Proceedings of the Standing Senate Committee on
Energy, the Environment and Natural Resources
Issue 17 - Evidence - October 21, 2014
OTTAWA, Tuesday, October 21, 2014
The Standing Senate Committee on Energy, the Environment and Natural Resources, to which was referred Bill C-501, An Act respecting a National Hunting, Trapping and Fishing Heritage Day, met this day at 5:23 p.m. to give consideration to the bill; and to study non-renewable and renewable energy development including energy storage, distribution, transmission, consumption and other emerging technologies in Canada's three northern territories.
Senator Richard Neufeld (Chair) in the chair.
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The Chair: Welcome to this meeting of the Standing Senate Committee on Energy, the Environment and Natural Resources. My name is Richard Neufeld. I represent the province of British Columbia in the Senate, and I am the chair of the Energy Committee.
I would also like to welcome honourable senators, any members of the public with us in the room, and viewers all across the country who are watching on television. As a reminder to those watching, these committee hearings are open to the public and also available via webcast at www.sen.parl.gc.ca. You may also find more information on the schedule of witnesses on the website under ''Senate Committees.''
I would now like to introduce the deputy chair, Senator Paul Massicotte, from Quebec. I would ask senators around the table to introduce themselves.
Senator Wallace: John Wallace from New Brunswick.
Senator Black: Douglas Black from Alberta.
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Senator Boisvenu: Pierre-Hugues Boisvenu from Quebec.
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Senator Patterson: Dennis Patterson from Nunavut.
Senator Mitchell: Grant Mitchell from Alberta.
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Senator Ringuette: Pierrette Ringuette from New Brunswick.
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Senator Sibbeston: Nick Sibbeston from the Northwest Territories.
The Chair: I'd also like to introduce our staff, beginning with the clerk, on my left, Lynn Gordon, and our two Library of Parliament analysts, Sam Banks and Marc LeBlanc.
Today we begin our study on Bill C-501, which proposes the introduction of a national hunting, trapping and fishing heritage day. This bill was introduced in the Senate on April 7, 2014, and referred to our committee on June 19. It is my pleasure to welcome the sponsor of the bill, Mr. Rick Norlock, Member of Parliament for Northumberland—Quinte West, to our meeting today.
Welcome. I understand you have a few words to say after which we'll go to questions and answers. The floor is yours, sir.
Rick Norlock, M.P. for Northumberland—Quinte West, sponsor of the bill, as an individual: Honourable senators, Bill C-501, An Act respecting a National Hunting, Trapping and Fishing Heritage Day, would designate the third Saturday of September every year as a heritage day. The bill is similar in nature to that of several provinces and close to that of the United States of America, the latter's heritage day being September 26 as decreed by President Obama in 2009.
I think we all know that the first inhabitants of North America, our Aboriginal brothers and sisters, relied on these activities for their very existence, whether for food, lodging or barter. As time went by, the first Europeans were attracted to our land because of the abundance of fish and fur-bearing animals. The first settlers used this abundance to assist in their survival as well as for trade with our Aboriginal groups right up until modern times. Today, our Aboriginal brothers and sisters still rely on hunting, trapping and fishing for food and income.
On a personal note, as I stated in the House of Commons, there's a familial connection to this proposed legislation. Hunting, trapping and fishing were part of my family's life and are part of my family's life. I just returned with my two sons from elk hunting on horseback in northern British Columbia, near Fort Nelson. There were 13 horses and 5 riders. I recommend to every Canadian that the way to see the foothills of the Rockies and the Rockies is on horseback. It gives a totally different perspective to our wonderful, beautiful country. Quite frankly, hunting and fishing is in the Norlock DNA. I think that many Canadian families would say the same, and I suspect some of them are seated around this table.
I'd like to refer the good senators to some interesting facts. This comes from the 2010 Survey of Recreational Fishing in Canada as prepared by Fisheries and Oceans Canada. It reads in one part:
Anglers contributed a total of $8.3 billion to various local economies in Canadian provinces and territories in 2010. Of this amount, $5.8 billion was in the form of investments and major purchases of durable goods related to recreational fishing activities. The remaining $2.5 billion covered direct recreational fishing expenditures . . .
To bring that into perspective, commercial fishing in Canada on all three oceans and some of our Great Lakes and inland waterways accounts for about $2 billion. Recreational fishing contributes four times that. With hunting and trapping, you could add probably another $2 billion easily to those statistics. For the good folks out there who putt or play hockey, and I refer to golfers and hockey players, more Canadian adults fish than participate in those two occupations combined.
What does it mean for employment? Recreational fishing alone accounts for about 100,000 jobs nationally. I could go through a lot of other statistics, but I'll wait until some questions are asked if senators prefer.
Every provincial and national hunting and fishing organization has endorsed and/or supports this bill. It's estimated that about 400,000 people visited the northern communities of our country to participate in hunting or fishing. Together, as I mentioned before, these activities account for about $2 billion. Hunters and anglers are the nation's greatest conservationists. Like Ducks Unlimited, the Ontario Federation of Anglers and Hunters, the FØdØration quØbØcoise des chasseurs et pŒcheurs, the Quinte Elk Restoration Committee and countless others are some of the greatest conservationists. I would say you would be hard-pressed to give me a conservation organization that isn't composed of hunters, anglers or trappers.
Ladies and gentlemen, I've given you a taste for it. Just to give you another little taste for how important this bill is, and some of the changes that are occurring, many of you would assume that hunting and fishing are dying occupations. As a percentage of population, the greatest growth in hunting and fishing licences are in the Greater Toronto region.
As mentioned by my honourable colleague Member of Parliament Christine Moore, NDP member for one of the Quebec ridings, in her support of the bill — and I can tell you that I can attest to it — most of the hunting and fishing outdoor stores, like Sail, Le Baron or Cabela's and others have a section of hunting and fishing clothing and equipment lines specifically designed for women. She mentioned in her speech a 95-year-old — I would say ''95-year-young'' — person in Yarmouth, Nova Scotia, having bagged her moose last year. This occupation is totally Canadian. It is in this country's DNA.
As a matter of fact, as I've mentioned, one of the founding reasons our country exists is because of the beaver and the desire for beaver hats in Europe. That accounted for why we are a country. Without going through a whole bunch of other facts, I anxiously await any questions you may have of me, Mr. Chair.
The Chair: Thank you very much, Mr. Norlock. Now that you've mentioned Fort Nelson, I can't help but say something about it. I actually lived in Fort Nelson for 19 years, worked out of there for 30 years, represented that area from 1991 to 2009 in the legislature in British Columbia, and now in the Senate.
For those of you from the East Coast, we created a protected area called the Muskwa-Kechika. It's the size of Nova Scotia. It was less than a third of my constituency in land mass. I've always said there's lots of room for the bears, and I was wondering if you got your elk.
Mr. Norlock: No. We got a moose. As I told my sons the day after we got the moose, we had the thrill of the hunt, the thrill of the kill, and some of those bears you're referring to stared us down when we got close to where the entrails were. Let me just say, you haven't lived until you look in the eyes of a grizzly bear that says, ''You need to move now because this is mine.''
Senator Massicotte: I congratulate you for your progress in getting this bill this attention. I've been working at this for five years. You need a medal.
Mr. Norlock: I got it here once before. It got to the Senate, but we had something called an election that killed it all.
Senator Massicotte: Let me ask you this, just to make sure Canadians understand: What's the importance? Certainly hunting and fishing are historical, very popular, but so what? Why have a day dedicated to it? You made reference to a hockey day. We have a baseball day. Tell me why it's important.
Mr. Norlock: Thank you very much for the question. It is a very good question. We have heritage days, as the Senate knows, coming up, quite a few of them as a matter of fact, to honour specific individuals or recognize something important, whether it be a charity or some occupation we do. I tend to want to be a humble person, but I say this quite frankly: You tell me what other pastime, occupation or endeavour that we could possibly be in? It is why our country was founded. It is the way our Aboriginal communities lived. It represents all the good, or a lot of the good, that is Canada. We are Canadians. We're looked upon as a small number of inhabitants and the huge, second-largest land mass in the world containing almost every type of species of animal, and we've managed those species very well. There are more white-tailed deer in North America and Canada than when the White man first came. Why? Because the animal is able to adapt to our way of living.
Where I hunt up in the Ottawa Valley here, you put out some corn or some soybeans and the deer won't touch it. Yet down where I live, they sure love it and the farmers aren't happy about it. So they adapt. We are great conservationists. We know our country was founded partly because of the beaver, because of the abundance of fish in the East Coast. You'll remember, as I mentioned in the House of Commons in my speech, Cabot referred to when he went back to Europe saying you could catch cod. You lower a bucket and pull it up and there's cod in it. I won't go into some of the things we've done to that fishery, but you go to the North of this country and see how important hunting, trapping and fishing are to our Aboriginal brothers and sisters in the North and some parts of the South. Why? It's the foundation of our country.
I would suggest to you that most of the senators around this table, or at least a lot of them, probably have hunted or fished, and it's important to our economy. I just mentioned how important it is to our gross domestic product. I think I've somewhat answered your question.
Senator Massicotte: I agree with all that, and that's factual. But why is it so important to name a day after that issue? How will that help Canadians? Why is it relevant to Canadians?
Mr. Norlock: Because it recognizes. It's a day in recognition of how important those occupations are not only to Canadians today but in the past and, I would suggest to you, in the future.
Also, when President Obama in the United States declared — and I have the declaration here and we can make a copy if you so wish — the declaration says how important it is to conservation. He mentioned Roosevelt in the early days and the beginnings of parks, et cetera. These were all created by hunters, fishers and trappers so the animals we hunt, fish and trap will continue to be in abundance there.
This day recognizes that it is important to the very nature of our country, to the very reason we were founded, and it goes a long way, as far as I'm concerned, in saying to other people in other countries how important it is, and you should come here and enjoy it. I see this day as a day, as in Ontario, when families can go fishing together.
Senator, if you know anyone who, as I always say, is very stressed out, put a fishing rod in that person's hand, sit them at the end of a dock or in a boat and they won't have to take medication to relax. That will do it right off the bat. I know lots of people who do it. That's why it's important. It is part of the DNA of this country called Canada, hunting, trapping and fishing. I think there should be at least one day we can celebrate and recognize that as a country. That's why I brought the bill in. And for personal reasons, it's in the DNA of my family.
Senator Mitchell: Mr. Norlock, congratulations. It is not easy to get one of these bills through. It looks like it's getting close. Let's hope there's not a fall election to inhibit it getting to this last stage.
It is interesting what you say about the impact, and we've had testimony in the past about the significance of the tourism industry, outdoor tourism and that kind of thing.
I just want to ask in a general sense, given the habitat is so important and you've mentioned groups are concerned about that: The Ministry of Natural Resources, I think, just produced a report saying that climate change is an issue for our forests, and pests that we wouldn't normally see spreading the way they are are spreading. Does this kind of recognition that you're bringing with this bill heighten the need for people to focus on that issue and ensure we're not endangering the habitat for this important industry?
Mr. Norlock: I would say yes. If you permit me just one small example of that, right now in the Great Lakes, especially Lake Ontario, there is a good salmon fishery. A lot of people rely on that salmon fishery, whether for recreational purposes, and there are outfitters that will take you out for the day and go fishing, and that's their livelihood.
If you come down to my area, the Bay of Quinte, for instance, there is some of the best walleye fishing in the world. It's a world-class fishery, especially ice fishing.
But the salmon you're fishing there isn't indigenous. The salmon you're fishing there is Pacific salmon. There's a group that was actually started by an Australian wine company but now has the Ontario Federation of Anglers and Hunters, the LCBO, a whole group of us, and we are reintroducing the Atlantic salmon fishery.
In my riding, in the town of Cobourg there's a creek called Cobourg Creek. One of the letters of an early settler to his family in Europe said that at certain times of the year you could walk across the creek on the backs of the salmon. Those salmon are all gone, but we're reintroducing them. And who is doing that? Once again, the Ontario Federation of Anglers and Hunters. It is the anglers and hunters of this country who are out there trying to get rid of the purple loosestrife, working with the Ministry of Natural Resources of Ontario, and we're being somewhat successful because of the introduction of a beetle.
Of course, these foreign species are taking over in some parts of our country. The front line is usually manned — or ''personed,'' I guess is the appropriate word — by anglers and hunters. As I said, I challenge you to tell me a conservation group in this country that isn't composed of hunters and fishers, the major groups, such as Ducks Unlimited. I could go on and on. These are all groups composed of hunters who want to make sure that the species they hunt are healthy, kept alive and are here in abundance because it's in their best interests to do so.
Senator Sibbeston: This bill will certainly be well received in the Northwest Territories. While life and the economy in the Northwest Territories have changed over the past few decades, there are still, in almost every person living in the North, particularly the First Nations and the Metis people, genes that come from their parents and grandparents who hunted, trapped and fished as a way of living. Of course, there are many non-Native people that come to the North who have been trappers. So it's very significant for the people of the North and it will be welcomed.
In the N.W.T., hunting, trapping and fishing are still an important part of people's lives. Last year, for example, we saw the price of furs like marten, lynx and beaver at its highest price. A marten pelt was in the range of $150, which is really good. Those who are trapping are able to get a good price for their furs and make somewhat of a good income from that.
If this bill passes, this will be significant nationally. Have any provinces or jurisdictions in our country also passed similar legislation recognizing hunting and trapping as a way of life or just recognizing that practice?
Mr. Norlock: Yes. If I dug through here I could bring you one from Alberta, and the minister responsible is in here. There are I believe five or six provinces that have what in Alberta is called a hunting heritage day or a day recognizing hunting as part of that. The other provinces as well as Ontario have a similar day.
But you mentioned the North. I have just a few little anecdotes with regard to that. I mentioned the 400,000 people going to the northern parts of our country in order to partake in hunting and fishing. I know a lot of the facts I've mentioned you probably knew already. I always like to speak to the folks at home, the people who are asking the same questions as Senator Massicotte: ''Why is it so important?'' I think I've mentioned how important it is to the GDP.
One of the occupations a former member of Parliament for the Yukon had was as a guide in an outfitters camp. Many of his customers came from Europe, or the outfitter he worked for came from Europe. Some of these folks demanded particular-sized prized animals. A 60-inch moose was almost guaranteed. I know some folks who are guaranteed that in Alaska, and if you don't get it you come back free next year. These people paid an outfitter $35,000 to shoot a moose. What does that mean to Yukon, to the Northwest Territories or other places?
Not only does this create jobs and employment, but also a lot of that money allows the territory or the province to heighten their conservation programs. This money does more than just create employment; it actually does the very things we want it to do. If we look at British Columbia, I've heard numbers as high as over $100,000 for certain sheep. The Government of British Columbia uses that money to ensure that those species are kept. This is great for GDP. It brings people from other countries. I have in here some other statistics of the thousands of people per year who come to our country.
Here's what's happening. Because we've been able to conserve and we have an abundance of this wildlife, instead of to hunt, a lot of folks come here with their cameras and they hunt with their cameras. I see ecotourism as a huge benefit to this country, and that ecotourism is possible because of people who hunt and fish.
When you mentioned trapping, senator, we have an outdoor all-party caucus, the largest caucus on the Hill. Now the industries involved with hunting and fishing are part of that caucus. I sat with some trappers last year from various parts of Canada. They were a cooperative group of people. In other words, they didn't belong to Hudson's Bay. They created a cooperative. They said over the past four or five years the sales of their furs have gone up 400 per cent.
Another little anecdote: I was speaking to someone from the Fur Council, and I believe Mr. Fast, our trade minister, was part of that. I think the statistic is that in dollar value from the province of Ontario — this was before the free trade agreement signed with South Korea — it was farmed mink that was the biggest dollar value in trade with South Korea or close to one of the biggest items, just from Ontario.
The growth in fur to China is exponential. They prefer the fur coats manufactured in Montreal over the ones manufactured in China. As you know, sometimes we dress the furs in Canada and they get sent over there. They make the fur coats and send them back here, as they do with dresses and other things. I know that from my wife telling me about those things, going to Hong Kong and back. But they prefer the Montreal-dressed and -made fur coats. This is huge to our economy. As I said, this is huge to our First Nations and Aboriginal brothers and sisters, many of whom rely on trapping, let alone hunting and fishing.
Senator Sibbeston: I have a further comment regarding moose and caribou being important to people's diets and food supply in the North. I was fortunate a number of weeks ago to go hunting and we did manage to shoot one moose. Just last week, again I was in a situation where we were out in the bush and we were able to shoot two caribou. Our family is benefiting and uses this food in a good way. I know that when fall comes, because it's in their genes, people will quit working, take time off and simply go out in the bush for weeks at a time, and there's nothing that anybody in the world can do. It's like trying to stop the geese from flying south or coming north. It's just so ingrained in their genes that it happens.
I know that most of the families in the North would have shot at least one moose or some caribou for their use in areas where there are caribou and the season is open to kill them. It's pretty significant.
Do you think it adds a great deal to have a jurisdiction, a province or a territory, also make a similar hunters' or trappers' day? Do you think when this bill passes this is enough? I'm wondering whether the N.W.T., Yukon or Nunavut would try to pass similar bills.
Mr. Norlock: I think so. As I said, I have a letter here from — I believe he was the minister in Alberta — on the first iteration of my bill. It was a different numbered bill. It is Ted Morton, who was the Minister of Sustainable Resource Development in Alberta in November of 2009. I forget the specific date that's in here, but time doesn't permit me to go through it. Alberta does and I know Ontario does.
As I say, I'm almost positive, in my research, that we have about six provinces that have hunting and/or fishing heritage days, and some of those provinces do something special. For instance, in Ontario, I think they waive the need for a licence for one day if a family goes out. I would highly recommend we do that. As I say, the U.S. has it.
There's always a reason why I try to get close to the Americans. In the past, and I will when I no longer have this job, we used an outfitter to do some fly-in hunting. We go to northwestern Ontario to go moose hunting and walleye fishing, and with the economic downturn, there is a big downturn in the number of Americans coming.
Just as another anecdote, when my youngest son was married in northwestern Ontario, because of the lack of accommodation there, we went to a camp where my daughter-in-law used to work when she was going to university and high school. We spent five days there because they provided us with boats and motors, and a group of us stayed and made a holiday out of the wedding.
When we were going to pay for our week's accommodation, my wife suggested I buy one of the denim shirts there because it had McEwan's fishing camp on it. She said, ''Well, my husband will help promote your camp.'' He said they had been in the business for 25 years and we were the first Canadians that stayed there; it was all Americans. It's huge to our economy.
So, yes, the Northwest Territories, or any of the territories if they wished, would be wise to emulate this bill, because it just shows the importance to the community of those past times.
The Chair: I know B.C. has a hunting, trapping and fishing day.
Senator Ringuette: I'm wondering if there's a particular reason why you chose the third Saturday in September.
Mr. Norlock: Absolutely, because it matches the one in the U.S. I was hoping that I would encourage those people in the business to try and utilize that day to attract Americans, because we've lost a lot of American hunters and fishers for various reasons. I could go into them, but I think we all know what some of those reasons are, everything from the gun registry on down, because they have a different view of firearms.
I was hoping we could use this day commercially. I want to be honest with you as to why I chose the day: It matches as close as possible. I want it to be a Saturday, because that's a day that families could go out. I'm hoping that more and more people lock onto that day as a day and say, ''Let's just drop everything and go fishing.'' We have lots of partridge in the area; I guess the proper name is grouse. ''Let's go grouse hunting.''
If you're an outfitter you say, ''We'll give you one day free if you come out in September.'' It is something to recognize the day. It's a tantalizing thing; let's see what you can do with this day.
Senator Sibbeston: That is the height of the rutting of the males, moose and caribou. That's when everything in the bush just goes wild. The bulls are chasing the cows. It's a significant time.
Mr. Norlock: That's all part and parcel of it. I've thought long and hard about this bill and what would be the appropriate time. Being a hunter and fisherman, that's a good time.
The Chair: Mr. Norlock, we appreciate the information you've brought to us. It's always good to hear these things and to remind us how important it is. Thank you for your time and effort.
Mr. Norlock: Thank you, senators.
The Chair: On March 4, 2014, the Senate authorized our committee to undertake a study on non-renewable and renewable energy development including energy storage, distribution, transmission, consumption and other emerging technologies in Canada's three northern territories.
The committee has held seven meetings with witnesses on this subject in Ottawa, and last May we traveled to all three of Canada's northern territories, holding private meetings and visiting sites. Today marks our eighth meeting on this study, and I'm pleased to welcome, from Dunedin Energy Systems, Mr. Peter Lang, President.
Welcome, Mr. Lang. You have some opening remarks.
Peter Lang, President, Dunedin Energy Systems Ltd.: Good evening, senators and ladies and gentlemen. Thank you for inviting me to speak with you this evening.
By way of introduction, my background comprises 40 years in commercial and military aviation and six years with Dunedin Energy Systems. Early in my career, I was stationed in Resolute Bay and Iqaluit, and I got to witness first-hand, as I visited every community in Nunavut, I believe, the incredible logistical and financial effort in supplying northern communities. As a military pilot flying sovereignty missions in the Arctic, I was surprised at the enormous scope and task of securing our sovereignty. What became clear to me was that both of these tasks require a secure, sustainable supply of energy.
First of all, I'd like to acknowledge the in-depth understanding you have already of the energy situation in the North. I hope we can agree that it is probably the master resource in that it makes the use of all other resources possible. It is fundamentally an enabling resource. As slide 2 of the book of slides indicates, it has been a source of enduring concern for northerners. I would like to add a couple of remarks regarding the existing situation in power generation in the North right now.
Five days ago, in his opening address to the legislative assembly of the Northwest Territories, Premier Bob McLeod announced that the Northwest Territories government would be spending $20 million to cover the additional electrical generating costs brought about by low water levels at the Snare River hydroelectric facility. This type of generation is generally perceived as reliable and sustainable, yet the low water levels reduce the amount of power. The complete text of what he said is on slides 3 and 4 for your reference.
He went on to inform the legislature that the upcoming energy charrette should focus not only on short-term fixes, which they need now, but also on a long-term sustainable energy plan that does not rely on large transmission projects. He said, ''We need to find ways to meet our energy needs closer to home.''
Acknowledging the critical importance of energy to the economy and people's well-being, he said, ''. . . we need to make fundamental changes to how we approach energy specifically and how we think, more generally, as a government.''
Driving the urgency of this fundamental change is the declining state of the cost and security of supply of Arctic diesel, which as you know is a specialty product. Don Dean of PROLOG Canada is co-author of The Northern Transportation Systems Assessment, on slide 5, the comprehensive study of all the logistical requirements of the North until the year 2030, I believe, over 50 per cent of which, by the way, is fuel. He recently reported that compounding this problem of diesel fuel in the North is that Imperial Oil closed their refinery in Nova Scotia, which was a manufacturer of Arctic diesel; that the imported diesel from other countries sometimes fails to meet specifications; that the paraffins precipitate out; and that it clogs up fuel injectors, causing expensive, unplanned outages of diesel generation. Suncor has terminated its plans to build its Voyageur II, a $12-billion upgrader to provide ultra-low sulphur diesel. And Imperial Oil will not sell diesel to Western customers directly. It must go through a third party right from the refinery gate in Edmonton, and the third party has to look after all of the costs and logistical effort of getting it to the customers. Finally, Transport Canada now requires double-hulled tankers and barges for the shipment of diesel fuel to the North; and much of the existing shipping infrastructure is single-hulled. All these factors combine to reduce the affordability of diesel fuel and the security of supply.
I'm here to talk to you today about a possible solution or what I think can be a significant part of the solution: Micro nuclear power plants can provide a substantial part of the energy and heat. I want to emphasize ''heat'' because at least half or more of the diesel fuel burned in the North is for heating. In many cases, they have a 12-month heating requirement. There are a number of small reactor designs out there, and I will focus on one where Dunedin Energy is leading the development of the SMART nuclear battery — you can see that on slide 6 — simply because I know the most about that one and I think it's the most appropriate one for this application.
Usually it boils down to four questions: What is it and what can it do? Is it safe? How much will it cost? Will it meet with social acceptance from Aboriginal and other stakeholders? I'll take a few moments to speak to each of those in turn, summarize and then go to questions.
What is it and what can it do? This is a pressurized water reactor design architecture. That means it is the most time-proven, reliable architecture of a reactor. Three quarters of the world's power reactors are pressurized water reactors. They are the ones that sailors have been sleeping next to in ships and submarines for the last 50 years. It is the Maytag of reactor designs. It has a power output of 6 megawatts electric, or 30 megawatts thermal, or some combination of the two in a cogeneration operation. Again, that heat is important not only for space heating but also process heating for mining development in the North. It has full load-following capability. Unlike the big reactors we see down south that run flat out all the time, these can follow the changing load from the beginning. Importantly, they have a long refuelling cycle. The SMART reactor will go about 20 years without refuelling at an average utilization rate. That gives a level of energy cost stability that's just unparalleled with any other fuel. Only hydro can come close to that. It's a modular installation and you can add units as the load grows. This next point you'll see repeated numerous times in the documentation: ''A single SMART nuclear battery will displace over 210 million litres of diesel fuel and eliminate the production of 600,000 tons of carbon dioxide in its lifetime.''
What won't it do? It's zero emissions operation, so it won't emit any oxides of sulphur, oxides of nitrogen, volatile organic compounds, soot, particulate matter or greenhouse gases. It does not require an external water source like big reactors need as it has air-cooled condensers. That's an environmental benefit. As well, you don't have to get a water licence for it. There's no on-site waste or fuel storage.
When the fuel is exhausted in the reactor after 20 years, the entire reactor module is removed as a sealed unit and shipped back to the manufacturer for recycling, because it still has fuel value in it. There is no waste storage on site or even in Canada. This gets shipped overseas for recycling and final disposal.
Is it safe? Yes, it is safe. All nuclear installations in Canada are licensed by the Canadian Nuclear Safety Commission, whose only mandate is the protection of the safety and health of Canadians and also meeting our international obligations for non-proliferation. This particular reactor also embodies a number of inherent and passive safety systems that are possible on small reactors that you can't necessarily get on big reactors. The most significant one is that its cooling system is gravity-driven. For example, the accident in Fukushima caused a loss of power that resulted in pumps failing and water not cooling. This reactor cools by natural circulation. Until someone shuts off gravity, it will continue to cool no matter what happens. Even in a total plant blackout, it will continue to cool indefinitely.
Not this reactor but pressurized water reactor architecture has more than 12,000 years of operational experience. Slide 7 really tells the tale on safety. Ontario generates more than 50 per cent of its electricity from nuclear energy. I took this screenshot on Sunday afternoon when I was preparing this. You can see that two thirds of our power is coming from nuclear energy, and Ontario has been doing this for half a century without a single nuclear fatality. This speaks more to the safety than anything else.
How much does it cost? There's the big question. I've been asked that a lot of times. There are two options: The customer can buy the reactor, but even if they do, it will still be operated by a fleet operator. The daily operations, maintenance and ultimate decommissioning will be done by a fleet operator. That speaks to option 2, which is a build-own-operate-decommission model, where the vendor looks after all of the costs of building, owning, operating and decommissioning. This is the preferred model by the regulator, too. They don't want to have to regulate many independent operators because a nuclear operator's licence is a significant thing, and they would rather deal with an experienced operator. Dunedin has been speaking with some of the experienced nuclear operators, mostly in Ontario, and this is the type of work they would do should this come to pass; and it's what they would prefer. The vendor would then sell power and heat back to the customer, whether a mine or a community or a territory, on a contract take-or-pay basis. This relieves the customer of the upfront capital costs, the ongoing O&M costs and the decommissioning.
The day-to-day general operating cost is 7.5 cents per kilowatt hour and depends on the installation. The North is a big place and some installations would be more expensive and difficult than others. The full life-cycle costs will be somewhat higher than that.
It's instructive to look at the side-by-side comparison with the diesel plant of comparable power output at slide 9. This is a 12-megawatt plant, which you would find in a smallish mine in the North. They both produce about 105,000 megawatt hours a year. The diesel plant will require about 26 million litres of fuel to produce that. At slide 9, if they're bringing that in via super tanker truck, you're looking at over 500 of them to bring that in. That picture represents half of the truckloads they require to bring that in for a smallish mine.
The annual fuel logistics are zero, annual greenhouse gas emissions zero and other emissions are zero. Then there is the question of carbon tax or credit. That's still an open question, depending what jurisdiction you're working in. I think we know the direction that the country and the world are going in that respect. There's potential for carbon credit due to zero emissions.
The last point I'd like to address is whether this will meet with social acceptance from Aboriginals and other stakeholders. Social acceptance or social licence is an absolute precursor to the introduction of any energy technology in the North. As it's an unfamiliar energy technology in this particular market, public acceptance is still very much an open question. However, I do believe there are good reasons to expect that micro nuclear energy will earn acceptance in the North. It will depend very much on careful consultation, careful listening and communications. They are key to achieving this social licence. But I would like you to consider the following four points.
Stakeholders in the North are acutely aware of the direct linkage between affordable energy, development, jobs and community well-being. They're directly linked; one follows the other just as night follows day. The Arctic environment, as we all know, is warming faster than the planet as a whole. They're experiencing the effects of global warming much more up North, and this would offer people a real opportunity to make a significant contribution to reducing or eliminating greenhouse gases in a part of the world that's most affected by it.
Northerners are rightly proud of their self-reliance and independence, but they're also well aware of the need to import goods from Southern Canada. Micro nuclear reactors can be fuelled with uranium mined in the territories, and this would return to northerners a measure of energy independence that they have not enjoyed in decades. I don't think that's an insignificant point.
Finally, northerners have a great respect for the land, and the legacy of waste and abandoned equipment left behind by earlier development — think of the giant mine in Yellowknife right now — is a source of constant concerned when considering new development proposals. With the nuclear power plant, before the first shovel goes in the ground, there must be an approved and funded decommissioning plan. This serves as a powerful guarantee that at the end of life of the plant it will be returned to a greenfield status. This money is held in escrow and it's reviewed. The sufficiency of this money is reviewed and updated every five years when the nuclear licence is renewed every five years.
Due to changing conditions, if they decide it's not enough money, it has to be increased before the nuclear licence is renewed. There is always money, regardless of the eventual fate of the companies involved. There is always money available to decommission the plant and return it to greenfield status. That's very important.
One final point I'd like to make: Has this ever been done before? Yes, it has. If you look at slide 10, Bilibino is in northern Siberia, at 68 degrees north, which is about the same as Hall Beach in Nunavut, north of the Arctic Circle. The city peaked at about 14,000 in the Soviet era, and it's down to about 5,500 now, but for 40 years they've powered and heated the town, the mine and even the greenhouses. It has been a big success for them up there.
The last slide is a summary. I don't think I have to go through the points. We're aware of them. The conclusion is important. I do believe that the nuclear battery is a national strategic technology that Canada must possess if we are to achieve our policy objectives of community and sovereignty in the Arctic. I'd be happy to take any questions you have.
The Chair: Thank you very much. I have a couple of questions.
In your paper, you have stated the two options. One option is where it would be totally owned by your company or the company, operated, all of those kinds of things, and would cost approximately 29 cents a kilowatt hour.
Mr. Lang: That's correct.
The Chair: And where would that be? Is that in Inuvik, or is that in someplace close around here?
Mr. Lang: No. That's in the North.
The Chair: Anywhere in the North?
Mr. Lang: No. That would depend on if you have sea transportation, whether it is a coastal installation, or is it 200 kilometres inland where it may have to go in by train, and supplying it would be more difficult. Any type of coastal operation where you could get a barge in would be a lower-cost operation. Anything where you have to go deep inland would be more expensive, or further north would be more expensive too. It's hard to quantify that at this point, senator, but it's obvious that the more effort required . . . Once it's in place the operating cost should be approximately the same. It's just getting that thing built.
The Chair: Most of the communities — I'm thinking of Nunavut — are all close to water.
Mr. Lang: The communities are.
The Chair: Because they're serviced by ship, with diesel fuel now. The 29 cents is interesting, but that's going to be variable, right?
Mr. Lang: Yes.
The Chair: Variable by what percentage? Give me a ballpark.
Mr. Lang: I'm going to say between 30 and 40 per cent. A very challenging installation, well inland, such as the Izok Lake one deep inside Nunavut, could be a challenging one, or, for example, if they wanted to put one in Alert. This would be a military installation, but basically everything comes in by air up there. You would have to wait for special conditions to get one there. The Baffinland iron mines on Mary River are a good example because they are a big power user, located about 140 kilometres inland. That would lie somewhere in the middle. On the other hand, the scale of their operation, because they would require multiple units in an example like that — I'm not saying they're doing that — would reduce the cost, multiple units.
The Chair: What's their response? Obviously I would assume you've talked to them or to some of the other mining companies in Nunavut where power is their largest cost.
Mr. Lang: Yes.
The Chair: It's their greatest cost. Have you talked to them? Have you broached with them?
Mr. Lang: I have.
The Chair: I don't want to get into your business.
Mr. Lang: I understand. I have spoken at both the Yellowknife and Nunavut mining symposiums they hold every year to introduce the subject. I have done that for a number of years in a row. In mining right now, it's a black time for them. Commodity prices are depressed; cash is very tight for them, and right now they're sticking with what they know, but they continue to tell me, ''We're interested. Let's just see one of them run.'' I think they really need to see one run. Even though it's a mature technology, this is not something they're familiar with in the mining world. They know the possibility is out there. I've had requests to speak to them, but they want to see one run somewhere. They want to have the confidence, kick the tires.
The Chair: There's a mine we went to see — I can't remember the name off the top, but Senator Patterson will remember — out of Rankin Inlet.
Senator Patterson: Agnico Eagle Meliadine mine.
The Chair: If I remember correctly, their costs were going to be a lot more than 29 cents.
Mr. Lang: Yes.
The Chair: They're not very far from water. Are they receptive? They're talking about building a hydro line. They say that —
Mr. Lang: Right. In a case like the Meliadine or the Meadowbank mine, where they're located near either Rankin or Baker Lake, mines will last only 10 or 15 years, but there will be the ongoing requirement for their communities. To locate it between or near one or the other, you can continue to supply the community long after the mine has gone, so there's a dual benefit.
Yes, they're interested. Once again, cash is so tight. Perhaps Senator Patterson can advise us on this. I don't think they have made the decision with Meliadine yet. It's been approved. It really boils down to economics.
The Chair: Okay. The last question I have is this: This is a Russian technology, as I understand from the paperwork.
Mr. Lang: That is correct.
The Chair: How does their technology or building of these kinds of reactors compare to Canada? Can you bring one that is built in Russia to Canada and it meets all the requirements, all of those kinds of things, without any changes?
Mr. Lang: I'm very glad you asked this question. Because the reactor is still being developed, I have already spoken with the Canadian Nuclear Safety Commission on this, and there's a pre-licensing stage they go through called the vendor design review. This is where you can look at the design and make changes to it before you start cutting metal. Our Canadian Nuclear Safety Commission could say they may want to build it that way in Russia, but we're going to need to see this and this in Canada. It's very much like the commercial aircraft industry, where Boeing builds the airplane to the FAA standards and Transport Canada accepts most of that at face value, but says we also need this and this to be licensed in Canada. There are protocols. Canada does have a nuclear agreement with Russia.
With regard to Russian nuclear technology, I just have a brief anecdote here. I scoured Canada looking for the right reactor design before I ended up looking at the Russian one. In fact, it was a retired senior scientist from Atomic Energy of Canada who said, ''Peter, go see what the Russians are doing. They do some really nice work.''
I said, ''Yes, they've thrown their lot in with this barge mounted thing of about 70 megawatts.'' He said, ''Dig deeper. You'll find what you're looking for.'' He was absolutely right. There are only two countries in the world that are advanced nuclear nations that have a vast undeveloped Arctic hinterland. That's Canada and Russia. This particular reactor is purpose-designed for exactly this market.
I attend a lot of meetings, as you can understand, both licensing and industry meetings. I hear a lot of background buzz about how the Russians do very nice work on their nuclear stuff, notwithstanding their rather famous accident.
Senator Massicotte: Thank you, Mr. Lang, for being with us. Obviously, it's a very interesting subject, possibly quite relevant because energy is a big issue. I'm not an expert, and I don't think many of us are. But some Canadians are. I think of Lavalin, for instance, which bought ACL, and you're looking for financing, a sponsor. They would be highly credible. They have a large, existing client base. I have to presume you must have approached them to say, ''Do you want to come in and develop this technology?'' Did you approach them? What was their response?
Mr. Lang: I have not specifically approached SNC. They would be a good partner. I have approached other engineering companies that do nuclear work for OPG and Bruce Power. One of them in particular does a lot of the balance of plant work. The reactor would be manufactured in its entirety in Russia. However, all of the auxiliary systems, controls, turbines and generators would be engineered in Canada. I have spoken with these companies.
With regard to financing it, there are actually a lot of third-party investors that don't actually need one that would be interested in financing it. You have to come up with a customer first. But the oil sands is another area of investigation that we're working with right now out there and it is good in the oil business. They're not in the same situation that mining is in. The reactor would need some modifications to provide the steam of the parameters they need. This is for the SAGD — steam-assisted gravity drainage — that you may be familiar with, where they pipe steam into the ground to loosen up the bitumen. I am actually working right now with them through a third party.
Senator Massicotte: I'm sure a lot of engineering firms are interested because they would see contracts. I think we need somebody who is an expert in nuclear technology to say, and not only Peter Lang, this is safe, these numbers are hard, this is real. I suspect there's an issue there. It seems there are very few players who are experts who can add that credibility. You have to get the issue over safety. There's a public acceptance. As you know, many countries, Germany, Japan have sort of said we're out of this game.
Mr. Lang: Yes.
Senator Massicotte: The other issue you have is that it's not only made in Russia, but the technology is owned by the Russian government. With the current issues, countries like France and Germany say, ''I don't want to be dependent upon Russia.'' You have those issues also. I suspect you've got some homework to do to add a lot of credibility to the story you're selling.
Mr. Lang: From the point view of credibility, if I can add, I have done a joint project with the University of Ontario Institute of Technology. They're the only university in Canada that grants undergraduate degrees in nuclear engineering and graduate degrees. I have spoken twice with Canadian Nuclear Partners, a sub-unit of Ontario Power Generation, one of the world's most experienced nuclear operators, and they are quite interested in providing licensing services, engineering support and operations as well. The purpose of their company, Canadian Nuclear Partners, is to leverage up this expertise they've developed over the years. They're a very credible source. They have a lot of engineering heft as well. You're right; I still have to knock on the door of SNC.
Senator Massicotte: I'm sure they're all interested when you call to say, ''Maybe I can get some dollars, maybe I can make some money from this thing.'' But did they express an opinion in writing saying this is safe, the numbers are real, and we support this completely?
Mr. Lang: The short answer to your question is no, I haven't had that from SNC.
Senator Massicotte: Or the other association referred to.
Mr. Lang: Canadian Nuclear Partners agree that it will be safe. They wouldn't operate what they consider to be an unsafe reactor, but I come back to the Canadian Nuclear Safety Commission. They simply won't license it. They have a very high standard, and in fact a number of other countries are bringing their reactor designs to Canada right now for pre-licensing review because it gives them more credibility going back to their own countries for licensing processes.
Senator Massicotte: But you said it's still being developed; it's not completed, I gather?
Mr. Lang: That is correct. Before the reactor goes to its absolute final design, they like to leave a certain part of the engineering design work undone just to accommodate any changes where a regulator may say, ''We would like to see this done differently,'' so the design isn't frozen yet so they can accommodate these changes once it goes into the licensing process.
Senator Mitchell: This is very interesting to me. I'm sure we all are, but I'm particularly concerned about climate change and emissions, and for that reason alone it's telling. It's interesting that for almost every solution that you can think of to fix emissions, somebody has a problem with it, even environmentalists. It's a great and unfortunate irony. I'd love to see this kind of thing work.
What would it totally cost to build one of these in a reasonably accessible place, in kilowatt hours, the absolute capital investment?
Mr. Lang: I put that question to the design bureau that was doing the actual work on this. They came back with a number of US$130 million to US$160 million, and that is for a location in Central Russia. That's the plant and all the ancillary equipment that goes with it.
It took them many weeks to come up with that. I was hounding them because I had someone who wanted answers quickly. They said, ''We want to do this right.'' The number they came up with was US$130 million to US$160 million, and the response I got from them was about 18 months ago. I don't think it will have moved too much in that time.
Senator Mitchell: In Russia.
Mr. Lang: Yes. They quoted that as in Central Russia. I fly over Russia three times a month, and Central Russia is a big, empty place. I think Central Russia would be comparable to a Yellowknife-type installation.
Senator Mitchell: What would it cost offhand to build a commensurate-sized diesel installation? I know a lot of the costs come later, but what would the capital investment be for that of commensurate size and capacity?
Mr. Lang: That would be approximately $25 million with the ongoing fuel costs. I don't know if I mentioned to you when you asked about the cost that that's for a two-unit plant. That $130 million to $160 million is for a two-reactor plant, so 12 megawatts of power.
Senator Mitchell: The $25 million for the diesel is —
Mr. Lang: A comparable diesel plant would be about 12 megawatts, about $25 million.
Senator Patterson: That's capital costs?
Mr. Lang: That's capital costs.
Senator Mitchell: With the difference in fuel costs, at what point do they converge and then nuclear starts to get cheaper?
Mr. Lang: I don't have the document with me, but you have it in front of you. If you flip the pages you'll see a graph. It shows when it crosses. It's about four years out. It's because the reactor comes fuelled for 20 years. That cost is fixed and it's part of the capital expenditure. We saw it's about 26 million litres a year for diesel.
Senator Mitchell: The reason you're talking about this in the North is because we're talking about this in the North. This could be applied anywhere in Canada.
Mr. Lang: It could. The economics will start to hurt it the further south you go. Its first market is really the diesel market, which is Nunavut exclusively and many parts of the Northwest Territories, the northern provinces. The Ring of Fire in Ontario is going to be a big player in that respect, too. It has all of the ice roads' inaccessibility and lack of infrastructure problems that they deal with in Nunavut, so it would fit there as well. Once you get down to where the grid is available, it really wouldn't compete with the grid. We produce power pretty cheaply in Canada, so it wouldn't really work there.
I've focused exclusively on the North. My experience up there is something that's always stuck with me from way back when I used to fly around. As I say, I fly over our Arctic archipelago almost every week right now. The thought never leaves me, as Senator Patterson will know. I've banged on his door a few times. This is a public good that needs to be done. I can retire any time from my job right now. I'm doing this because it needs to be done.
Senator Patterson: I'd like to say how pleased I am Mr. Lang is able to share his passion with our committee as he has done on many occasions in the North. It's very significant that you've shown the declining state of the cost and security of Arctic diesel. Colleagues would know, and our chair would know, that Arctic diesel is a special product that doesn't freeze in sub-zero weather. It's a different animal from the diesel that is used elsewhere in the world.
I'd like to give this little preface. We are studying energy in the North, and the federal government provides significant support for energy costs in the North in all three territories through its generous transfer payments.
Now, Canada has a stated policy of reducing reliance on fossil fuels. I wonder if you've given any thought and whether you would make a recommendation to our committee of what would be a role for Canada, if you would recommend a role, in advancing this alternative to fossil fuel.
Mr. Lang: When you say what role for Canada, do you mean Canada as a country or the Canadian government?
Senator Patterson: The Canadian government.
Mr. Lang: This comes back to SNC-Lavalin, or any of the mines. The most important thing they're looking for is confidence. They have an obligation to their shareholders to minimize risk, maximize returns or to keep their communities safe.
The first stage of licensing is the vendor design review. It's 14,000 hours of review time by the safety regulator, and it is a pre-licensing document. When this document is complete, and if it's a successful review, it says, ''If you build it this way, this will license. This isn't a licence, but we've had a good look at your technology, and it should license.'' To license, it must meet all the safety requirements.
The cost of getting that document is about $6 million, all the review time. Some of the larger mines and oil sands companies would be willing to contribute to this, as they so often partner on projects. If the federal government showed leadership by providing some of the funding — not all of it, not even most of it, but some of the funding — that would give the major players a sense of leadership and encouragement to join in on getting this vendor design review document completed. As I say, this is a confidence document. The successful review would allow you to go to potential customers anywhere and say that the technology is safe and it will license.
Senator Patterson: Have you had a chance to interface with Natural Resources Canada or other federal agencies with this proposal?
Mr. Lang: I have spoken to the Department of National Defence twice at their request. I've come up and briefed them, similar to what we've done here but a little more in-depth on the technical side. I spoke to the Department of Aboriginal Affairs and Northern Development. That was a number of years ago. They said to go see Natural Resources.
At the federal level, I've been told that energy is a provincial responsibility, to go speak to the province or the territory. I've been told at the territorial level that we get our funding from the federal government, so go see them. You understand the problem.
That's why it's nice to get you, who are specifically invested in this problem, in one room. That's been the extent of my conversation at the federal level.
Senator Patterson: I was surprised you didn't ask this question, Mr. Chair, but thinking about a northern community that could probably use six megawatts, some of the larger northern communities, the one concern would be that this reactor would be a highly technical, highly sophisticated creature. We have lots of people that can maintain diesel engines, and even diesel gen sets, in the North. You said the fleet operator would take care of maintenance, but how sophisticated a job is that? Could you comment on whether there would be challenges in maintaining the facility safely in a remote location?
Mr. Lang: It is entirely doable. There would be challenges, to be sure. When you go through the licensing process, these are the questions they ask you: How are you going to get people in here? Sometimes you can't get access to these locations for two weeks if there's bad weather.
Integral in the design is redundancy of certain systems to keep the system going, if there's been a failure or a fail-safe mode of operation. Here's a simple example: The heat transported from the reactor has to be turned into steam, and that's done in a steam generator. A reactor typically has four steams generators; this one has 12. If one of them stops, it switches over to the other one and it keeps going until someone can get in. It was purpose-built to be in remote locations where you wouldn't require a large maintenance team. To be honest, they designed it to run unattended, but there's no way that will happen in Canada. At the very least, as a steam system, it will require a first-class steam engineer on site.
The short answer to that question is the maintaining of it has been examined carefully. It was considered in the design, and it's considered to be quite doable and feasible.
If I may add one thing, because this is an enabling technology, the actual employment of people to do this — as you said, you have many people that can handle big diesel engines up there. As an enabling technology, the real economic advantage is not the actual reactor itself, but what it enables in the form of industrial and community development.
The Chair: The reason I didn't ask the question is that when I read your notes you are proposing that you would have your representative on site to make sure that this facility runs.
Mr. Lang: Absolutely, yes.
The Chair: That's included in what he gave us at the 26 cents per kilowatt hour; correct?
Mr. Lang: Yes. I even put in an amount per year for community relations and unexpected things. All of that is factored in.
Senator Seidman: Clearly what you're offering elicits an enormous amount of interest from the point of view of the northern isolated areas; as you say, it offers great promise. The thing I find curious is you say, in response to has this ever been done before, yes, in Siberia, in Bilibino, population 5,500, and it's been in operation since 1974.
Mr. Lang: Correct.
Senator Seidman: I find it curious that that is the only place where it has ever been done before. If I think about all the other options in terms of in Northern Russia, even in other Nordic countries, if I think about Finland, for example, where there are very isolated off-the-grid communities, which would satisfy all the requirements you propose.
My question is why hasn't it been done elsewhere before.
Mr. Lang: That's a very good question. In fact, Atomic Energy of Canada worked on two different reactor designs for this type of application, and they scrubbed it in the late 1980s, having worked on it for a number of years. It really boils down to oil was sitting at $18 a barrel. You couldn't make the economics work.
There was also no concern about the security of supply then. With this Arctic diesel, which is a boutique product, there wasn't concern for the security of supply. Oil was so cheap, sort of like gas is so cheap right now. It's hard to compete with gas on anything, if it's available. That's mostly why it has been set aside.
Now that oil is quite a bit more expensive, the Russians, for example, have built their two-reactor barge. They've taken a reactor they designed to power icebreakers and have successfully powered them for a long time, and they've placed two of them on a barge, and they built the reactors. They're on the barge, they're doing systems integration right now, and they have a number of customers along the North Sea route in Russia that will be provided with electricity by that, instead of what they call ''black oil,'' and the enormous logistic chain they have to get it up there. Russia has also recently signed an agreement with China to develop for their use a barge-mounted reactor for the same process. It's all driven by energy and oil prices right now. It's economics that's driving it. Global warming wasn't on anyone's radar in the 1970s.
Senator Seidman: You're saying there's a new resurgence in interest in this because of the economic situation, the price of oil?
Mr. Lang: Yes, the price and the availability. And the fact that there's a lot more interest in the Arctic and developing the resources there.
They see, as you know because you're looking into the future, that there's going to be a huge requirement for more energy. From the community side, this is the fastest growing demographic in Canada up there right now, too.
Senator Seidman: If I might ask you something about operationalizing this, you say that the battery is installed below the ground in bedrock.
Mr. Lang: That is one installation option, yes. It's a preferred option, too.
Senator Seidman: A preferred option, indeed. Does the permafrost present any installation or operational challenges?
Mr. Lang: Yes, it does. This question was asked of me on an open-line radio program in Yellowknife one time. The preferred installation would always be to look for bedrock. That would be a possibility. Bedrock in the North usually is fairly close to the surface until you get out to the Western Arctic. If you get out near Tuktoyaktuk and you're in the Mackenzie Delta it's a different story. Even Inuvik, which is right up there, I was up in Inuvik some time ago and scouting for that type of bedrock installation. That would be the opportunity most of the time. A surface build is possible. There is something called thermosiphons — perhaps you're familiar with them. These are passive systems designed specifically to prevent heat transfer from the building, reactor, whatever the case may be, going into the permafrost and melting what's underneath. Yes, permafrost would affect the installation of them if you couldn't find bedrock.
Senator Seidman: The other issue is does melting permafrost present any safety challenges?
Mr. Lang: With a reactor installation, if it was built on permafrost with some technology to prevent it from melting the permafrost and that technology failed for whatever reason and the reactor began to move, I expect that there would be implications, certainly ones to be studied. When you build a reactor they don't just license the design, they license the site. It requires environmental assessment and an engineering assessment at the site. That would be considered in advance, and ultimately I suspect a site like that might be rejected for that very reason unless, as the safety commission says, ''Show me. Convince me. If you can convince me that this will be safe, we'll license it.''
I expect you would avoid those types of sites as much as possible.
Senator Sibbeston: I'd like to say to Mr. Lang that you're making the presentation in the context of the study that we've done on energy in the North. You're making a presentation promoting a nuclear reactor as an alternative to the diesel-oil guzzling machines we have throughout the North. How realistic are you? How readily available is the technology? On page 1 you talk about how some of the imported diesel fuels have not met specifications, leading to clogging and so forth. I want to ask you about where you get your information about that. In the West I haven't heard about that.
You're making your presentation as if all of this is readily available, yet we hear that technology is not available in Canada. You're talking about a Russian system. The huge size on page 6, you see a man dwarfed by the big system and also the cost. You talk of cost being in the range of $130 million. All of these really make it impractical, or many decades or even centuries away from its being practical and possible in the North.
Mr. Lang: There are a number of questions there, so you might have to refresh my memory on them.
Getting back to the diesel fuel that you spoke of, my sources of information on the imported diesel fuel come from two sources. One is from Don Dean, the co-author on that study on northern logistics. That study was done for the federal Department of Transport and is available. He is extremely knowledgeable on the whole diesel supply system for the North. He's the one who pointed out that over 50 per cent of all material moving north is diesel. In fact, in Nunavut it's closer to about 65 per cent.
I was also speaking with one of the people from Agnico Eagle and how they did with their diesel at the mine in Meadowbank. This was about two or three years ago. They bought their diesel from a refinery in New Jersey, and I asked how it worked out. He just shook his head and said, ''We had no end of trouble with it.'' They were flying up drums of additive over the winter and pouring them into the storage tanks to try and get the diesel to work properly, to keep the paraffins from precipitating out.
With regard to the size of it, I've had that comment before. There are a couple of reasons for the large physical size. I would ask you to compare that to the physical size of what storing 200 million litres of diesel would be. Nevertheless, a large commercial reactor, such as we see in Pickering or Darlington, has a power density of about 120 kilowatts per litre. That's a lot of power in one litre. As part of the safety design in this they wanted to have wide operating margins. This reactor runs at a power density of just 27 kilowatts per litre, roughly about a quarter to a fifth of what a utility-scale reactor does, and that's to increase the margins of safety. It's part of addressing the fact that we can't have a giant tech team on site all the time so we have much wider margins of safety on the reactor.
You may recall I mentioned earlier that it has convective cooling, as opposed to forced cooling with pumps. To get that convective cooling going you need sort of a chimney effect. It has to be fairly tall to get that cooling moving through the reactor. So the physical size can be a little deceiving for the power output.
Was there anything else, senator, on that?
Senator Sibbeston: Just how readily available is this? You're making the presentation as if next year we could buy them and they're available somewhere, but I don't think that's the reality.
Mr. Lang: The reactor is unlikely to be built until there's a customer. I put this question to the designers and manufacturers. I said, ''How long if I walk in tomorrow with a customer that says they'll finance the whole thing?'' They said five years.
In the nuclear world, I've got to tell you, that's lightning fast. Five years, they said. The licensing process is also about five years. This actually is part of the problem with trying to introduce this subject in the North, or actually anywhere, because we tend to react more to circumstances. If oil jumps to $140 a barrel, as it did in 2007 or 2008, suddenly they want an alternative and they want it yesterday. Sorry, guys, it's a minimum of five years.
This is for reactor technology that's well understood. Many of the other designs are advanced and hold great promise for the future, but since they have never been licensed before you know the regulator is going to take extra time. They're going to be in a technology area they're unfamiliar with and they're going to have to bring in outside consultants. It's going to be a much longer licensing process. This is part of the reason we've gone with such a tried-and-true type of reactor architecture.
However, after the first one is built it's serial production, again much like commercial aircraft. You spend all your money in engineering up front and then you mass produce multiple identical units at reduced cost and at a much faster rate. The design doesn't have to be relicensed every time, just the site and the operating licence but not the actual machine.
Senator Wallace: Mr. Lang, I just want to make sure I understand this. In your presentation you referred to the nuclear energy that has been provided in Bilibino, Russia, for 40 years successfully for that community. I take it, though, that the technology that's used there, the actual unit and the technology behind that unit is not the same as what is referred to as the SMART, Small Modular Adaptable Reactor Technology, that you're suggesting could be used in Northern Canada. Is that correct?
Mr. Lang: That is correct, yes.
Senator Wallace: So there isn't a track record that we or a potential customer could look at for this particular unit that's been developed anywhere else in the world, including Russia?
Mr. Lang: That is correct. There are a number of very similar-type reactors that have been built, but not that design specifically, no.
Senator Wallace: Are there any other nuclear companies, technology companies located anywhere else in the world that would also be marketing units, nuclear units, small micro units similar to this for use in a northern climate? Any of the Scandinavian countries?
Mr. Lang: Yes, most definitely. Most of the designs come out of the United States. They don't have a domestic requirement for it, but they're looking at it from a purely commercial point of view. As I mentioned a moment ago, most of these reactors are very advanced designs, liquid metal cooled reactors, fast spectrum reactors. I don't mean to use jargon on you, but these are quite advanced designs that have never been built and used commercially. There are about 450 reactors running in the world. Two of them are metal-cooled, and all the others are water cooled. Yet many of these designs are metal-cooled reactors.
Senator Wallace: I'll accept what you say. There are many nuclear reactors around the world, but we're talking about smaller micro units that can be useful to smaller communities. For these smaller micro units, do they exist anywhere else in the world, and are they being provided by suppliers other than this Russian company?
Mr. Lang: They don't exist anywhere else in the world. There are other companies making offerings similar to this with different technology but still nuclear reactor technology.
Senator Wallace: When you say the design of the reactor is still being developed, I guess that's the way it is worldwide. This is breaking new ground.
Mr. Lang: That is correct.
Senator Wallace: You say it could provide very good opportunities here.
As you said, there are two different options for a purchaser, either purchase the unit outright or do it on a licensed basis and the cost of providing would be provided by your firm.
On an ongoing basis, if it were this Russian unit, when it's finally designed and completed, that's provided, would there be a continuing need to have Russian company involvement in that unit? For example, would they provide replacement parts, if needed? Would they provide the maintenance of that unit? Or is it simply that you're the licensed company in Canada, all involvement would be through you and there would be no direct or indirect involvement with the Russian supplier?
Mr. Lang: Much of what you've just considered is still very much open for discussion with the Russians. The Russians sell reactors around the world, and they enter into a variety of different commercial arrangements with their customers. Some countries simply lack the technical wherewithal to handle a reactor.
That is clearly not Canada. We're a world leader in reactor technology. I would propose and push for a gradual technology transfer and responsibility for maintaining and looking after the reactor transfer, just as we have industrial offsets in any large or complicated technology. Canada seeks always to broaden their technology base, and I think we would be in a good position. Canada is a large potential market for this, particularly if the oil sands get involved. I think we would have a fair amount of leverage getting technology transfer and going beyond just being a licensee, as it were.
I strongly believe we also have a lot to offer back to Russia. They don't know everything. We're pretty good at this ourselves, too.
Senator Wallace: I'm thinking that not only Canada but any country that's going to rely upon another country for its supply of energy, whatever form that might take, wants to understand what that relationship is today and could be in the future.
I was just trying to get a sense if with your proposal there would be that need for the ongoing supply relationship with the Russian supplier as opposed to you as the holder of the licence would be providing it. Again, it depends on who it is you're buying from. There's always the reliability of the supplier now and in the future. I think that would be a thought in the minds of some. I'm trying to get a sense of whether that continuing relationship would be required.
Mr. Lang: That's a very good point, and I expect there would be a dependency on them for parts and equipment in the early stages with a gradual weaning off that over time. As I mentioned, Russia is a large nuclear exporter around the world, and nobody wants to compromise their reputation on the big reactors by making a mess with the small ones.
The Chair: From our conversation, do I understand that if Canada said, ''We're going to look at this through you,'' it would be five years before you got a demonstration plant and another five years at the minimum to license it? That's 10 years. Can I ask you what the proponent would have to come up with for money to actually get that process going?
Mr. Lang: If I can just clarify, the licensing and the construction can take place simultaneously. They can be overlapping efforts. The licensing and the construction of the demonstration unit can take place over five to seven years.
The Chair: How can you license it if you're just building it?
Mr. Lang: Most reactors are fully licensed before they make the first pieces. It's all based on design and testing.
The Chair: Is seven years on the low side?
Mr. Lang: For a utility-scale reactor, they work on a 12-year horizon. I've had numerous meetings with the regulator on this, and they foresee the opportunity. In fact, the National Research Council of Canada gave Dunedin Energy a small grant to study licensing efficiencies for these small reactors to speed the whole process up. Canada's licensing regulator is risk-informed, and the small nature of the reactor is a great deal less risk than a utility-scale reactor. That would be a factor in determining the licensing period. It could be built concurrently.
For a demonstration unit, another big advantage is we have multiple licensed nuclear sites already, such as Chalk River, so that part can be sped up, too, to get that first demonstration unit built.
As I said, if a big pile of money fell out of the sky tonight, you could be walking around or running one in five to six years.
The Chair: Give me the amount of the big pile of money that you say needs to fall out of the sky. Or is Dunedin Energy willing to take it all, if the government just said, ''We'll take one in seven years; you can deliver it and you can accept all the cost''?
Mr. Lang: With a firm order, we could raise the money through investors without any difficulty, absolutely. As I mentioned, a two-unit plant, which I don't know if anyone would get for a demonstration unit — that would be a single-unit plant — but a two-unit plant built at a place like Chalk River, for example, would be in the order of US$150 million roughly.
Did that answer your question, senator?
The Chair: I think so.
Senator Massicotte: After that, how much time and money does it take to get one built up in the North?
Mr. Lang: Very much site dependent on that.
Senator Massicotte: Northwest Territories, pick the capital.
Mr. Lang: Yellowknife is strictly road access, and they just got the bridge operational. I'm guessing 20 per cent more. It's a guess.
Senator Massicotte: And another year and a half or two years?
Mr. Lang: I don't know that the time would be any longer. I'm thinking of the logistical effort of getting it up there.
Senator Massicotte: So $150 million becomes $200 million; is that correct?
Mr. Lang: I know nuclear has a long history of cost overruns, so I'm reluctant to give you hard numbers because it's just estimating at this point. Without having an engineering company sitting beside me saying, ''We've built projects there and you can safely run up the price by another 30 per cent,'' I don't have the body of knowledge to give that to you now. I can find that out for you.
The Chair: If you would and get back to us.
Senator Patterson: You have looked at hydro options being considered in Nunavut, and one was a 12-megawatt plant. Could you share with us some idea of what that would cost and what the licensing period might be?
Mr. Lang: I don't know if the senators are familiar with the plant that Senator Patterson is referring to. It's the Jaynes Inlet hydro installation. The price of that has been batted around. I've seen it as high as $450 million. It is a phased project, where they would start off with, I think, 8 megawatts and eventually ramp up to as much as 15 megawatts.
My biggest concern about that project, senator, is that it's planned to bring the power through a 90-kilometre wooden pole transmission line with no road access. The servicing of that would be done by helicopter. You will recall the big blow they had in Iqaluit just last winter, 130 to 140 kilometres an hour winds. I don't know how that transmission line would survive that, and certainly no helicopter pilot would be going out to fix it under those conditions. You're taking all of the power for Iqaluit in essentially one package, and I know the diesel backups would still be there, but that transmission line is extremely vulnerable.
Hydro is very much like nuclear. Capital expenditure is big up front, and then it's a low-cost producer. They're very similar in that respect.
The hydro project is a possibility for Iqaluit, certainly. I worry about the distance it is, considering the terrain and the weather they have there in maintaining that line.
Senator Massicotte: This could be very important. We don't know. You know more than we do. This could be very important for Canada and Northern Canada. But if I was to give you frank advice, there's a big issue of credibility for nuclear, and a big issue of credibility in dealing with technology that has yet to be completed.
I would highly recommend that you align yourself with someone like SNC-Lavalin, somebody who is large, has money, immense credibility and could really task up something that's very good. But I think to slog it alone will be a tough one for you. You may not want to share the lottery winnings, but I highly recommend you align yourself with very credible people.
Mr. Lang: Thank you for the advice, senator. It's very much my intention to do just that.
The Chair: Thank you very much. We appreciate very much your presentation, input and answers to the questions.
(The committee adjourned.)