Canadian government spending on climate change: $3.2 billion and counting

A note attached to documents left behind at the CTV studio in Ottawa may hint at the dollar figure the federal government will pitch, or has already pitched, to Ontario to sweeten the province’s incentive to buy Canadian in its nuclear reactor competition. The figure: roughly  $538 million. i.e., the same amount that former prime minister Paul Martin promised Ontario premier Dalton McGuinty in May 2005.

Martin’s 2005 promise was specifically to help Ontario defray the cost of closing its fleet of coal-fired electricity generating plants, in the context of helping meet Canada’s obligations under the Kyoto Treaty. McGuinty had promised in the 2003 provincial election that he would close all the coal plants by 2007. That has turned into an embarrassment, since the only plant that actually did close, the 43-year-old 2,400 megawatt Lakeview facility in Mississauga, was due to close anyway.

Nonetheless, even though the rest of the provincial coal fleet is alive and well and in service today, the Ontario Liberals still stick to their coal-closure pledge. The only way they can replace coal without causing an electricity supply crisis is by increasing the amount of nuclear generation. Hence their refurbishments at the Bruce and Pickering stations, and the RFP for new reactors at Darlington.

According to the Toronto Star, the handwritten note on the errant documents at CTV indicated the feds have put $1.7 billion into Atomic Energy Canada Limited (AECL) since the Conservatives came to power in 2006. If that’s accurate, how was that money apportioned? Budget announcements in 2008 and 2009 gave $300 million and $350 million, respectively, to AECL. The latter amount was specifically for completing the design of the ACR 1000, AECL’s offering in the Ontario competition. The feds have told anybody who will listen they want AECL to win the Ontario reactor competition.

The AECL budget money comes to $650 million. Add the $538 million Martin promised McGuinty in 2005, which finance minister Jim Flaherty in early 2006 said the Conservative government would honour, and you get roughly $1.19 billion.

What about the other $512 million ($1.7 billion minus $1.19 billion)? Quebec and New Brunswick each have one AECL CANDU 6; both reactors need refurbishment. In 2004, NB Conservative premier Bernard Lord started asking the then-Liberal federal government for financial help with his province’s nuclear refurbishment. In July 2005 the answer came back: no dice. The feds’ reasoning at the time was that financial help for New Brunswick would oblige the feds to extend similar financial help to Quebec and Ontario (the other nuclear provinces).

But Paul Martin’s famous fiscal prudence went out the window as his minority government slid into short-term survival mode, inside and outside Parliament. At the time Martin promised McGuinty the $538 million, the Liberal position in Parliament was extremely precarious—this was just before the infamous Belinda vote—and Martin was desperate to shore up electoral support in Ontario, whose voters had started showing interest in the Conservatives after more than a decade of Liberal clean sweeps.

The note left at the CTV studio is reported to have said the $1.7 billion was to clean up “a Liberal mess.”  Having promised to honour Martin’s promise, the Conservatives after 2006 would have been under pressure to extend similar support to Quebec and New Brunswick. Each of these provinces has one CANDU 6. Each, under the formula I have suggested, could conceivably get roughly $256 million to refurbish their machine.

This is Canadian politics, and in my view this kind of financial deal (if it happened at all) would be totally legitimate. Nuclear is, after all, our best technological hope for fighting climate change. Moreover, we’re in a recession. Everybody agrees there should be major infrastructure spending. Well, this is infrastructure. And it will create many thousands of high-paying, high-skilled jobs.

Combined with the $1.5 billion the feds have promised to put into the ecoTrust fund, part of which will go for carbon capture and sequestration, this adds up to $3.3 billion for climate change. That’s not small change.

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