FEDERAL NUCLEAR SUBSIDIES - TIME TO CALL A HALT
Executive Summary
by David H. Martin
Nuclear Awareness Project
November 1998
Federal Government Subsidies to AECL
When calculated in real 1998 dollars, total federal subsidies to Atomic Energy of Canada Limited (AECL) for the last 46 years amount to $15.8 billion. It should be noted that $15.8 billion is a real cash subsidy to AECL, and does not include any opportunity cost?what the subsidies would have been worth if the government had invested in more cost competitive ventures. At a rate of 15%, the opportunity cost of government subsidies to AECL is $202 billion.
There is also federal financial support for other nuclear activities
in progress or impending, including: the Whiteshell Laboratories privatization
($23.1 million); the MAPLE reactors at Chalk River Laboratories ($120 million);
the Canadian Neutron Facility ($400 million); radioactive waste management
and decommissioning ($665 million); and reactor exports ($2.5 billion considered).
Government Backtracks on AECL Subsidy Reduction
In its budget announcement of March 1996, the government claimed that subsidies for AECL would continue, but that they would be reduced from historic levels. According to the 1996 Budget Plan, AECL's subsidy was to be $174 million in 1996-97; $132 million in 1997-98; and $100 million in 1998-99 and each year thereafter. The government has already backtracked on this commitment. The subsidy was actually $197.454 million in 1996-97. This did not include additional disguised subsidy of $21.459 million from the sale of heavy water. Thus, government subsidies to AECL in 1996-97 actually amounted to $218.913 million.
Unlike most crown corporations, departments and agencies, which received
significant funding reductions in 1996-97, AECL actually received a funding
increase of 13% in 1996-97, or 25% if we include the disguised heavy water
subsidy.
Whiteshell Laboratories
Instead of simply shutting down AECL's Whiteshell Laboratories in Manitoba
as a cost cutting measure, privatization was attempted. Despite an incentive
package of over $20 million, the government could not even pay the private
sector to take Whiteshell off their hands in a comprehensive privatization
of the site. The nuclear business is just not profitable. Rather than wasting
more money in an attempt to preserve jobs in a sunset industry, the federal
government should clean up the radioactive contamination at the site, sell
the land if possible, and reimburse the public purse.
Two More Reactors
AECL is currently constructing two MAPLE reactors at its Chalk River
Laboratories. The federal government is providing $120 million in financial
support. Despite this huge investment of public funds, the reactors will
be owned by MDS Nordion, a private company whose business is selling the
radioisotopes manufactured in the reactors. If the medical isotope business
is a profitable commercial venture, why is government support needed?
There is a dangerous link between financial and safety issues in the
nuclear industry. In order to protect MDS Nordion's supply of radioisotopes
while the MAPLE reactors are under construction, the aging and hazardous
NRU reactor is being kept running without the necessary safety upgrades
completed.
Canadian Neutron Facility
AECL and the National Research Council have proposed a new $400 million
reactor for CANDU development and materials research. It is time to apply
some practical benchmark to determine if this facility is really needed
or if it just another big ticket, big science toy. If it really is commercially
valuable, then the private sector and the research community should be
prepared to invest. Similarly, CANDU users such as Ontario Hydro should
cover a fair share of the cost.
Radioactive Waste and Decommissioning
After spending ten years and $20 million, the attempt to relocate low level radioactive waste from the Port Hope area of Ontario ended in total failure. The government is now being forced to accept what the environmental community has supported from the beginning?the concept of above-ground, retrievable, monitored storage for the radioactive waste. The onus is now on the federal government to arrive at a local solution in the Port Hope area that is safe and acceptable to the community.
AECL has long ignored its responsibility to plan and finance long-term
radioactive waste management and facility decommissioning. AECL currently
underestimates the cost at $400 million. The Auditor General put it at
about $665 million. It is about time that AECL was forced to account properly
for its waste management and decommissioning liability, as requested by
the Auditor General for the past six years. Using income from the sale
of heavy water is not a reliable or suitable way to pay for these costs.
AECL, Ontario Hydro and COG
Circumstances have driven a wedge between AECL and Ontario Hydro. AECL
focuses on reactor exports, whereas Ontario Hydro is concerned with maintaining
and refurbishing its existing reactors. The abandonment of nuclear power
expansion plans in Ontario, and the end of the research phase for high
level radioactive waste management has meant that Ontario Hydro gives much
less financial support to AECL.
Reactor Exports: Fated to Fail
AECL has decided to focus even more of its efforts on reactor exports. The goal is to export ten reactors in ten years. It is doubtful that AECL can meet this target, since AECL's best prospects for sales (China, South Korea, Romania, and Turkey) are all dubious propositions.
But what if AECL could meet its goal of selling ten reactors in ten years? Even these sales could not recoup the $15.8 billion subsidy already provided to AECL. AECL will never become self- sufficient. AECL is a net loss for Canada, and sooner we cut our losses, the better.
Beyond the financial arguments are the environmental and safety issues. There are safer, cleaner and cheaper ways to generate electricity than nuclear power. The link between nuclear power and nuclear weapons adds to global concern. There is also an ethical question, with Canada is turning a blind eye to human rights violations in countries such as China and Turkey.
The financial risks of reactor exports are high, with taxpayer loans of $1.5 billion to China; another $1.5 billion promised if AECL wins the Turkey bid; and Romania negotiating for another $1 billion loan. It is a buyers' market for nuclear reactors, and even if AECL wins, Canada loses. It is time to call halt.
The full text of Federal Nuclear Subsidies : Time to Call a Halt (ISBN 1-896863-06-X) is available from the Campaign for Nuclear Phaseout. Please note, the full text is available in English only.
Campaign for Nuclear Phaseout