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Canada, U.S., Mexico Face Unique Energy Challenges

By John Stewart
Director, Policy and Research
Canadian Nuclear Association

Many serious challenges currently face utilities and major energy projects across North America.  That was the overarching message from the World Energy Council’s North American Regional Forum, which brought Canadian, U.S. and Mexican representatives together in Calgary on June 26.

  • Marie-Jose Nadeau, WEC chair, said big projects are increasingly “all-of-society” issues, and once-national energy questions are increasingly international issues (as North Americans have seen with, for example, the EU’s Fuel Directive).
  • Pollster Greg Lyle of Innovative Research presented research on low public confidence in authority. Only about half of Canadians agree that “government and regulators do a good job protecting the public interest on major developments.” This is consistent with an increasing lack of trust in authority. Large minorities of Canadians and Americans believe that corporations deliberately suppress environmentally beneficial technologies.
  • Toronto Hydro President Anthony Haines noted that while one-third of his company’s infrastructure is past its expected lifespan, it is currently supporting unprecedented growth in high-density housing (“becoming another Manhattan”) and bracing to host the 2015 Pan Am Games. A 20-year period of strong electricity cost increases is just beginning.
  • Jim Burpee, Canadian Electricity Association (CEA) president, said that increases in the cost of a commodity that accounts for about two per cent of household expenses draw a disproportionate emotional response. This may be because consumers have no option to test price-quality trade-offs as they do for most products. CEA has worked with Innovative Research on how best to explain electricity’s value proposition, and they focus on two tactics: comparing electricity to other necessities, and emphasizing the need to leave a reliable system for future generations. The result is a 30-second ad with the tag line, “Invest today. Power tomorrow.
  • While the U.S. and Canada have experienced the shale gas revolution, Mexico’s demographic and economic growth has made it a net importer of oil and gas. Mexican delegates fleshed out their country’s dramatic reform plans for the energy sector, which they expect will return Mexico to net exporter status.
  • Mexico’s electric power monopoly CFE, which is currently plagued by financial losses as well as power theft, will remain a state monopoly in transmission and distribution. However, the generation sector will be thrown wide open to private investment and new legislation will promote clean power generation.
  • Mexican participants described the various challenges of integrating renewables, particularly solar, into their electricity grid.
  • Mexican energy regulator Francisco Barnes said his country, whose two nuclear power reactors are aged, “must eventually reopen the question of re-launching its nuclear energy program.”

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Nuclear Features Prominently at 2014 Canadian Energy Summit

By John Stewart
Director, Policy and Research
Canadian Nuclear Association

Nuclear topics were featured at the Energy Council of Canada’s 2014 Canadian Energy Summit thanks in large part to hard work by the CNA. The one-day event in Calgary  brought together various Canadian energy sectors, federal and provincial figures, plus U.S. and Mexican reps. The following are a few highlights.

    John Barrett and Kelly Block (2)

    CNA President John Barrett and MP Kelly Block at the 2014 Canadian Energy Summit

  • Social license for big energy projects was a central topic. CNA President John Barrett argued that, given differing resource endowments and energy production in provincial jurisdiction, a sense of national urgency or need may be the prerequisite for a national energy strategy. Since there is no perceived lack of energy, fashioning a national strategy may be difficult. However, a shared concern through the energy sector over climate change might provide this uniting factor. The Canadian Gas Association’s Tim Egan said big projects need a crucial combination of policy prioritization, creativity, and profit opportunity.
  • Among big energy projects, top of mind was LNG exports through the British Columbia coast. Participants noted the shrinkage of Canada’s gas exports to the U.S. market (on both volume and price) since the shale gas revolution and the economic stakes for Canada in reaching new markets within the next five to six years.
  • Another key topic was Canada’s national energy strategy. Egan noted that given disparate provincial interests, the most realistic aim could be to secure agreement on shared principles and values.
  • Pollster Greg Lyle (currently working with the CNA on our annual national survey) presented research on project opponents (NIMBYs). Lyle continued to stress that ultimately, those with NIMBY attitudes to infrastructure are relatively few in number. He emphasized approaches that reach  a larger and more persuadable group:  those who “don’t like a project but think it’s necessary.”
  • On nuclear, lawyer David McFadden recalled the creation of Bruce Power, saying that while this decision directly contradicted the Macdonald Royal Commission’s advice not to privatize nuclear plants, the decision was supported by “good communications and a comprehensive view of the region’s economic and social development,” and this proved highly successful.
  • McFadden and Hydro One’s Mike Penstone also recalled the success of the methods used to obtain social license from both natives and wealthy property owners along the closely related Bruce-Milton power transmission corridor – another process that McFadden concluded “could have been a mess but instead went beautifully.”
  • Peter Lang of Dunedin Energy gave a brief but effective presentation on Canadian applications for small reactors. Asked later about “game changing innovations,” Lang cited Liquid Fluoride Thorium Reactors (LFTRs) for their capacity to address most or all of the reservations most of the public has about nuclear power generation.

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New Cabinet Includes Bob Chiarelli, Glenn Murray

By George Christidis
Director, Government Affairs
Canadian Nuclear Association

On June 24, 2014, the newly-elected Premier of Ontario, Kathleen Wynne, announced the post-election cabinet. It includes some key ministers staying in the same portfolios as well as some senior ministers moving to new roles.

Of significance to the Canadian nuclear industry is the reappointment of Bob Chiarelli as Minister of Energy and the appointment of Glenn Murray, the former transportation minister, to Environment and Climate Change.

Charles Sousa was reappointed to Finance while Minister Michael Gravelle remains at  Northern Development and Mines. Minister David Zimmer continues at Aboriginal Affairs.

Bill Mauro was appointed to Natural Resources. Minister Mitzie Hunter was appointed Associate Minister of Finance with responsibility for the new Ontario Retirement Pension Plan.

As well, former Health Minister Deb Matthews was named President of the Treasury Board.

The legislature will reconvene next Wednesday with a Throne Speech marking the beginning of Ontario’s 41st Parliament. The CNA will monitor and assess the new Throne Speech and will provide a broad blue print to where the government intends to focus its priorities. Given the recent election, the previously tabled budget, which was also the key election platform for premier Wynne, is expected to be the basis of the new Throne Speech.

The CNA will be seeking an opportunity to reconnected with the key ministers and their staff as part of its on going efforts in re-enforcing the message that nuclear plays an important role in Ontario’s economic and social well being.

Please feel free in contacting us if you have any questions.

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What a Liberal Majority Means for Ontario’s Nuclear Industry

By John Stewart
Director, Policy and Research
Canadian Nuclear Association

What will four years of Liberal majority government mean for Ontario’s electric power industry?

We could analyze this in several ways. Some would be more critical than my colleagues would probably want posted; so the following is as kind as I can be.

Electric power is a business of decades. The infrastructure is large and expensive. For good reasons of reliability and safety, it is designed, verified, tested and evaluated to very high standards. It stays in service for 30 to 70 years. It affects every single household and business. The system is fantastically complex to manage; it requires balance and synchronization that few of us can understand.

North America’s electric power grid has been called the world’s largest single machine. If there is a business for technocrats – engineers, accountants, and independent regulators – surely this is it.

Politics is a business of months or, at most, a few years. Power and leadership are tenuous (as two leaders found out last night). Attention is dispersed between campaigning, forming teams, fending off attacks from inside and outside one’s party, legislating, and trying to govern.

Yet few businesses in our society are run so directly from the Premier’s desk as electric power. Electric power is a technocrat’s 50-year game that absolutely must come out right. Yet we subject it to constant political meddling.

When I first studied this business as an economist 24 years ago, it was obvious to me that this was a serious problem. Sadly for Ontario, it still is. I thought rational governments would seek to put some distance between themselves and the governance of the electric power system, if not for the good of the province, then at least to give themselves some peace. We have not seen that happen.

So let’s accept that our electric power system is and will continue to be run by politicians whose time frame does not match the one required for successful results, and who will continue to do the kinds of things in the future that they have done in the past.

Paradoxically, then, last night’s election result may be the best we could have hoped for. Here’s why: It is probably the least disruptive.

Whatever else one thinks of the opposition parties, a win by the PCs or the NDP would have held high risks for further erratic policy changes in a sector that is already challenged by the unforeseen consequences of recent interference.

A minority Liberal government would have held smaller versions of those risks, which might have been imposed by one of the opposition parties in return for support in the legislature.

The Wynne government has a mandate to change things, but with little apparent focus on the electricity sector; it pertains mainly to areas like education, social services and pensions.  The government’s commitment to infrastructure investment will be constrained by finances, it seems to be focused on transportation, and anyway, it has a chance of being beneficial if done rationally.

The Wynne government also has an electric power policy, the Long-Term Energy Plan, released last fall. Whatever else one thinks of it, at least we know what it is. In fact, it’s not bad.

And last night’s result means there is little risk of an election or a transition in the Premier’s Office for four years.

Much can still go wrong, and history says there’s a good chance it will. But much can still go right. A colleague recently remarked to me that “Ontario used to be where people came to learn how to run an electric power system. Now it’s where they come to learn how not to do it.” That can still change. Our odds are a little better today than they were yesterday.

Nuclear Policy Uncategorized

EDC Talks Nuclear Export Opportunities

By John Stewart
Director, Policy and Research
Canadian Nuclear Association

OCI President Ron Oberth and CNA staff recently participated in a detailed and constructive conversation about export financing with knowledgeable experts.

On June 5, Export Development Canada, along with the CNA and OCI, hosted Successful Exporting for Canadian Nuclear Companies, an informative two-and-a-half hour presentation and luncheon discussing how companies can grow their business by exporting abroad.

About 20 guests took part in the event at EDC’s downtown Toronto office. It is part of the CNA’s efforts to promote members’ awareness of international opportunities.

The conversation covered EDC’s general mandate and role, client eligibility and the nuts-and-bolts of EDC’s services. To access EDC’s services, companies need not export directly. They only have to be part of an export supply chain.

EDC officers Line Charbonneau, Chris Evans and Richard Ross participated, as did Louie DiPalma of the Ontario Chamber of Commerce, who described services available from the provincial level.

The CNA hopes to host another event like this in the months to come.

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Carbon Crisis a Help for Nuclear, Not a Cure-All

By John Stewart
Director, Policy and Research
Canadian Nuclear Association

The climate challenge will likely prove a modest, not a dramatic, help to nuclear energy, according to experts who spoke at this year’s Nuclear Energy Assembly in Scottsdale, Arizona.

Broad-brush policies on carbon are not happening, they emphasized at the conference that was attended by representatives from the Canadian Nuclear Association.

Global treaties failed, U.S. cap-and-trade legislation failed, and Congress will not put an explicit price on carbon.

The experts also correctly predicted that U.S. President Barack Obama’s administration would use Environmental Protection Agency (EPA) regulations to set climate policy.

On June 2, 2014, the Obama administration unveiled a bold new Environmental Protection Agency rule that would reduce carbon emissions 30 per cent by 2030, compared to 2005 levels.

David Victor, a modeller with the University of California at San Diego, said the climate models call for modest, but not vast, new investment in nuclear.

As a way of decarbonizing the atmosphere, more nuclear power appears to be competitive with encouraging forest growth (as a carbon sink), and with generating power from biomass combined with carbon capture and storage (CCS).

There are many “paper technologies,” Victor said, for reducing atmospheric carbon, but they tend to be pushed by technology-boosters with little knowledge of real-world investing and regulatory conditions.

Victor’s advice to policymakers is to focus on adapting. Limiting global warming to two degrees is now impossible and that “huge adaptation” is not only needed, but inevitable.

His advice to the nuclear energy industry is:  Focus less on climate policies, more on “what your real competition is” for effective carbon mitigation.