The unremittingly grim news from the Fukushima nuclear complex continues as this column goes to press.
The ripples from the disaster will be felt for decades. In addition to the horrifying potential effects on the Japanese people, the catastrophe deals a serious blow to the nuclear industry worldwide. This affects all of us, since governments around the world were relying on nukes as a key part of their plans to reduce carbon emissions and cut the risk of severe climate change.
It is a horrifying true-life example of the kind of choice that professors of risk management like to give their students. Choice A is something that is safe most of the time but has a low chance of a catastrophic disaster. Choice B is something that has a higher chance of small bits of bad things happening regularly.
Choice A is a nuclear reactor. The ones outside Toronto generated thousands of megawatts of power for decades with minimal bad news. Same for the ones near Tokyo, until last week.
Choice B is coal-fired power plants. Coal-fired stations can’t melt down. No one has ever needed to put a fifty-mile exclusion zone around one. But every year, people are killed mining the coal and transporting it to the station. Health statisticians have models that estimate how many senior citizens and asthma sufferers die each year because of the particulates emitted. And coal contributes to global warming, not spectacularly enough to attract a CNN film crew, but slowly and steadily all the same.
Germany has shut down seven older plants temporarily (for now), even though it depends on nukes for 25 per cent of its electricity generation. Plans in the UK to build four new reactors by 2018 have been thrown into question as the government reviews the implications of Fukushima. The UK Nuclear Industry Association points out that the largest earthquake ever recorded in Western Europe was more than 1,000-times smaller than the recent Japanese quake, but those kinds of facts reassure no one these days.
Before Fukushima, around 60 nuclear plants were under construction according to the World Nuclear Association, with another 155 in the planning stages. Almost 300 others were in early proposal stages. China has 27 under construction and many more in various stages of planning. However, the Politburo has frozen further work until Chinese nuclear officials can think through the implications of Japan.
Here in Canada, our governments have decisions to make. Plans for new reactors in Ontario, already on thin ice, will surely be questioned further. The protests at this week’s public consultations made that clear. In the longer run, when our current fleet of aging nukes is decommissioned what will they be replaced with?
The federal government has an even more immediate problem: publicly owned Atomic Energy of Canada Limited.
AECL created the Candu reactor, which was a leading design in its day. But that was decades ago. Recent reactor construction is dominated by France’s Areva, GE-Hitachi and Toshiba-Westinghouse. Candu is well down the list. Even Russia’s ZAO and Korea’s Kepco seem to get more attention in the multi-billion dollar bidding processes.
AECL has been investing heavily in a new version called Advanced Candu Reactor or ACR-1000. It’s a so-called third generation reactor technology, and AECL touts its improved passive safety features and competitive economics. It is optimistic about international sales.
But AECL has not yet signed up a “launch” client. Ontario pointedly opened up bidding to AECL’s international rivals. Even if protecting Ontario jobs gives AECL the inside track, no deal appears imminent. Ontario may also insist on expensive subsidies and guarantees from federal taxpayers. We don’t know how big the guarantees could be, but given nuclear’s tradition of massive cost over-runs it could be billions.
Even if Fukushima doesn’t kill plans for new reactors in Canada, it will likely delay them. Meanwhile, AECL is hemorrhaging money. Some revenue comes in from existing reactors, but the investment in keeping the new Candu project moving forward is expensive. In the 2009-10 fiscal year, AECL’s Candu Reactor Division brought in $440 million in revenue but had $890 million in expenses. That’s a gap of almost half a billion dollars, and it is unlikely to be closed any time soon. The taxpayer’s total shareholder’s equity to date in AECL is negative $3.4 billion.
This is one reason the federal government has announced plans to sell off at least part of the Candu Reactor Division and its new ACR-1000 project. Reaction from potential buyers seems unenthusiastic. Who wants to buy untested new nuclear technology without a launch client, when firms like Areva have already been chosen to build new plants? Areva won at least eleven new reactor projects in the European Union alone, while no Canadian utility is signed up to build a new Candu.
One suspects that even if the feds managed to find a buyer for AECL, they would have to sweeten the deal with so many loan guarantees and public subsidies that AECL’s burden on the taxpayer wouldn’t really be gone anyway.
With the Fukushima disaster, AECL’s lack of commercial success and a big federal deficit, it might be time to put AECL out of its misery if a buyer doesn’t materialize this year. This would be sad, since it would add another example to the pile of bright Canadian ideas that died such as the Avro Arrow and Nortel.
But we shouldn’t be sentimental. The AECL battle was lost long ago. We don’t have an independent Canadian car company or electronics maker. Various iconic Canadian names in mining, beer and department stores have disappeared without really being missed. We can probably do without a money-losing nuclear reactor company.
Our federal government should face up to this. If we’re going to spend hundreds of millions on energy every year, it would probably be smarter to spend the money on renewable technologies.
If the Fukushima disaster gives the federal government a chance to stop throwing good money after bad at AECL, then at least last week’s catastrophe will have had one tiny positive effect.
Keith Halliday is a Yukon economist and author of the Aurore of the Yukon series of historical children’s adventure novels.