Media Release
For release Tuesday, November 21, 2000
 

Ottawa — A report released today by the Campaign for Nuclear Phaseout, says that Canadian government subsidies to Atomic Energy of Canada Limited (AECL) now total $16.6 billion. The government has backtracked on its 1996 promise to dramatically reduce AECL’s subsidies. AECL was supposed to receive $100 million in the fiscal year 1999-2000, but in fact received $156.5 million.

David Martin, author of the report called “Financial Meltdown”, stated, “Tax dollars are too valuable to waste on the failing nuclear industry. AECL’s $156 million subsidy last year could have purchased 50 MRI machines and operated them for a year; or it could have paid for about 2,200 nurses for one years, or for 12,500 heart operations.”

“AECL is in a state of financial meltdown. The Chrétien government is committed to ongoing nuclear subsidies, but after 50 years of subsidies, it’s high time to call a halt.” stated Elizabeth May of the Sierra Club of Canada.

Campaign for Nuclear Phaseout coordinator Kristen Ostling said, “Last year, the government spent 13 times more on subsidies to AECL ($156 million) than it spent on its total funding for renewable energy ($12 million). For economic and environmental reasons, nuclear power should be phased out.”

The government has also given AECL a huge amount of financial support that does not show up on its books. This includes $1.5 billion in financing for the 1996 sale of two reactors to China; $120 million for two new privately owned reactors in Chalk River; and $38 million for a bungled attempt to privatize AECL’s Whiteshell laboratory in Manitoba. In 2000, the government promised AECL another $120 million over five years from its “rust out” infrastructure program.

In 1995, AECL pinned its hopes on selling more CANDU reactors, aiming to sell ‘ten reactors in ten years’. Since then, only two reactors have been sold. Most of the world has abandoned the nuclear option. By 2002, global nuclear power will have peaked and then will decline permanently as old plants are shut down. At the climate change negotiations currently taking place in the Hague, Lloyd Axworthy, head of the Canadian delegation, stated on Monday that reactor sales should be allowed to offset Canadian carbon emissions.

The report also demands greater disclosure and accountability for AECL. There has been no public consultation on the future of this publicly funded crown corporation. AECL has not filed its corporate plans with parliament since 1995, and it is no longer reporting agent fees, which have been used for bribes in the past.

For more information, contact:

Nuclear Awareness Project, 905-852-0571
Sierra Club of Canada, 613-241-4611,
Campaign for Nuclear Phaseout, 613-789-3634 (Ottawa)

The full report, “Financial Meltdown: Federal Nuclear Subsidies to AECL” is available in PDF format at http://www.cnp.ca/issues/nuclear-subsidies-2000.pdf

The executive summary follows.

FINANCIAL MELTDOWN: Federal Nuclear Subsidies to AECL
by David H. Martin Nuclear Awareness Project November 2000

Executive Summary

Atomic Energy of Canada Limited (AECL) is a federal crown corporation that designs and markets CANDU reactors, and conducts other nuclear-related activities. AECL was created by the federal government, and from the beginning has relied on public funding. Now, almost fifty years later, AECL continues to depend on subsidies from taxpayers. Despite glowing promises of economic benefits and profit, it has always been a case of jam tomorrow, but never jam today. Government subsidies to AECL from 1953 to 2000 total $16.6 billion ($2000). It’s time to stop the financial meltdown, and end federal nuclear subsidies to AECL.

In its March 1996 budget announcement, the Chrétien government promised to reduce its subsidies to AECL. Subsidies were to be reduced to $174 million in 1997; $132 million by 1998; and $100 million per year thereafter. The government has seriously backtracked on this commitment. Its budget promise was exceeded by 14% in 1997; 27% in 1998; 27% in 1999; and 57% in 2000. The average annual subsidy to AECL in those four years was $162 million.

While the federal government has implemented draconian cutbacks to social programs such as health care, it has continued to throw billions of dollars at nuclear power, a sunset technology. By way of comparison, AECL’s $156 million subsidy in 2000 could have bought 50 MRI (Magnetic Resonance Imaging) machines and operated them for a year. Instead Canadians are forced to pay for private clinics and travel to the United States. AECL’s subsidy in 2000 could also have paid for about 2,200 nurses for one year, or for 12,500 heart operations.

The federal government spent 13 times more on subsidies to AECL in 2000 than on its total funding for renewable energy ($156.5 million to AECL in 1999-2000, $12 million/year for renewables). The impact on the federal budget would be 'revenue neutral’ if the government eliminated subsidies to AECL and instead funded renewable energy and efficiency programs. Efficiency and renewable energy technologies are two of the most important solutions to the climate change crisis. Nuclear power is not a viable solution to climate change because of its high cost and its own serious environmental problems.

The government has also given AECL a huge amount of financial support that does not show up on its books as direct subsidies:

• In 1996, the government provided a loan and guarantee of $1.5 billion to China so that AECL could sell them two CANDU reactors.
  
  
• From 1996-2000, $38.1 million was committed in an unsuccessful attempt to preserve AECL’s Whiteshell laboratory in Manitoba.
  
  
• In 1996, $120 million was committed for two MAPLE reactors at AECL’s Chalk River facility that are owned by a private company (MDS Nordion).
  
  
• In 2000, another $120 million has been promised to AECL over five years as part of the government’s 'rust-out’ program.

With AECL, subsidies in the past become the reason for even greater subsidies in the future. Now AECL wants $500 million to build a new reactor known as the Canadian Neutron Facility. This reactor should only be built on a user-pay basis, with no public funding. Users such as Ontario Power Generation, and private sector companies which expressed support, such as Alcan International Ltd., Xerox Canada, and Marubeni Canada Ltd., should pay both the capital and operating costs of the reactor.

AECL has also served notice that it needs another mega-project — a new heavy water plant for the reactors that it hopes to sell.

Taxpayers are being forced to pay a billion dollars or more to clean up radioactive waste and decommission AECL’s old nuclear facilities. Because of its huge cost and because human health and the environment are at stake, an open process involving the public should be convened to consider AECL’s decommissioning plan, including its expected costs and the proposed terms for management of the decommissioning fund. AECL and the federal government should establish an actual fund to cover the future costs and the total cost (allowing for accrual of interest over time) should be paid into this fund during the active operating life of the facilities. This fund should be separate from the operations of AECL, and should be managed and accounted for by an independent body.

AECL is a crown corporation out of control. The government has refused to allow any public consultation on the future of this publicly funded crown corporation, and has withheld basic information. Its corporate plans have not been filed with parliament since 1995, despite a legislative obligation to report annually. AECL ceased to report its overseas 'agent fees’ in 1998. Agent fees were the vehicle for multi-million dollar bribes in the past. Secrecy and lack of accountability have been justified in the name of national security, despite the fact that Canada does not have a nuclear weapons program, and in the name of commercial confidentiality, despite the fact that AECL is not a commercial company in any normal sense of the word.

AECL is not economically viable. Ontario Hydro (now Ontario Power Generation) dramatically reduced its funding of AECL, and prospects for further reactor sales are dismal. Ironically, AECL has focused on CANDU sales just when most of the world has stopped building new nuclear plants and has opted for cheaper, cleaner and safer generating options such as renewable energy and high efficiency natural gas. There have been no new reactor orders in North America since 1979. CANDU nuclear power is plagued by high cost, abysmal performance, endemic technical problems, the risk of catastrophic accidents, and environmental problems such as radiation releases and radioactive waste.

Since the goal of selling ‘ten reactors in ten years’ was set by the government in 1995, AECL has sold only two reactors to China, and more sales to South Korea, Romania, or China are unlikely. Even if AECL sells a few more reactors, it would still be a net loss for Canada given $16.6 billion of past subsidies, and the billions more that would be required in the near future. After almost fifty years of ongoing taxpayer subsidies to AECL, it is time to phase out federal support for nuclear power in favour of renewable energy and efficiency measures. Halting subsidies to AECL is an important step towards a green energy future for Canada.

Download full report in PDF format (346K)

Campaign for Nuclear Phaseout
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