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Notes for Remarks

by

the Honourable Joe Oliver
Minister of Natural Resources

To the

Canadian Nuclear Association 

"Canada's Nuclear Industry: Positioning for the Future"

February 28, 2013
Ottawa, ON

Introduction

Thanks very much Dr. Isaac [Dr. Grant Isaac, Canadian Nuclear Association Chair] .

I want to express my appreciation to the Canadian Nuclear Association for inviting me today.

It's a very welcome opportunity to underscore our Government's work to ensure Canada's nuclear sector is positioned for a strong future.   

Canada is among a very small number of nations with a long history of nuclear technology development, manufacturing and marketing. 

We have been involved in the development and application of nuclear technologies for peaceful purposes for nearly three-quarters of a century.  The legacy created by AECL and its experts is significant.  It includes scientists such as Bertram Brockhouse, who along with American Clifford Shull of MIT, was awarded a Nobel Prize in Physics for developing neutron scattering techniques for studying condensed matter.   Scientists whose work has applications from personalized medicine to aerospace.

Canada has been engaged in virtually every aspect of the industry — from uranium mining, to the construction and operation of nuclear power plants, to decommissioning and waste management.

The industry and the potential

I am sure most people here know the facts and numbers, but I want to provide them for a broader audience. Canada is the world's second-largest producer of uranium, with exports valued at more than $1 billion a year.  Uranium mining provides close to 5,000 direct jobs, more than 40% of which are held by Aboriginal people.

Nuclear continues to be a key part of Canada's energy mix and a major contributor to our status as a world leader in clean electricity.

According to the Canadian Energy Research Institute, nuclear power production alone generates close to $5 billion in annual revenues and provides direct employment for more than 17,000 people in Canada.

In its long-term energy plan, Ontario foresees the refurbishment of up to 10 reactors over the long-term and potentially, two new reactors.  A study by the Canadian Manufacturers and Exporters estimates that the refurbishments alone would create 65,000 person years of work and require an estimated investment of $25 billion.

In addition, there are significant opportunities for Canada in the global marketplace, particularly in energy-hungry nations such as China and India.

Challenges

Our Government has a responsibility to ensure the right conditions are in place for Canada's nuclear industry to take advantage of these and other opportunities and to compete successfully in a highly competitive international nuclear marketplace.

That is why addressing long-neglected issues and putting those conditions in place has been a priority for our Government from the beginning. 

In 2007 and subsequently, the Canadian nuclear industry faced daunting challenges. 

Prospects for new reactor sales were slim. As the CANDU Reactor Division moved forward with refurbishment and life-extension projects, costs escalated dramatically and timelines stretched out. The aging National Research Universal reactor or NRU at Chalk River experienced problems. More and more doubts were being raised about the direction and the wisdom of public investment in Canada’s nuclear industry. 

Our government took action

Our Government acted to address these challenges.

Recognizing the central role that AECL plays in Canada’s nuclear industry, we began with a thorough review of the corporation – concluding that it must be restructured.

We needed to put in place conditions that would enhance the opportunities for the Canadian nuclear industry to succeed. We also needed to minimize taxpayers’ financial exposure, delivering on our commitment to lowering taxes for Canadians.

And that is what we have done.

In October 2011, we concluded the sale of the assets of AECL's CANDU Reactor Division to Candu Energy Inc., a wholly owned subsidiary of Montreal-based SNC-Lavalin.

Today, Candu Energy Inc. is pursuing an increasing number of opportunities in Canada and abroad. It is one of two firms the Government of Ontario invited for detailed proposals for new power reactors at Darlington and the company is engaged in the $440 million refurbishment of the Embalse Nuclear Generating Station in Argentina.

Our Government provided the required funds to enable the NRU to restart after its prolonged outage and to be relicensed, enabling a supply of medical isotopes up to 2016.  And, we have pursued a long-term strategy to ensure security of supply of medical isotopes for Canadians.

Several years ago, when unplanned outages at the Chalk River Laboratories reactor caused unexpected shortages of Tc-99m, our Government demonstrated leadership by taking action to improve the security of supply of medical isotopes for Canadians.

We spearheaded an international effort to coordinate reactor outages, share information and find practical, long-term solutions to ensure a secure, stable global supply.

Three years ago, we established an Expert Review Panel to investigate and make recommendations on how to secure a reliable supply of that key isotope for Canada in the medium and long term.

A key recommendation from this process was: explore the possibility of a viable supply of Tc-99m without using nuclear reactors.

Drawing on the advice of the Expert Panel, we invested $35 million in the Non-reactor-based Isotope Supply Contribution Program. Four Canadian research teams from industry, academia and health care have demonstrated that Tc-99m can be made using cyclotrons and linear accelerators.  These projects have shown promising results.

Our challenge now is to prove that cyclotron and linear accelerator production can be commercially viable.

So today, I’m pleased to announce the signing of contribution agreements with three leading Canadian organizations to develop new sources of supply for this key medical isotope.

After a rigorous competitive process, our Government is funding projects led by TRIUMF, in British Columbia, the University of Alberta, and the Prairie Isotope Production Enterprise in Manitoba.

Through Canada’s Economic Action Plan, our Government will provide funding of $25 million to these recipients under the Isotope Technology Acceleration Program. This program will support the development and commercialization of alternative isotope production technologies to secure a robust supply of Tc-99m for Canadians in the medium to long term.  

We envision a future where isotope production will no longer require highly enriched uranium — a weapons-grade material.  That means less radioactive waste, and another contribution by Canada to the international commitment to nuclear non-proliferation. 

Canada boasts some of the best and brightest researchers in the world and today’s announcement builds on that expertise and investing in Canadian innovation.

We are also opening doors to other new opportunities. Prime Minister Harper announced an agreement to facilitate exports of Canadian uranium to China in 2012 — where 28 power reactors are under construction.

Last November, the Prime Minister announced the conclusion of negotiations on the Administrative Arrangements for the Canada–India Nuclear Cooperation Agreement. With this agreement in place, Canada's nuclear industry will have access to opportunities in India — another country looking at a major expansion of its nuclear generating capacity.

Safety, security, health and environmental stewardship continue be our Government’s top priority in nuclear.  That is why we have ensured a strong, independent regulator — the Canadian Nuclear Safety Commission — that has the resources it needs to deliver its critical mandate. This includes not only financial resources, but leadership. That’s why, last December, I was very pleased to announce the re-appointment of Dr. Michael Binder for a second five-year term as President of the CNSC.

Our Government also recognizes its duty to foster a more modern, efficient and effective regulatory regime and this is why we introduced our plan for Responsible Resource Development.  Canada now offers potential investors in major projects a new level of predictability — assurance that reviews of projects will not go on forever. However, those new rules were not imposed on the CNSC. It was free to independently determine what changes if any should be made, without compromising safety, which is its overarching objective.

As is now the case for other major projects, reviews of new nuclear development led by the Commission, will be subject to firm, end-to-end timelines. The 24-month timeline will apply to Commission reviews and decisions for site preparation licences for new Class I nuclear facilities.  It will also apply to licences for site preparation and construction of new uranium mines or mills. 

Finally, we are committed to bringing in legislation that will update and enhance Canada’s nuclear liability regime and, in so doing, complete the modernization of our legislative framework for nuclear.

These changes are essential if Canada's industry is to compete for the capital needed to grow in Canada and to expand into new markets.

Next phase: Chalk River labs

While we have made major progress on the nuclear file, we know there is more to be done.  

We owe it to the taxpayers to provide assurance that Canada’s investment in the industry and in nuclear science and technology will be managed with rigour, discipline, careful planning and expert risk management.

To that end, today, I am announcing the second phase of our AECL restructuring plan, focusing on AECL’s nuclear Laboratories.  Our Government will launch a competitive procurement process for private sector management and operation of the Laboratories.  The President, Dr. Robert Walker, and the Chair of the Board, Peter Currie, have been instrumental in helping us move forward and we will continue to work with AECL to ensure the success of the restructuring.

To be clear, we are not selling or closing the Chalk River Nuclear Laboratories.

This approach is in keeping with the conclusions of the Government of Canada’s Review of AECL. It also draws on input from the industry and other stakeholders in response to the Request for Expressions of Interest we issued last February.

The new model aims to bring private sector rigour and efficiencies to the management of the Laboratories, with the goal of creating commercial opportunity and reducing the financial cost and risk for Canadian taxpayers.

Address GoC and industry priorities

Going forward, we intend to focus the labs on three key objectives.

First, support our Government to meet its obligation to address legacy liabilities accumulated during the more than 60 years of nuclear research and development.

The ongoing need to address nuclear legacy liabilities is not unique to Canada.  By engaging the private sector, we stand to benefit from experiences and best practices from around the world.

Our second objective is to ensure that Canada's world-class nuclear science and technology capabilities support our nuclear role and responsibilities — from health protection and public safety to security and environmental protection.

This includes the labs' role in research and testing to support the Canadian Nuclear Safety Commission’s  understanding of nuclear safety issues and in the development and application of nuclear safety and regulatory standards.

This would include, for example, the detection of nuclear materials that may arrive at our borders with malicious intent. 

We must, and we will, enhance our capacity to respond quickly and effectively in the event of a nuclear incident in Canada or elsewhere.

Research is also necessary to increase our understanding of the effects of radiation on people and our environment — essential to the ongoing development of policies, procedures and regulations to protect Canadians.

Canada is uniquely well-equipped to study the effects of radiation on living things.  The Biological Research Facility at AECL is one of only two facilities of its kind in the world.  The facility is currently working with the Ottawa Heart Institute, as well as a number of international partners, to understand the effects of radiation on the progression of heart disease. This research will also increase our understanding of the effects of radiation from a variety of sources, such as diagnostic imaging and cancer treatment.

Our third priority for the restructured Laboratories is to ensure ongoing industry access to the labs' in-depth nuclear scientific expertise.

After we issued the call for Expressions of Interest last year, one message came through loud and clear: the facilities and experts at AECL have an unparalleled capacity to support the efficiency and competitiveness of industry in the safest possible way.

This includes the development of technologies that help utilities to provide a reliable supply of energy at ever-higher standards of safety and security.

Maintaining ongoing access to the labs for owners and operators of CANDU reactors is part of this — so is providing access to the CANDU and broader nuclear supply chain in Canada.

CANDU is Canadian technology and no one understands it better than our experts at AECL.  That is why, for example, when power utilities in Ontario needed help to determine the scope for safely extending the life of their reactors, they went to AECL.

Our Government is committed to providing industry access to AECL’s expertise — but we are also committed to taxpayers.  That is why, over time, the delivery of AECL's science and technology services to industry will need to move to full cost recovery. 

A process

I would stress that this restructuring is an evolution, and not a revolution in the Government’s support for nuclear science and technology. 

The process will not be completed overnight.  A competitive procurement process will be launched in the coming months to select the contractor to manage and operate the labs.  We expect a procurement of this size and complexity will take about two years to complete.

We will have to acquire the appropriate expertise we need to move towards a Government-owned, Contractor-operated model.  This so-called GoCo approach has been the norm in both the United States and the United Kingdom. 

As part of the GoCo process, we will be assessing the business cases for an industry-driven nuclear innovation agenda, based on a cost-shared approach.

We will not make decisions on investments in an innovation agenda, including investments in infrastructure, without thorough consideration of the business cases and their value to Canadians.

We are acutely aware of the interests of AECL’s skilled workforce in this process of transformation. As it moves forward, we will be respectful of the employees and we will keep them informed and engaged.   

Our goal is to put the Laboratories on a solid footing — to position them for new science services and commercial opportunities that, ultimately, will benefit everyone — Canadians, government, private sector stakeholders, academia and employees.  This is the best way to sustain and build value for the future. 

This goal is attainable if we work together. This is why I count on a robust collaboration with AECL employees, under the leadership of its Board and management.

Conclusion

We all take pride in Canadians' role as pioneers in developing nuclear technologies for peaceful purposes.  Canadians continue to play a leading role in demonstrating the safe and effective use of nuclear energy.

Our Government is committed to putting our nuclear labs on a more secure footing, by introducing private sector discipline and commercial vision. Our commitment is to ensure Canada's tradition of excellence and leadership in nuclear science and technology will continue, in support of the needs of Canada and Canadian business and in respect for the Canadian taxpayer.

These changes will in no way reduce the Government of Canada's role in safety, security and environmental stewardship in all aspects of the nuclear industry.  The Canadian Nuclear Safety Commission will continue its strong, independent regulation of all parts of the nuclear industry in Canada, including AECL's Laboratories.

At the AECL labs, we possess a capacity for nuclear research and development that is among the best in the world.

By creating the opportunity for closer engagement between science and industry, our restructuring initiatives will provide Canadians with a cost-effective, world-class research and technology organization focused on results, jobs and prosperity for Canadians.

Thanks very much Dr. Isaac [Dr. Grant Isaac, Canadian Nuclear Association Chair].