I have no trouble saying that, if this MOX plan were the way to get rid of the clear and present danger of misuse of the plutonium pits that are sitting in the former Soviet Union, for example, I believe that I personally, and Energy Probe, would find a way to overcome our objections in every other aspect.
Yes, the transportation hazard is real. The democratic problem of having it going through unwilling neighbourhoods is real. There are a number of serious problems. The transportation hazard across the ocean is of a staggering proportion. I worry about it because it must be treated like transporting nuclear weapons. However, if the only way to get rid of these easily misused materials were to do that, I would be trying to convince Energy Probe's supporters to swallow their objections and live with this for the sake of the planet.
The good news, from the point of view of my decision-making, is that this MOX plan seems to be a third rate, ineffective, slow and, of course, hugely oversold way of doing that job. The alternative seems much more practical, as well as doing the job better without opening this other scary Pandora's box of showing people how easy it is to use plutonium in CANDU reactors. That has never been demonstrated. AECL is about to prove it is feasible with a little test -- the size of two pen-light batteries. It is no big deal. The AECB also told you it is no big deal.
From the point of view of a precedent, from the point of view of showing the Koreans, the Pakistanis, the Romanians, the Taiwanese, et cetera, that this not only can be done but Canada is willing to do it, that is a big deal.
The Chairman: We are out of time. I thank you for sharing your views with us. It is very important to hear the other side, which we had not heard until now, and you have certainly given us food for thought.
The committee adjourned.