Nuclear Energy: The Third Pillar of Canada’s Energy Future
- Hugh MacDiarmid, Speaker
- Media Type:
- Item Type:
- The speaker’s self-description as a Nuclear Newbie or a Newbie Nuke or a Nuke Fan and what that means to him. Here to inform, maybe educate and stimulate thinking. First, a few words about the speaker’s company – Atomic Energy of Canada with some facts and figures. Their dual mandate from their shareholders. Three key messages today. The Global Nuclear Renaissance – Nuclear is For Real. The market potential for nuclear power. The environmental case for nuclear energy. The rising cost of oil. The supply of natural uranium in Canada. Rising public acceptance and support for nuclear. A good and improving safety record for nuclear technology. Nuclear in Canada. The opportunity for the nuclear energy industry in Canada. A brief review of opportunities in Alberta, Saskatchewan, Ontario, Quebec, and Atlantic Canada. CANDU and AECL Around the World. International markets and successes for the CANDU reactor. Nuclear Industry Challenges. Project delivery and management of spent fuel. Ways that AECL is meeting those challenges. Long-term issues. Advocating a long-term mindset for nuclear policy and decision making. Nuclear reactors as an investment with a 60-year life. Decision-making that needs to reflect that timeframe. An alternative fuel resource. CANDU reactors as a platform for advanced fuel cycle technologies. Recent development at AECL. A brief advertorial on AECL and CANDU. Confidence in the future. Concluding remarks.
- Date of Publication:
- 22 May 2008
- Language of Item:
- Copyright Statement:
Empire Club of Canada
Agency street/mail address
Fairmont Royal York Hotel
100 Front Street West, Floor H
Toronto, ON, M5J 1E3
- Full Text
May 22, 2008
Nuclear Energy: The Third Pillar of Canada’s Energy Future
President and CEO, Atomic Energy of Canada Limited
Chairman: Catherine S. Swift
President, The Empire Club of Canada
Head Table Guests:
Ann Curran: Director, Corporate Relations, AIC Limited, and Past President, The Empire Club of Canada
Liz Wong: Grade 12 Student, Riverdale Collegiate Institute
Reverend Canon Philip Hobson: Rector, St. Martin-in-the-Fields Anglican Church
Rafia Waraich: Graduate—Engineering and Society, McMaster University
Edward P. Badovinac: Director, The Empire Club of Canada
Dr. Valentin Naumescu: Consul-General, Consulate General of Romania in Toronto
Stanley H. Hartt: Chairman, Citigroup Global Markets Canada Inc., and Director, The Empire Club of Canada
Patrick Lamarre: President and CEO, SNC-Lavalin Nuclear
Larry Cann: UA Special Representative, Building and Construction Trades Department.
Introduction by Catherine Swift:
The world entered the atomic age in December of 1942, when the first sustained nuclear reaction was successfully completed in an athletic stadium at the University of Chicago. The pressure was on because of the Second World War underway and the fear that Hitler would succeed in developing such a reaction and proceed to use it for the construction of a bomb. Although physicists in many countries had warned about this possibility for some time, the Japanese bombing of Pearl Harbour in December of 1941 served to finally get the attention of the U.S. and British governments. Following Pearl Harbour, these governments finally agreed to devote the resources necessary to support the program that became the famous Manhattan project.
The bombs that resulted from the Manhattan project were those later dropped on Hiroshima and Nagasaki in August of 1945, the most horrendous use of nuclear weapons to date in populated areas. Following the end of the Second World War, the pursuit of peaceful uses of nuclear power began. Atomic power had a bad reputation among the general public as a result of memories of the bombs, so there was considerable opposition to be overcome. After considerable development work, nuclear power became commercially viable around the mid- to late-1950s. Some years later, it was concluded that nuclear power did not turn out to be as economically viable as first expected, but that of course was in a world that could not have foreseen $130-a-barrel oil.
Canada has had long involvement in the nuclear industry, being an active participant virtually from the beginning. Atomic Energy of Canada Limited has a well-established presence in the industry, and in its 50-plus year history has played a significant role in constructing nuclear facilities around the world.
Our speaker today, Hugh MacDiarmid, will discuss the role of nuclear power in Canada’s emergence as a global energy superpower. Mr. MacDiarmid was recently appointed President and CEO of AECL by the Prime Minister of Canada effective January 2008. He came to AECL with a broad range of executive and professional experience, with a focus on technology-intensive businesses and transportation-related industries, with extensive exposure to international commerce.
He has operating executive experience in corporations such as Canadian Pacific Railway and has also worked in smaller and mid-sized companies such as Lumonics Inc., a Canadian manufacturer of laser systems and Holden America LLC, a railway components supply business. Early in his career, he was a partner with McKinsey & Company, a leading international management consulting firm.
He has served on a number of boards in the high-tech sector and has served on the board of the Public Policy Forum and has been Chairman of the Board of Trustees of the Ottawa General Hospital.
He obtained his Honours Business Administration degree from the Ivey School at University of Western Ontario and his MBA from Standford, where he graduated as a Miller Scholar.
Please join me in welcoming Hugh MacDiarmid.
Thank you, Catherine, for your warm introduction. I’m excited to be speaking to the Empire Club—a true Toronto institution!
I’m also excited to have joined the nuclear industry, a key element of our power generation infrastructure.
I’m a Nuclear Newbie, or a Newbie Nuke. Either way you say it, I’m learning big time. I’ve come to understand and appreciate the industry’s focus on safety, on reliability, and on excellence in operations, engineering and project management. I’ve learned that reliable electricity is hugely important to our quality of life, often taken for granted. I’ve also learned how important nuclear energy is to our future. In short, I’ve become a passionate advocate and “Nuke Fan” in a very short period of time so don’t expect me to be too analytical and dispassionate. I’m here to inform, maybe to educate, and certainly to stimulate your thinking.
First, a few words about my company. Our name says it all—Atomic Energy of Canada. We are Canada’s nuclear energy company. Our mission as an organization is to deliver safe, reliable, economic and sustainable nuclear energy solutions worldwide.
We employ roughly 5,000 people, of which over 70 per cent have post-secondary education and over 850 people have either a master’s degree or a doctorate—an astounding nucleus, and I mean it, of brainpower.
Our company is a Crown Corporation, owned by the Government of Canada. We are in our 56th year of existence and have compiled an admirable track record over the years of technical innovation, of global marketing and project management, and can point to a fleet of over 30 CANDU reactors that have established our brand around the world.
We have a dual mandate from our shareholder. The first element is to be the nuclear platform, the repository of scientific research capability for our country, supporting not only AECL and the fleet of CANDU reactors that is already operating but also offering services to scientists and the academic community. This is carried out primarily from our Chalk River Laboratories facility west of Ottawa—the birthplace of CANDU technology. As you also know from recent media coverage, we also produce radioisotopes at Chalk River, and have commercialized this technology to enable our business partner, MDS Nordion, to supply valuable products and services to patients across North America and around the world.
The second element of our mandate is to operate a commercially viable business, selling and delivering nuclear power reactors, and providing services to the operators of these reactors around the world. This we do primarily from our Sheridan Park complex in Mississauga, drawing heavily of course on the scientific expertise resident in Chalk River.
I’m very proud to be associated with an organization that represents the finest Canada has to offer in terms of technology, people and global reach.
I want to leave you with three key messages today:
Number 1. Nuclear energy is for real. It is an important part of the energy mix into the future and for all the right fundamental reasons.
Number 2. The nuclear industry must demonstrate the ability to deliver major projects on time and on budget, and must convince citizens that we have a safe and sustainable program to manage spent nuclear fuel.
And number 3. I want to advocate a long-term mindset for nuclear policy and decision making. Nuclear reactors are an investment with a 60-year life and decision-making needs to reflect that timeframe.
The Global Nuclear Renaissance—Nuclear is For Real
Message number 1. Nuclear is for real.
While the debate around energy is often divisive, politicians, business leaders and environmentalists agree that there is a need to find new and innovative ways to meet the growing demand for energy.
Energy demand—especially for electricity—will continue to grow as economies around the world industrialize. And recall right now there are over 400 reactors operating, producing nearly 20 per cent of the world’s electricity. The International Energy Agency predicts that worldwide energy consumption will continue to grow by 2 per cent a year from now until 2030 and this prediction factors in some very aggressive conservation efforts. This represents a tremendous amount of market potential for nuclear power.
The fact that nuclear produces virtually no carbon dioxide emissions makes the environmental case for nuclear energy compelling from the perspective of global climate change. Continued fossil fuel burning to produce base-load electricity just isn’t environmentally sustainable in the long-run, but the base-load power has to come from somewhere and, in that context, nuclear is definitely part of the answer. It has arguably the smallest environmental footprint for base-load generation of any energy source.
The case for nuclear becomes even more compelling in the face of the rising cost of oil, which in turn is driving all fossil fuels upward in cost. Look no further than your local service station to see that. Add to that a growing willingness to use economic incentives, which itself adds cost to fossil-fuel derived energy. Renewables have their place in the mix, but they are not suited to base-load operation because of their intermittent nature.
Nuclear plant operators have a much lower exposure to fuel cost escalation than operators of fossil-fuel plants, as fuel is a much smaller proportion of lifetime cost for a nuclear facility than it is for coal or other carbon-based fuels.
To give you a little more perspective, eight pellets of natural uranium, the size of this pellet—mined in Canada, by the way—produce enough electricity to power a house for a year.
This one pellet, which weighs about 20 grams, can provide energy equal to:
• 400 kilograms of coal;
• 270 litres of oil; or
• 300 cubic metres of natural gas.
Saskatchewan alone is sitting on 350 million kilograms of this stuff, about one-quarter of the world’s known supplies or equivalent to 18 billion barrels of oil.
Public acceptance and support for nuclear has continued to rise. According to a recent Ipsos Reid poll conducted on behalf of the Canadian Nuclear Association, support for nuclear power has risen 12 percentage points in Canada since 2005 and stands above 60 per cent in Ontario. I know some politicians who would really appreciate that kind of support! And internationally, the same trends apply, though the industry still has some distance to go. The trends are moving in the right direction and communities are even competing to host large nuclear facilities.
From the nuclear technology side, an already very good safety record is being improved upon. The new Generation III reactors, being developed by all major reactor vendors, are building in even more robust safety features and the international regulatory regimes overseeing nuclear safety have greater competencies and oversight powers than ever before.
Nuclear in Canada
This leads me to offer a few words about Canada and the opportunity for this industry in our country.
The Prime Minister and the media have declared that Canada is becoming an energy powerhouse, but most of the attention has been focused on Canada’s incredible strength and abundance of riches in the oil and gas sector.
But I would like to emphasize the point that there is a vibrant energy sector in Canada beyond oil and gas. If the first pillar of our energy infrastructure is oil and gas, and the second is our proud history of hydro-electric and renewable power, the third pillar most certainly is, and needs to be into the future, nuclear power.
And across Canada, we are looking at many great opportunities.
In Alberta, an expert panel led by Harvie Andre, has been struck to examine the opportunity for nuclear energy as part of the answer to the incredible growth of demand for power in that province. They are also looking into the question of whether nuclear-produced steam and electricity can be a part of the answer in extracting oil from the oil sands.
In Saskatchewan, Premier Wall has mused about whether a nuclear power plant in his province might make economic sense and he has been actively promoting a plan throughout Canada and the U.S. that will see more of the uranium mined in Saskatchewan refined and processed there.
In Ontario, AECL is presently working on a major mid-life extension project with Bruce Power and of course, you are all aware of the current process in Ontario that I can’t talk about. Ontario is the third most nuclear-intensive electricity grid in the world—after only France and Lithuania—with over half our electricity coming from nuclear. Nuclear can and will provide a stable base load of clean power to Ontarians for generations to come.
In Quebec, a study is underway for the mid-life extension of the Gentilly reactor operated by Hydro Quebec, and I am hopeful they will decide to retain nuclear power as part of their electric power mix.
And finally, in Atlantic Canada, Premier Graham has laid out a compelling vision for his province that will see New Brunswick become an integrated energy hub featuring a refurbished CANDU at Point Lepreau alongside a new ACR-1000 reactor. New Brunswick is presenting AECL, and its Team CANDU partners, with a challenge to create a compelling economic case based on a merchant model to construct the new reactor—a truly exciting opportunity for our consortium.
CANDU and AECL Around the World
Around the world, AECL has had great success in marketing our natural uranium reactors in mid-market countries where the CANDU 6 fits the local power grid and where using natural uranium is a big factor. We have delivered on-time, on-budget projects in Korea, Romania and China in the last 12 years, and we are in active discussions pursuing new-build opportunities in Argentina, Romania and Turkey, with even more market opportunities to be announced in the coming months. The CANDU 6 is a good fit in these markets and our newest Generation III+ reactor—the ACR-1000—will fit other larger nuclear markets in years to come.
I am honoured to be joined today by Dr. Valentin Naumescu, Consul General of Romania in Toronto. His country is an important market for us and is representative of the future prospects for AECL in global markets around the world.
So, nuclear is for real, both here and around the world. The growth of nuclear will be driven by sound fundamentals as the global community seeks energy production solutions that are more environmentally sustainable and have sound economic bases.
Nuclear Industry Challenges
My second message relates to the challenges the entire industry faces: project delivery and management of spent fuel.
Nuclear power plants are big, complex and expensive things to build. So it stands to reason that if the cost of construction can be managed better, then the economics of nuclear become even more compelling.
A key challenge is the inevitable supply crunch for new nuclear construction that is coming in a matter of a few years. With between 75 to 100 new-build projects in various stages of development around the world, and many more under active consideration, the supply of talent and critical components will become even tighter. These are risks that have to be considered and carefully managed. And, in fact, AECL has some history in doing this. You’ll recall that we were building four new plants concurrently in the ’80s.
To address the constructability challenge, the first part of our answer was to design the plant to be built in modules so that work could take place in parallel—sometimes in different locations—and assembled on-site. This mitigates much of the construction and time risk. Altogether, we anticipate a 42-month project completion for the ACR-1000 from first concrete pour until fuelling and start-up.
Perhaps the most important factor to the success of the ACR-1000, however, is the strength of our partners, such as Patrick Lamarre from SNC Lavalin Nuclear, who has joined me on stage today, or other brand-name companies such as Hitachi Canada, Babcock & Wilcox and GE Hitachi Nuclear Canada. These companies, key members of Team CANDU, represent business partners that believe in AECL, believe in this technology, and who themselves bring decades of experience and innovation to the team.
They are joined by over 100 mostly Canadian small and medium business suppliers that make up the Organization of CANDU Industries: our vitally important supply chain. We may be a big company, but we couldn’t do it without the backing of innovative business partners in the small and medium business community across Canada. I am pleased that so many of these partners are represented in the audience today. Thank you.
At the end of the day, construction is mostly a challenge of management—not of technology. It is a challenge that careful planning, co-operative relationships with your work force, the effective use of partnerships and the oversight of strong management can meet. I am pleased that the Building and Construction Trades Council, representing 400,000 construction and trade workers across Canada, has sponsored this event today. I value that partnership.
Let me turn to the matter of spent fuel.
Waste management—whether nuclear waste management or the management of emissions that go up smoke stacks—has to be looked at from the perspective of the footprint it leaves on the world. Nuclear waste produces a relatively small and contained footprint, while fossil fuels produce large quantities of emissions and waste, some of which contributes to global climate change.
Spent fuel needs to be contained and managed—there is no denying that—but it can be done and we do have a blueprint.
In fact, we have a very sensible and practical answer right here in Canada. We support the Canadian Nuclear Waste Management Organization in its mission and support its Adaptive Phased Management process for the long-term management of spent nuclear fuel.
Their work offers a long-term and cost-effective solution to this problem. Current dry storage and future long-term underground management represent a sensible strategy. My staff have some brochures at the back which describes this process in greater detail for anyone who wishes to learn more.
And now, on to message number 3.
When making a 60-year investment, looking out over the horizon to the long-term issues is more than important; it is critical.
One specific long-term issue that I want to raise is what we term fuel cycle flexibility or in plain English, the ability to use alternative fuels. At AECL, we believe the supply-demand dynamics of uranium must eventually change. As more reactors come on-stream, demand will increase. Exploration activity is increasing, but we see it as inevitable that uranium supply will ultimately become constrained. An extensive fuel resource, several times more prevalent than uranium, is thorium. Thorium is a basic element that when placed in a reactor becomes fissile with radioactive properties, like uranium, and becomes a viable neutron source—in other words, a viable source of energy.
Now, this won’t be implemented tomorrow, but thorium offers a long-term option for security of supply. We believe research must continue, and indeed accelerate, into this kind of fuel cycle flexibility.
In another aspect of fuel cycle flexibility, just two weeks ago, AECL hosted an international conference with representatives from seven countries, to further explore the suitability of CANDU reactors as a platform for advanced fuel cycle technologies. The initiative was to co-ordinate the possible use of recovered uranium obtained from the reprocessing of used light water reactor fuel. Such an application would address the global push towards the security of fuel supply, and reduce the inventory of spent fuel that needs to be managed and stored.
Let me stray from my central messages for just a moment to comment on recent developments at AECL. I wouldn’t be doing justice to the Empire Club podium if I didn’t speak to the recent issues and associated media commentary.
Our decision to discontinue the Maples project was a business decision, not a technology decision. We evaluated our options, assessed the marketplace, technology and economics and concluded that there was no sound basis for continuing. We made the choice by looking forward, not back. We will continue to fulfill our commitment to isotope production.
The NRU shutdown last November was an avoidable event that occurred for a number of complex and inter-related reasons relating to the regulator and AECL and to interpretations of our site license conditions. The CNSC and AECL have commissioned an independent study that will be published soon and that will point to important lessons learned and operating experience that we both will apply in the future.
AECL is not perfect, but we are a fine designer and builder of nuclear power reactors. There is no basis to connect the NRU and Maples issues to our ability to design and deliver a CANDU reactor. The Maple reactors are low power machines that were first-of-a-kind development projects at the frontiers of design—high risk from the outset. CANDU reactors are proven technology that has been installed successfully around the world. The ACR-1000 has 100 times the power output of a Maple reactor. It is simply not the same machine. We have thoroughly validated the ACR design using independent experts and all will confirm that the design is sound.
Let me wrap up with the briefest of advertorials on AECL and CANDU. I start from the premise that all reactor vendors make fine products. They all work well, including ours. The CANDU design has certain features that stand apart from the crowd, and purposefully so. We believe our design is leading-edge in terms of safety, productivity, operational flexibility and fuel flexibility. We also believe our track record is excellent in terms of project management and on-time and on-budget delivery of power reactors.
We accept the challenge of the marketplace. We are confident in our business case; confident in our technology and design; in our safety record; in our plant productivity and capacity; in our environmental management plan; and in how we deal with construction risk.
On the global stage, we can and will succeed.
Our future is bright. A future represented by the next generation of nuclear scientists and engineers such as Rafia Waraich, who has joined the head table today. Rafia is a recent graduate with an Engineering and Society degree from McMaster University and worked for AECL as a student. She also runs Kids ‘N’ Quarks, a science and engineering camp for kids, that AECL supports. Rafia represents the future of our company and of our industry in Canada. And a growing nuclear industry in Canada presents enormous high-tech job opportunities for our young people.
In closing, demand for all types of energy is growing throughout the world and nuclear energy is poised to grow with rising energy demands.
Canada is well positioned to capitalize on the future potential of nuclear energy given this country’s track record and experience. But success will require us to see beyond oil and natural gas and include nuclear energy in a vision of Canada as an energy powerhouse. Becoming a strong global player in the nuclear sector will require Canada to build from its solid nuclear energy foundation at home.
In other words, the nuclear story is undeniably real and it is a key part of our energy future.
Challenges do exist—I have no doubt about that—but they can be overcome. With goodwill, hard work, innovation and a little perspective on the magnitude of those challenges, I believe that not only can solutions be found, but that most of the solutions already exist.
And finally, AECL has a suite of products that are well suited to the future market for nuclear energy. With flexible fuel sources, well-managed construction, and design that maximizes operational efficiency over the long-run, the commercial case for our product is very strong.
AECL is Canada’s nuclear energy company, and CANDU is tomorrow’s nuclear energy technology. We’re proud of it and I hope you are too.
Thank you for your time and attention.
The appreciation of the meeting was expressed by Stanley H. Hartt, Chairman, Citigroup Global Markets Canada Inc., and Director, The Empire Club of Canada.