How to pay for new nuclear plants in North America
Over the past year I have suggested emitting jurisdictions become involved in cap-and-trade systems. Even though the European Emission Trading Scheme, or ETS, is deeply flawed and in desperate need of stronger support from the member countries that tout it (see article), I recommended becoming involved in cap-and-trade as a way of easing into a world where carbon and pollution emissions cost something.

The aim is to encourage a shift from emitting to non-emitting electricity by making the costs of running new coal- and gas-fired power generating plants less competitive compared with the costs of building plants that don’t emit anything. i.e., nuclear plants.

We should still look at cap-and-trade, but let’s not fool ourselves into thinking higher power costs will encourage electricity consumers to use less. They won’t, any more than ridiculous gasoline prices in Europe have encouraged Europeans to drive less.
Rather, we should use the proceeds of carbon sales to pay for non-emitting power plants.

But however we proceed, it is unavoidable that some government, somewhere, is going to have to impose a cap on emissions. Caps in regulated areas mean regulated utilities should be able to finance the cost of building a new nuclear plant at least partly by increasing rates.

Emission caps in deregulated systems would be a bit trickier, but perhaps the operators of deregulated systems could apply the costs evenly across all types of generation in order to achieve a system-wide emission intensity of so many grams per kilowatt-hour. That cost would be a permanent component of the market price of power.

This of course would require a sales job. An integral part of this would be framing the cost increase properly. In Ontario, power consumers are still paying for our most recent nuclear plant, Darlington. This appears as the “Debt Retirement Charge” on every consumer’s power bill. This label appears to have been deliberately designed to antagonize tax-hating conservatives and anti-nuclear greens. Change it to “Climate Change Contribution,” and everybody would calm down.

Enviros sue Canadian government over Kyoto: climate change electoral test is on
As I predicted last week, green activists decided to take legal action against the federal government on climate change. Ontario is in the middle of an election campaign, and the issues of energy, especially electricity, keep popping up. The incumbent Liberals are taking some heat for failing to keep their 2003 promise to close the provincial coal plants by 2007.

The original reason for the promise was that coal is dirtying up our air. But recently, closing coal has been touted as a pro-Kyoto move. So—how prominently will yesterday’s legal action against the federal government figure in the rest of the Ontario campaign?

Watch or listen to the provincial leaders debate tonight and find out. Steve Paikin will moderate the debate. He’s very familiar with the coal/electricity issue, and will surely bring it up. Will any of the party leaders invoke Kyoto in their response?

Also watch the debate de-brief on The Agenda with Steve Paikin at eight p.m.

Nuclear cooperation and Canadian energy policy: Harper’s complicated decision tree
A couple of Canadian newspapers are on the prime minister for being coy about the prospects of Canada joining the Global Nuclear Energy Partnership (GNEP). They’re trying to pin him down on how Canada will deal with radioactive waste, i.e., whether we would import it or not. Harper is too smart to answer right now. Any positive statement at this point would send nationalists and greens alike into a frothy paroxysm.

Plus, there’s a whole lot of negotiating going on about Canada’s role in the GNEP. Canada has major potential clout in nuclear matters, but realizing this potential means thinking through some pretty complex issues.

Laying out the terms of Canada’s involvement in the GNEP won’t be easy. This decision depends on a number of investment scenarios, which have major bearing on Canadian industry, security, energy, and environment policy. The successive decision points in these scenarios beget further branches in the decision-tree. Following them illustrates how complicated it can get. In one scenario, the power reactor fleet in this country remains based on heavy water. Because CANDUs use natural unenriched uranium, Canada could be a net contributor of fuel to the system, in the form of plutonium in spent fuel.

Sounds straightforward, but it gets complicated depending on subsequent decisions. If we decide to allow spent fuel reprocessing (or recycling, or re-use) in this country, then Canada could also be a major recipient of spent fuel waste. And the implications of this activity would in turn depend on how we re-use spent fuel. Would it be in fast burner reactors, or advanced CANDUs via the DUPIC process (the proximity of which to technical and commercial viability has yet further bearing on Canada’s decision)?

And what if a Canadian utility decides to go with light water technology? That utility would have to import enriched uranium (not difficult; that’s the commercial front end of the GNEP). The advantage would be that it is viable now, since a third-generation light water reactor does exist—as opposed to the third-generation CANDU, which is still in development. Another advantage would be that the utility would be part of an emerging international supply chain of standardized reactor components, a critical consideration in terms of construction timelines.

Also, a light water decision would of course have an impact on the federal government’s plans for AECL.

And remember that each decision point is fraught with political danger. Never mind that recycling spent fuel turns a dangerous waste product into huge amounts of useful energy. You just have to mention “spent fuel waste” and imagine the headlines.

Whether or not to join the GNEP is, arguably, the most important decision on energy and security policy Canada has had to take in decades. No wonder Harper is being non-committal.

Kyoto faces its first major electoral test in Canada
On June 27 I said Kyoto’s traction—or lack of traction—as a public issue in Canada might finally be proven by an electoral test. This was because Bill C-288 (a private members bill sponsored by Pablo Rodriguez, a.k.a. P-Rod) had received royal assent on June 22. P-Rod’s bill calls for the federal government to come up with a plan to implement the Kyoto Treaty within 60 days, and to develop regulations by mid-October.

That is, the regulations are to have been developed around a week after Ontario’s provincial election.

Saturday’s Toronto Star carried an article citing recent polls that suggest the environment, “driven by climate change,” may be the number one issue in Ontario’s election campaign. “It’s a potent issue that political parties ignore at their peril,” says Environmental Defence’s Rick Smith.

Hold on, Rick. The Star article also points out that, according to the smart guys who run and interpret the polls, the three major parties can pretty much get by by paying lip service to the environment. Unless somebody screws up big time, some other factor will decide the October 10 outcome.

Maybe there’s another way to read this. P-Rod’s 60 days came and went in late August without much media fuss. If the federal Conservatives have developed the required plan, they’re keeping it secret. In fact, it looks like they’re thinking hard about joining the Asia-Pacific Partnership for Clean Development and Climate, an alternative to Kyoto. This might suggest the environment is actually lower on the agenda than all the experts think.

Oddly, the Star article didn’t mention anything about the feds missing P-Rod’s deadline. Why should it, you may ask—it’s about Ontario not federal politics. Well, for one thing the Star’s editorial leanings are not toward the federal Conservatives. The Star ordinarily pounces on any Conservative mis-step, real or perceived, no matter how minor. Besides, the McGuinty Liberals keep talking about closing the province’s coal-fired generating plants as their contribution to meeting Ontario’s Kyoto targets. So Kyoto is a provincial issue.

Which means either the greens, who scoff at the Asia-Pacific Partnership, have decided to forego a juicy opportunity to force the Ontario parties into a commitment on climate change by attacking the federal government—or they’re planning something. If it’s the first alternative, maybe they’re catching the dreadful feeling that the environment isn’t all that big after all. But I bet it’s the second. The greens won’t willingly slide away into irrelevance.

Like I said, this will be an interesting fall.

The Asia-Pacific Partnership and GNEP, versus Kyoto and the NPT
I mentioned on May 24 that climate change and nuclear weapons proliferation are the two biggest dangers facing humanity. The Kyoto Treaty addresses climate change, but several of the biggest emitting countries, including the U.S., have refused to sign it. This, together with the fact that some of Kyoto’s strongest adherents cannot establish economy-friendly mechanisms for reducing greenhouse gas (GHG) emissions, renders the Treaty all but unworkable.

Keeping this in mind, which international framework stands the better chance of producing significant emission reductions: Kyoto or the Asia-Pacific Partnership for Clean Development and Climate? The latter includes the U.S., India, and China, which all stayed out of Kyoto. It is significant that these countries also support expansion of civilian nuclear power as a major technological solution to climate change.

India’s pro-nuclear position, and its inclusion in the Asia-Pacific Partnership (though it continues to be denied entry to APEC), raises concerns regarding the other danger I mentioned: nuclear weapons proliferation. Until recently, India was on Uncle Sam’s list of nuclear delinquents, because of its bomb test in 1974 and refusal to sign the Non-Proliferation Treaty (NPT).

But September 11, the nuclear crisis between India and Pakistan in 2002 (the diplomatic resolution of which was brokered by the Bush administration), and the advent of bigger proliferation problems than India—i.e., Iran, North Korea, and, of course, Pakistan—spurred a reality-based rethink of U.S. India policy. The subsequent diplomatic reversal made it palatable for the U.S. to enter into last month’s commercial nuclear fuel agreement with India.

However, this agreement was made in spite of the fact that India has rejected, and probably will continue to reject, the NPT. Though others are troubled by this, Bush & co. have apparently decided India could do far worse than stay out of an arrangement that isn’t working anyway.

Where does that leave current anti-proliferation efforts? The other day, I mentioned the dual promise of the GNEP: to boost civilian nuclear power generation—and displace fossil fuels on a grand scale—while safeguarding the commercial nuclear fuel market against weapons proliferation. (“Promise” is the operative word; not everyone agrees the GNEP would work as intended.) The GNEP is in lockstep with the spirit of the Asia-Pacific Partnership. How do the GNEP’s requirements regarding international inspection differ from those under the NPT? If there’s little or no difference, we could be seeing the beginning of a new international approach to non-proliferation.

What is Canada’s position on all this? We’re thinking about joining the GNEP, and that’s a good thing (see article). We’ve also been thinking about joining the Asia-Pacific Partnership. Not surprisingly, this hasn’t gone down too well with the pro-Kyoto, anti-nuke crowd. The knives have come out quickly. Canada’s point man on nuclear power, Natural Resources Minister Gary Lunn, has already had to correct media reports that say Canada would be “forced” to accept imports of nuclear waste.

This is a leadership opportunity. Canada could and should use its role as an energy superpower as a lever to achieve a stronger non-proliferation regime.

How Canada can punch above its weight in energy
Canada has been called an energy superpower, largely because of the massive petroleum reserves entrained in the Alberta oil sands. But this country is also a major player in the international nuclear industry. Canada is the world’s largest uranium producing country, and a Canadian company, Cameco (formerly the government-owned Eldorado Nuclear), is the world’s leading individual uranium producer.

Most of the major activities in the nuclear fuel cycle—mining, refining, fuel fabrication, power generation, and spent-fuel storage—occur in several provinces in Canada. Canada does not enrich uranium, as the country’s domestic nuclear power generation technology—CANDU, for Canadian deuterium uranium—uses natural unenriched fuel. Canada exports uranium fuel to other countries that use CANDUs, and it manufactures and exports uranium hexafluoride for enrichment, primarily to the United States. In accordance with the terms of various international treaties, Canada’s uranium exports are for peaceful purposes only.

The end of the fuel cycle—sequestration of spent fuel—is the subject of some controversy. Spent fuel in Canada is stored at reactor sites, as it is at every power reactor site in the U.S. The Nuclear Waste Management Organization, or NWMO, recently recommended burying it 500 to 1,000 meters deep in the Canadian shield, and mentioned several locations in Canada that may be suitable. A final decision could be years away.

A major concern about deep geologic storage is that, as more nuclear plants enter service in Canada and around the world, the amount of highly radioactive waste will outgrow the available storage space. Enter the Global Nuclear Energy Partnership (GNEP), a U.S. scheme in which only several countries would enrich uranium, then lease it to countries for use in moderated reactors. Spent fuel would be returned to the countries that enrich uranium. These countries would then extract the uranium and plutonium from spent fuel and burn them in special reactors that generate electricity while destroying their more dangerous components. Canada is considering participating in the GNEP.

Canada’s role in the scheme would depend heavily on decisions, yet to be taken, regarding near- and long-term power generation investment in several Canadian provinces. Should the bulk of Canada’s nuclear power fleet remain based on CANDU technology, there would be no need to “lease” enriched uranium from Tier 1 countries. Canada would in that case be a net contributor of fuel—in the form of natural uranium for CANDU reactors abroad, and, possibly, uranium- and plutonium-laden spent fuel—to the GNEP system. But would we build burner reactors? Would we receive spent fuel from countries using CANDU technology?

The GNEP addresses concerns related to both spent fuel and weapons proliferation. For this reason, I’m glad Canada is at least looking at it.