HazMat Management

Canada’s nuclear liability hike falls short

The Conservatives fifth attempt at raising nuclear liability has been met with parliamentary criticism that the Bill lacks financial coverage, should Canada ever experience a nuclear disaster.

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April 3, 2014 by Hazmat Management

The Conservatives fifth attempt at raising nuclear liability has been met with parliamentary criticism that the Bill lacks financial coverage, should Canada ever experience a nuclear disaster.

While countries like the U.S. and Germany have nuclear liability ceilings that range from $12 billion to unlimited, Canada’s Bill C-22, the Energy Safety and Security Act, proposes a jump from the current $75 million to $1 billion of liability, in the case that the nuclear company is not at fault if something goes wrong.

The $75-million nuclear liability figure hasn’t changed since Canada first set it in 1976, yet there has never been a claim to file either.

During second reading debate in Ottawa on March 25, 2014, Liberal and NDP members of Parliament (MPs) challenged the Conservatives over Bill C-22’s liability cap, noting that $1 billion would be woefully inadequate if compared to damages incurred during Japan’s nuclear disaster in Fukishima, Ukraine’s Chernobyl disaster, or even from major oil spills.

“Let me just remind members that the offshore BP Gulf oil spill of 2010 is expected to cost as much as $42 billion for total cleanup,” Chris Charlton, NDP MP for Hamilton Mountain, told Parliament. “That is right. Given the liability limit of $1 billion, that spill alone would leave the government, and therefore taxpayers, on the hook for $41 billion. The Japanese government is now saying that the cost of the nuclear disaster at the Fukushima Daiichi plant will be over $250 billion. Does the government really believe that Canadians should hold the risk for these private companies? If asked, I suspect it would respond with a resounding no,” she added.

While the NDP plans to support Bill C-22, which remains on the agenda for second reading debate, the party is of the view that nuclear power is a “mature industry” that “can and must pay for itself.” Moreso, the NDP is advocating for investment in other forms of renewable energy.

According to the Director of Environmental Governance for the Pembina Institute, a major accident at the Darlington, Ontario nuclear plant east of Toronto, near Charlton’s riding, could cause damage in the range of an estimated $1 trillion.

Canada’s brand new federal Minister of Natural Resources, Greg Rickford, defended Bill C-22 from the position that the NDP doesn’t realize the costs involved in going beyond the billion-dollar liability figure.

“I am just wondering how realistic the New Democrats think their plan is to make liability limits unlimited?” Rickford asked Parliament. “Have they actually looked into the impact their plan would have on families who rely on nuclear power for electricity?” he added.

Other supporters of Bill C-22 have argued that unlimited liability would encourage a company involved in a nuclear accident to declare bankruptcy and walk away, leaving governments on the financial hook.

Bill C-22 proposes that nuclear facility operators — such as Ontario Power Generation, Atomic Energy of Canada Limited, Bruce Power, Cameco, and GE Hitachi — would be required to demonstrate to regulators that they have the financial capacity to cover $1 billion in cleanup costs, should they become necessary. Second, the Bill stipulates that only half of the $1-billion liability coverage for nuclear operators will have to be covered using traditional insurance. Operators will be allowed to put up other forms of financial security for the remaining $500 million.

While Bill C-22 also focuses on increasing the liability limit to $1 billion in the event of an oil spill, most of Parliament’s debate centred on the Bill’s implications for the nuclear industry.

Canada’s nuclear industry generates nearly $5 billion a year in revenues and provides jobs for more than 30,000 Canadians. According to the World Nuclear Association, about 15 per cent of Canada’s electricity comes from nuclear power, with 19 reactors, mostly in Ontario, providing upwards of 13.5 electric gigawatts of power capacity. While Canada has been considered a leader in nuclear research, over the last two years the federal government bailed on its plans to expand nuclear facilities in Ontario. Instead, existing nuclear facilities are being refurbished.

One controversial aspect of Bill C-22 that came up repeatedly during Parliamentary debate was the Bill’s discretionary powers afforded to the federal Minister of Natural Resources. At any time, the minister can reduce the amount of absolute liability prescribed under the Act.

“It would leave the door wide open for the reduction of absolute liability levels for certain projects as a form of economic incentive for oil and gas development that the government wishes to encourage,” Charlton warned Parliament. “Given the Conservatives’ poor track record in protecting Canada’s public interest, this aspect causes us grave concern.”

Several MPs expressed their desire to see the discretionary power excised if the Bill makes it to the committee level.

Minister Rickford was unclear about the reasoning for the discretionary power when asked about it directly.

“I think the intention here is to modernize,” Rickford responded. “This Bill would reflect the realities both for the protection of Canadians and for the industry itself, and move Canada as a leader with other countries to a place, through international conventions, that would in fact modernize this. Therefore, any of the changes, specific or broadly speaking, reflected in this Bill is an effort to make sure Canadians have the best protection available under the law and continue to respect the economic benefits of offshore activities and the nuclear sector,” he added.

If Bill C-22 passes, it would also allow Canada to ratify the International Atomic Energy Agency’s convention signed in December of 2013, the International Convention on Supplementary Compensation for Nuclear Damage. 

Bill C-22’s long-form title is An Act respecting Canada’s offshore oil and gas operations, enacting the Nuclear Liability and Compensation Act, repealing the Nuclear Liability Act and making consequential amendments to other Acts.