The images could scarcely be breezier; the double take more, well, shocking.
Over the past two years, millions of Canadians have tuned in to a soothing corporate advocacy campaign of almost unrivalled effectiveness, the centrepiece of which has been a series
of slick commercials touting that old bugbear, nuclear power, as "clean, affordable and reliable."
Sharing the airwaves with newscasts carrying disquieting reports about nuclear tests in North Korea and Iran, and nuclear-weapons smuggling networks in Pakistan, the ads featured a series of words floating against a blue sky. A woman's voice coolly rhymed off some basic factoids about nuclear energy as the letters flipped and flew off the screen, allowing one word to morph into the next. "If you are like most Canadians, you are unclear about nuclear power," she said. "Well, let's clear things up." The take-away message: that nukes aren't scary and they won't poison the atmosphere.
The Canadian Nuclear Association (CNA) has spent millions of dollars on these elegant spots, produced by a Toronto ad agency best known for its work for multinational pharmaceutical firms. And CNA is not the only nuclear player trumpeting
its merits. Since 2004, Ontario Power Generation—the government-owned utility that generates 70% of Ontario's electricity—has hiked spending tenfold on its own pro-nuclear ads.
Duncan Hawthorne, CEO of Bruce Power, is shopping for reactors. Areva's new model is 'real,' he notes; the new Candu isn't, yet (Lorne Bridgeman)
The timing of the ads is no coincidence. Public concern about air quality, blackouts and climate change has created a choice moment that nuclear lobbyists are hustling to exploit. And it seems to be working. Never mind the inconvenient truths about radioactive waste, cost overruns and the proliferation of weapons-grade uranium. A generation after Three Mile Island and Chernobyl—and a decade
after a third of Ontario's reactors were mothballed—the repackaged nuclear energy sector has deftly wrapped itself in the mantle of green power and is poised for explosive growth.
Coming off yet another breathless, hazy summer, on Oct. 10 Ontario voters will pass judgment on Dalton McGuinty's Liberals, whose record in office includes a landmark decision to pour billions into new and refurbished nuclear reactors over the next decade or so. The nuclear industry's savvy lobbying and PR blitzes have had a strong influence on McGuinty & Co., says Candu expert Duane Bratt, a political scientist at Mount Royal College in Calgary: "[The McGuinty government] had to be pushed, and they had to be pushed in a number of ways." Nuclear advocates have sought to convince the government of the environmental upside of their technology, while seasoning that upbeat message with stern warnings about failing to provide enough electricity for a power-hungry
province. That done, the industry has now set its sights on New Brunswick and Saskatchewan, which are both considering how to expand their electricity supply. Meanwhile, a Calgary firm is poised to develop at least one private $6-billion reactor for Alberta's oil patch, which uses huge amounts of power in the oil sands.
The nuclear renaissance, which comes after a long period of almost no growth, is a global phenomenon. The International Atomic Energy Agency predicts 60 new plants will be built by 2020; industry estimates put the figure closer to 100.
National and international regulators are streamlining licensing processes. Uranium prices have been soaring, setting off a speculative mining boom. And the reactor manufacturing industry has restructured itself into a formidable trio of two-headed giants: Westinghouse/Toshiba, Areva/Mitsubishi and General Electric/Hitachi are girding to compete for mega-deals as
dozens of utilities in North America, Europe and Asia cut orders for the next generation of reactors.
Now for the domestic twist. With its PR and lobbying campaign, the Canadian industry has won the battle. But now it may lose the war. Atomic Energy of Canada Ltd. (AECL), the 4,700-employee Crown corporation that has designed and built 33 Candu reactors in Canada and abroad, faces the prospect of being shut out of Ontario's nuclear building campaign, or even being sold. How's that for a short circuit?
Murray Elston, the CNA's current president and CEO, is the man responsible for the Canadian chapter of the nuclear industry's renaissance. He arrived at the CNA's inauspicious Ottawa office in 2004 with three noteworthy details on his resumé. First, as a former Liberal health minister in Ontario, he was one of Dalton McGuinty's earliest backers during the party's 1996 leadership race. Second, Elston's previous gig
was as chief tout in Canada for the multinational drug companies, which had all sorts of image issues. Lastly, unlike his predecessors, he didn't come from inside the nuclear industry.
A slightly wary 57-year-old with a boyish face and the bland-works disposition common to many Ontario pols, Elston did his ministerial stint in David Peterson's government, which voted to complete construction on the $14-billion Darlington nuclear station east of Toronto. It opened in phases during the early 1990s amid intense controversy over its cost.
Elston vividly remembers the first time he came face-to-face with the nuclear industry's PR deficit. It was at the CNA's annual confab in February, 2004, at Ottawa's Château Laurier hotel. During one panel session, MP John McKay, a Toronto Liberal with close ties to then prime minister Paul Martin, upbraided the nuclear industry for its "culture of arrogance" and a
credibility-destroying record of financial mismanagement that made it exceedingly difficult for politicians to offer up their support. Elston's interpretation of McKay's scathing critique: "He's asking us to broaden our message." In other words, cue the admen.
Elston knew what needed to be done. During his six years running the lobby group for multinational drug firms in Canada, he led the industry's push to have the federal government lift advertising restrictions on prescription drugs and extend the patent protection period for brand-name pharmaceuticals (net effect: costlier drugs). And he had overseen a brilliant rebranding of the group. As the Pharmaceutical Manufacturers Association of Canada (PMAC), it had gained too much baggage: above all, a reputation as one of the pushiest lobbies.
The campaign was the brainchild of Anderson DDB Health & Lifestyle. In 1998, PMAC hired the Toronto ad firm to fit it
out with a more public-friendly image. Anderson proposed a clever new moniker—"Rx&D: Canada's Research-based Pharmaceutical Companies"—intended to defuse the widespread perception that Big Pharma was solely interested in Canada as a place to make profits, and not as a place to invest in research. Anderson also devised a Hallmark Card-like TV campaign entitled "I believe," which featured real people recounting their inspiring experiences with illness, recovery and, by inference, prescription drugs. Three weeks after it aired, the campaign achieved an impressive 25% recall rate among consumers, according to Anderson.
At Elston's request, the agency signed on with the CNA in the summer of 2004. Anderson president Kevin Brady says of his marching orders, "We wanted to reclaim the word 'nuclear.'"
It was time to turn back the clock to a more upbeat era. During the Second World War, Canada, the U.K. and the U.S.
had collaborated on the Manhattan Project, which produced the atomic bomb. As the Cold War began, governments on both sides developed a civilian spinoff of the military breakthrough—technology that could harness the energy released during nuclear fusion and use it to drive electrical turbines. At AECL's labs in Chalk River, Ontario Hydro and Canadian General Electric worked with the Crown agency to build Canada's first demonstration plant. Soon, Ontario, New Brunswick and Quebec began planning for nuclear reactors and promoting the peacetime uses of atomic power. Ontario Hydro famously promised ratepayers that they could "live better electrically" because the cost of producing "flameless" power would be negligible.
Between the late 1960s and the late 1980s, Hydro developed three huge nuclear stations—Pickering and Darlington, which are east of Toronto, and Bruce, located near Port Elgin on the shores of Lake Huron—using AECL's Candu design.
Hydro, a mind-of-its-own monopoly that all but dictated energy policy to the Ontario government, came to be known as Canada's largest construction contractor thanks to its insistence on building all the plants by itself. That notorious practice—coupled with delays in government decision making—drastically drove up costs, leaving the utility saddled with a $30-billion debt.
Over the years, public confidence in Hydro's nuclear operations dimmed. While the plants have a solid safety record, peace activists opposed them on principle, and environmentalists warned about radioactive leaks and the problem of storing spent fuel. Opposition politicians, the provincial Liberals among them, bemoaned the price of all this no-cost energy.
The CNA was formed in 1960 to lobby for AECL, Hydro and the nuclear equipment industry. As the anti-war movement gathered momentum in the course of the decade, the CNA had to counter
mounting anxiety about nuclear power and the proliferation of nuclear weapons in countries such as India and Pakistan, where AECL was selling its reactors. Its advocacy was variously self-serving, belligerent and zany—hardly the work of PR professionals. Early on, the organization often relied on a circular economic development argument, saying that if governments didn't build more reactors, Canada's nuclear industry would either wither or flee. The association had a long-standing practice of rebutting any criticism with prickly letters to the editor. And during the CNA's annual summits, industry gurus offered up oddball predictions (for example, that more nuclear would lead to improved nutrition) and dire warnings about looming energy supply shortfalls. At one session, not long after the Three Mile Island meltdown, a psychiatrist who had been invited by the association scolded the media for feeding the public's phobias about radioactivity.
The late 1980s and the 1990s were a grim era for the nuclear industry: Chernobyl terrified energy planners. Polls conducted in Canada in the years following the 1986 Ukrainian disaster showed that the public not only felt a Canadian accident was likely, they also believed that the government was keeping secrets about reactor safety. Ontario Hydro, however, seemed oblivious, releasing a 1989 plan to build a huge new reactor fleet while secretly considering the orchestration of brownouts to stoke public concern over energy supply. By the early 1990s, however, the utility was bleeding cash due to the recession and the servicing cost of its hefty debt. Then the reactors themselves started to falter. In 1997, seven of Ontario's 19 units were put in dry dock, triggering a provincial inquiry that concluded there was widespread mismanagement within Ontario Hydro's nuclear division.
While Hydro was imploding, AECL busied itself selling Candus abroad. Aided by hefty
export subsidies and given pride of place on the federal government's trade missions, in the 1990s the Crown corporation won a series of multibillion-dollar contracts to sell an updated version of the Candu reactor to utilities in South Korea and China. AECL's executives boasted that they'd delivered these international projects on time and on budget—something Ontario Hydro never managed to do when it was building its Candus.
The politics of electricity changed abruptly in August of 2003, when a blackout, triggered by faulty transmission lines in Ohio, left much of Ontario without power. By then, Queen's Park had brought Hydro to heel by carving it into five pieces but had stopped short of full-scale privatization. Indeed, the only part of the Hydro empire that ended up in private hands was the Bruce nuclear station, now operated by a consortium that includes TransCanada Corp. and Saskatchewan's Cameco Corp., the world's largest uranium
company.
McGuinty's Liberals, driving hard to win the October, 2003, provincial election, exploited public nervousness about air quality by promising to close OPG's five coal-fired generating plants by 2007. The juice would be replaced by clean, renewable energy sources. The party's platform, interestingly, made no mention of nuclear energy.
No matter. Nuclear-industry strategists immediately understood the significance of the Grits' coal promise, says Duane Bratt. "Getting rid of coal meant replacing it with something else. That's when the nuclear industry raised its hand and said, 'Over here, look at us.'" Nuclear executives also reminded provincial energy officials that several of Ontario's still-operating reactors were within a decade or so of their best-before date—roughly the interval required to get a new reactor designed, licensed, ordered and built. It was time to connect the dots.
Elston
took the helm of the CNA shortly after McGuinty took office. He quickly discovered that public support for nuclear power was tracking south. During the early 2000s, the CNA's pollster, Ipsos-Reid, found that as many as 64% of Ontarians favoured nuclear energy, while as many as 36% opposed it. But during 2004, the pro-nuke numbers began to fall while anti-nuke sentiment started to rise. For the first time in recent memory, more Ontarians opposed nuclear power than supported it.
Pamela Davis-Ross, vice-president of marketing for World Wildlife Fund of Canada, figured out why. She cross-referenced Ipsos-Reid's polling data against what was appearing in the media, and discovered a wave of negative stories: reports about problems with nuclear waste management, temporary shutdowns at various Ontario reactors, and Canadian Nuclear Safety Commission hearings on whether reactors could withstand a 9/11-type terrorist attack.
When Elston retained ad agency Anderson to reverse this worrisome slide, the creative team began by studying previous CNA ads. Anderson's Brady told his client that the CNA needed a new approach that didn't have an engineer-driven focus on the merits of the technology. Instead, Anderson devised a campaign in which each new TV spot—there were to be four in all—would add more information and reinforce the core message of empowering the Ontario consumer. The ads would also invite viewers to visit the CNA's website.
Focus groups told the agency team that women tend to be more wary about nuclear power than are men. Accordingly, a female voiceover was used. The iconic images of fluffy clouds against a blue sky are a common leitmotif in ads used by drug companies and green energy firms. (Anderson's offices, in fact, are festooned with blue-sky posters.) The tag line—"More power to you"—carries the industry's growth message in a deft
double-entendre. On screen, the displayed words closely track what the narrator says, a communication technique that increases comprehension and retention. Lastly, as Brady notes, the ads don't disparage other sources of clean power (an attitude that is nonetheless alive and well within the nuclear industry itself). "The thing is, nuclear has to be part of the mix," says Brady. "Never criticize the other ones."
As for placement, Anderson recommended that the CNA eschew its preferred media: print and radio. Instead, Brady bought $970,000 worth of time on network television and another $700,000 on specialty channels in 2005. The total outlay was $400,000 more than the group had invested in media buys over the four previous years. The CNA now enjoyed a prime-time presence it had simply never had before.
The ads put environmentalists on notice. "The first time I ever saw that ad, I was at home, making dinner and
watching the news on a TV in the kitchen," recalls WWF's Davis-Ross. "My first visceral reaction was one of relief: 'Okay, one more big thing I don't have to worry about.' My second reaction was, 'That is so diabolical.'" The WWF and other environmental groups complained to federal regulators that the ads didn't come clean about nuclear shortcomings, such as cost overruns, spotty reactor performance records and groundwater contamination from uranium tailings. Still, Davis-Ross has a grudging respect for what the nuclear lobby achieved. The ads, she admits, "had a very strong impact on public opinion. What it's done is made our job that much more difficult."
Elston, meanwhile, was travelling constantly, making speeches to chambers of commerce and service clubs, reinforcing the upbeat message in the CNA ads. "The public," he says, "didn't know how many units we had, how many megawatts had been produced, how much fuel is used. The information is
brand new."
Nor did it hurt that a pair of famous environmentalists—former Greenpeace activist Patrick Moore and Gaia guru James Lovelock—were speaking out in favour of nuclear power as a solution to climate change. (Elston invited both men to attend the CNA's annual conference. Lovelock sent a video message in 2005; Moore made a presentation in person in 2006.) But Davis-Ross and other anti-nuke environmentalists point out that Moore is on the industry payroll, and has been involved with a pro-nuclear environmental "coalition" set up by Hill & Knowlton, the PR giant that is notorious for marketing the Gulf War to the American public, and which is regularly retained by the U.S. nuclear industry's lobbyists. (In Canada, Bruce Power hired H&K as a lobbyist after the firm recruited Bob Lopinski, a former senior adviser to Dalton McGuinty.)
Quite apart from such untidy details, the media attention being paid
to climate change and clean energy was a huge improvement over the old days, when nuclear engineers and scientists dominated the pro side of the debate with technical boasts that carried more than a hint of arrogance. As Elston says, "The nuclear industry has benefited from everything—Kyoto, the Clean Air Act, [Al] Gore—coming together at once."
Elston and his board happily watched public opinion do an about-face. Among Ontarians, the poll numbers bounced back to above 60%, thanks in large measure to Anderson's ads. "It was the first time we've been out there saying, 'Look at us, ask us questions,' " Elston says. "The invitation to know more about us is probably the most clever element of those ads. It helps people make decisions." (Support for nuclear power tends to be substantially lower in provinces without nuclear plants.) The net effect was to provide Ontario's Liberal government with the necessary political cover to initiate several big
money decisions in favour of nuclear power. "There was a sense that the criticism of nuclear had bottomed out," says one lobbyist.
In 2005, Queen's Park began approving hefty nuclear investments and hedging on its promise to close down OPG's coal plants. The cabinet had already churned through $1 billion to fix one of the damaged reactors at the Pickering A plant. Then, it hastily approved a $4.25-billion deal with Bruce Power to repair reactors at the Bruce station (the government scotched a $2-billion plan to refurbish two more idle units at Pickering as uneconomical). That agreement was subsequently criticized by Ontario's Auditor-General this past April for favouring Bruce Power's investors at the expense of consumers. While the auditor's report noted that the province had successfully transferred the operating risk to Bruce Power, the financial upshot was that the power produced by the refurbished reactors will cost consumers 7.1 cents
per kilowatt hour, which is "significantly higher" than the average market rate of 4.9 cents. The reason for the differential: Bruce Power needed to achieve its target returns.
Then came the clincher. On June 13, 2006, Ontario Energy Minister Dwight Duncan held a press conference to reveal that the government would begin planning for the construction of new nuclear reactors if the province's energy regulators felt there was a business case to support such a scheme. For some time, Duncan had refused to rule out new nuclear projects, while the government was simultaneously focusing on policies to encourage investment in renewable energy sources such as wind, solar and small-scale hydro. The result of the combined policies was that there was no widespread hue and cry from the public, even though environmentalists were appalled. Elston and Brady, after all, had done their jobs well, by positioning nuclear power as another green solution to
climate change.
But Duncan added a critical twist to his historic announcement. All things being equal, the minister said, Queen's Park would prefer to go with Canadian technology (i.e., AECL's Candu reactors), but its decision would ultimately be guided by what's best for electricity consumers. In effect, Duncan was putting AECL, the entrenched incumbent, on notice that the Ontario nuclear reactor market would henceforth be open to all comers.
"It's just nonsense," shrugs Armand Laferrere, with obvious irritation in his voice.
The 39-year-old president of Areva's Canadian division is sitting in a ground-floor office in an industrial building just down the road from OPG's Pickering nuclear plant. Ever since he was dispatched from Paris last year to front Areva's ambitious bid to sell reactors in Ontario, Laferrere has tuned in to all sorts of innuendo emanating from Canada's dug-in nuclear
establishment, beholden as it is to AECL and its utility clients.
He's heard AECL insiders and lobbyists mount whisper campaigns, insinuating that a loss for the Crown corporation in Ontario will kill off a Canadian high-tech success story. He's read articles quoting anonymous sources saying that Areva's archrival, GE, is poised to buy AECL from the government. Most annoying, though, is hearing Areva run down as a foreign carpetbagger. "We are a multinational, but one with deep roots in Canada," says Laferrere, citing Areva's uranium mines in Saskatchewan and its transmission-line business in Quebec. "We've already demonstrated we're here for the long haul."
The looming showdown between Areva and AECL—and AECL's long-time ally, GE—has all the makings of a fierce confrontation, the dynamics of which reveal much about the changes sweeping through the increasingly global and growth-oriented nuclear energy business.
Though AECL may seem to have the inside track, Areva is a force to be reckoned with, even though the company is hardly a household name in Ontario.
Both are vying to supply the new reactors in Ontario—to be located either at OPG's Darlington plant or at the Bruce Power facility. Last year, both OPG and Bruce Power began environmental and technical assessments of the competing reactor technologies now on the market. But the "new build" decision is subject to numerous imponderables: the viability of extending by decades the lifespans of the existing reactors; the risk of construction delays; fluctuating energy prices; political will. "The exact process is far from defined and charted at this time," says Amir Shalaby, vice-president of power system planning for the Ontario Power Authority, the agency created by the Liberals to plan new sources of electricity supply.
Areva is a huge and imperialistic operation,
owned by the French government; its reach extends around the world. (Laferrere, interestingly, is a former adviser to French President Nicholas Sarkozy.) Like its rivals, the conglomerate is highly attuned to the climate-change spin. As a Day-Glo green corporate brochure in the lobby outside Laferrere's office declares, "Our energies have a future. A future without CO2."
"Canada is one of the biggest markets there is," Laferrere says, citing the inventory of aging Candu reactors that will need to be replaced within the next 10 to 15 years. Areva has built 98 of the 264 pressurized light-water reactors currently operating in France and elsewhere around the world. Its key current projects, in Finland and France, rely on so-called Generation Three technology, considered to be the way of the future because the reactors are larger, better able to withstand terrorist attacks (security has become a well-deserved fixation for all nuclear operators)
and purportedly have a 60-year lifespan.
AECL's Candu units, by contrast, are heavy-water reactors. The technology is in danger of becoming the nuclear industry's version of the Beta videotape. Candus pump chemically supercharged water through their reactor cores, allowing them to use ordinary uranium as fuel. The vast majority of other reactors, including Areva's, employ light-water technology that combines ordinary water and enriched uranium, which is produced in special plants. All the major nuclear players are developing Gen-3 reactors, including AECL. Indeed, GE has four operating in Japan. But from AECL's perspective, it's more notable that Areva has sold one. While Areva's groundbreaking project in Finland is overbudget and behind schedule, Areva, unlike AECL, can claim to have taken a Gen-3 reactor through an exhaustive regulatory approvals process. What's more, with the Finnish deal, Areva prevailed over the state-owned Russian
vendor and General Electric in an open bidding process, partly by agreeing to swallow the cost of construction overruns.
Laferrere notes that Areva has also lined up orders for Gen-3 reactors from three U.S. utilities, although these have yet to be licensed by Washington's Nuclear Regulatory Commission. "But we're so confident that we've started to build the components and the first forgings have already come through," he adds. "We expect the process to lead to an approval in 2011."
AECL may be dwarfed by Areva, but they have state parentage in common. Since its inception in the 1950s, the Crown corporation has received, by its own reckoning, $6 billion in federal research and export subsidies (critics peg the figure vastly higher). It sold reactors to India and Pakistan, but when those countries parlayed the technology into bomb-making, Ottawa clamped down on reactor sales to dicey regimes. The sales to China
and South Korea in the 1990s signalled a revival, but business has been lagging in recent years. The pipeline for new deals isn't exactly brimming either, and there have been some embarrassing near misses. In 2004, AECL tried to crack the U.S. market with a tentative deal to sell a scaled-down version of its Gen-3 reactor, the ACR-700, to a Virginia energy company. Though former AECL chief executive Robert Van Adel initially characterized the partnership as a breakthrough deal, the Virginia firm pulled out within two months because the ACR wasn't ready. The U.S. market now looks more impenetrable than ever.
Later this fall, AECL is hoping to gain a toehold in the U.K., which is now gearing up to build nuclear plants after a long hiatus. "I expect there will be a decision to look at three [reactor technologies], and we're bidding to be one of those," says Ken Petrunik, AECL's chief operating officer.
But the
company is at a disadvantage because the design of its Gen-3 reactor remains a work in progress. "There's no pick-up for the ACR right now," says Bruce Power CEO Duncan Hawthorne. "AECL hasn't gotten to the stage where anyone's giving it approval [because] it's not market-ready." As he notes, "Areva's Generation 3 design is being built right now, so I know it's real."
It's understandable, then, that AECL's preoccupation these days is Ontario, where Queen's Park will spend the next few years figuring out whether to order new reactors, where to build them, and which vendor to use (see timeline, page 73). Asked about AECL's prospects in this marathon, Petrunik offers up the party line: "If a competitor comes into Canada, we're confident we can offer a better solution. No one else [promises] on-time delivery." But Howard Shearer, president of Hitachi Canada, an AECL supplier and strategic partner, has a somewhat less varnished message: "If we
were to lose the Ontario market, it would put a critical dent into the perception of Candu." Some nuclear watchers feel there would be more damage than a dent. After all, if the home market doesn't have confidence in made-in-Canada technology, why would anyone else? "If Ontario went with a different technology, it would be the end of AECL," says Duane Bratt.
AECL is playing catch-up, and evidently recognizes that time is of the essence. "There are 400 people grinding out the engineering [on the new reactor design]," says Petrunik. Meantime, the corporation is also doing all it can to position itself to win the deal. Last year, it established "Team Candu," a strategic alliance between AECL and its key suppliers: GE Canada, Hitachi Canada, Babcock & Wilcox Canada and SNC-Lavalin Nuclear. And it has retained a leading lobbying firm, Strategy Corp., which has advised Team Candu members to stress job creation and invoke the spectre of the Avro
Arrow in their discussions with policymakers. (One Strategy principal working on the file is Dalton McGuinty's former principal secretary, David MacNaughton—yet another connection between the nuclear industry and government that suggests the Liberals, like the Tories before them, have drunk the nuclear Kool-Aid.) "This is a massive decision about industrial policy in Ontario," says an industry consultant. "On the economic development chessboard, you're talking about bishops and queens, not pawns."
AECL executives and other Canadian nuclear insiders are also keen to point out Areva's putative Achilles heel. As Petrunik says, there are two types of markets: "contestable" and "non-contestable." Areva's home base falls into the latter category. "France doesn't really allow competition," Petrunik contends. "Most large countries with vendors basically sell to themselves."
Although Laferrere says he'll "never outspend
AECL on lobbyists," he is eager to rebut those assertions. "It's not true. AECL has contracts with EDF [France's state-owned utility and Areva's largest customer]. I will not deny that our company's origins are in a national program. But now, France is subject to the European Union's competition laws." In the past decade, Areva has seen its business with EDF gradually decline as the utility begins to source equipment and nuclear fuel on a competitive basis, "which is perfectly reasonable," says Laferrere.
Aside from the trade issues, Areva officials know that they don't stand a chance in Ontario if their pitch doesn't include a healthy complement of Canadian manufacturing jobs. For much of the past year, Laferrere has been quietly meeting with Canadian nuclear equipment suppliers, telling them that if they are willing to be certified as subcontractors for an Areva-built light-water reactor in Ontario, they'd also be well positioned to export
into the U.S. market, where Areva is pursuing its three projects.
This is a touchy point, and Laferrere knows it. As he says, "The vast majority of new-build reactors will be light water. That's the way the market is going."
But does it make sense to introduce a fundamentally different reactor technology to a market so heavily invested in Candu's heavy-water plants? Laferrere says there are technical synergies to be had by pairing Areva's light-water reactors and Candu's heavy-water cousins. Uranium from the former can be cleaned up and reused in the latter—a form of radioactive recycling that, he claims, could reduce the industry's dependence on fresh uranium by 30%. "We actually think there's a deal to be made," Laferrere says. "The market is so big, there's room for two technologies. We're not here to take 100%. We're here because we believe we have a win-win deal."
Bruce's
Hawthorne says Ontario won't help AECL in the international market by choosing it simply because it's the hometown favourite. And he also feels Areva has made a strong case for itself in the Canadian market. "Areva believes they can penetrate the U.S. market but they don't have a manufacturing base [in the U.S.]. If they were successful in [selling a Generation 3 reactor] in Ontario, we'd have an opportunity to export components." He feels the ideal scenario for building new Ontario reactors would involve a joint venture between AECL and Areva. "But there's no chance of that because AECL and Areva have such a confrontational relationship."
Other nuclear veterans are skeptical, pointing to logistical impediments for going with a non-AECL reactor. George Bereznai, a retired OPG engineer who is dean of the School of Energy Systems and Nuclear Science at the University of Ontario Institute of Technology, figures that selecting a vendor other than
AECL would add two or three years—and therefore cost—to the approvals process because Canadian regulators and nuclear-equipment suppliers have spent decades dealing exclusively with Candu technology. "If Areva is serious about cracking this market, they need to start investing in the expertise in Canada and start paying people to gain that expertise." But, he adds, none of this is impossible.
Indeed, the likelihood of an Areva win in Ontario may explain why GE is reported to have approached the federal government about acquiring a stake in AECL as a kind of blocking move. Privatization rumours have been circulating for almost a year—even while federal Natural Resources Minister Gary Lunn has been saying publicly that he wants Queen's Park to select AECL to build new reactors in Ontario. For its part, GE isn't trying to sell its own brand of reactors in Ontario; rather, the global energy giant is a charter member of the Team Candu alliance and is one of AECL's
key suppliers. As such, GE is well positioned to snap up some or all of AECL if the opportunity arises. Lunn has denied that GE has been promised a stake in AECL. (He did not respond to an interview request.)
Laferrere has also talked with the Natural Resources Minister about privatization. Though he won't divulge details, Laferrere says Ottawa appears to be at "a preliminary stage," but he has been given assurances that any sell-off will be done through a transparent bidding process. So, will Areva be a potential suitor if all or some of AECL is put on the block? "The decision will be made in Paris," Laferrere demurs. But he adds that the most likely scenario would involve Areva looking to buy no more than a stake. "We may feel more comfortable in a partnership with other Canadians players."
As a veteran of the vagaries of the political process, Elston makes a point of stressing that Ontario hasn't formally
decided whether it will build new reactors or merely refurbish existing ones. "The difficulty for us right now," he says, "is that there isn't a decision yet."
That may be technically true, but all the arrows are pointing toward new reactors, and the momentum seems unstoppable. Elston has worked hard to mute controversy, and his efforts seem to be bearing fruit. While climate change will surely play a large role in the fall election, there's scant difference between the Liberals and the Progressive Conservatives on this file, and the NDP, though opposed to nuclear expansion, is not a contender to govern.
But is the case for new reactors as controversy-free and environmentally benign as the lobbyists would have voters believe? There's as much room for skepticism as there ever was. For instance, it's an open question whether nuclear waste can ever be safely buried, even though Ottawa is pressing ahead with this
approach to the issue of long-term storage. The proposed solution is so sensitive, in fact, that the industry has hired none other than Hill & Knowlton to spin the case for a deep-burial facility in Nevada. Meanwhile the cost factor, as the Auditor-General has confirmed, continues to dog the nuclear industry, in spite of claims by AECL that its projects are delivered on budget, and by OPG that its plants are functioning more efficiently than they were a decade ago. And as for safety, the earthquake in Japan this summer gave the world's largest nuclear station a good shake and caused 1,200 litres of radioactive liquid to spill into the ocean. The incident serves as a reminder that nuclear accidents can still occur in the post-Chernobyl era.
Whether any of this gets into the provincial debate over the next month remains to be seen. But whatever the politicians end up talking about, one thing is certain: An enormous amount of bureaucratic
due diligence on nuclear new build is continuing apace, election or no: environmental assessments on the most suitable venue for new reactors; regulatory assessments of Gen-3 technology; and cost-benefit analyses comparing the business case for fixing up the existing fleet versus building Gen-3 reactors from scratch.
Here's an interesting footnote: Even though OPG and Bruce Power are commercial rivals in this bewilderingly complex process (i.e., both want to be selected to build those reactors), they've teamed up to evaluate the reactor designs proposed by Areva and AECL. Why? As executives in the two organizations know, the case for new reactors has to be politically unshakeable, and they'd be undermining the cause by independently recommending different vendors to the Ontario cabinet, where the decision will ultimately be made. "You know, the rebirth of nuclear power is something we've worked on long and hard over the last 25 years," says
Greg Smith, OPG's senior vice-president for nuclear generation development. "We're not going to mess it up."
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