From notes for remarks by Armand Laferrère, President and CEO of AREVA Canada, to the C.D. Howe Roundtable Luncheon, April 15, 2009
I am very glad to have this opportunity to address the largest think-tank in Ontario and to exchange views with such an impressive audience.
I want to say first, at the risk of disappointing some of you, that I will abide by the rules that stop all vendors from discussing the current RFP in Ontario. I am allowed to say, however, that the current Ontario process is part of a global phenomenon – that of the nuclear renaissance.
This renaissance has been slowed by the ongoing global economic and financial crisis. Some potential customers, such as South Africa, suddenly discovered last Fall that they had lost access to the financial markets for the financing of very large projects. Others, such as some U.S utilities, have delayed their investment plans as they felt the need to clean their balance sheets before going forward.
But in spite of these delays, the nuclear renaissance remains a reality. Twenty-three building sites are active as we speak: sixteen in Asia, five in Russia and two in Europe. Licensing for future projects is going ahead in the U.S, Canada and U.K, among other countries.
More importantly perhaps, the nuclear industry is still investing. My own company announced just last week a major investment plant to expand the capacity of existing equipment factories in Europe.
This is a sign of an industry which remains confident that it will have to answer a growing global demand. Part of this demand is currently delayed, to be sure. But we are used to thinking in terms of decades, not weeks or months. Whatever the current difficulties, it is a simple truth that in the next few decades, huge investment will be needed to cover the world’s energy demand. In the long term, demand for energy will continue to grow. This is a moral imperative – there is simply no way to reduce poverty in a growing world population without increasing our energy consumption. The current generation capacities will age and need replacement. The prices of fossil fuels may be low today, but oil & gas reserves are not infinite. These prices will almost certainly escalate when economic growth resumes. In the meantime, the world will keep looking for CO2-free electricity generation to reduce global warming.
These are all reasons why the demand for nuclear remains strong. But in order to go through an economic crisis such as the one that the world is experiencing now, demand is not enough: we need to adapt and organize to answer that demand. This is what has happened all over the world in the nuclear industry in the past few years.
First of all, we have experienced significant consolidation. Initially, this was due to the increased costs of designing and building nuclear plants that are both safer and more economical than the existing fleet – the models known as Generation 3 reactors. It took hundreds of millions of dollars to design Generation 2 reactors. The bill amounts to several billions for each Generation 3 design.
This means that no one can go it alone anymore. Our industry has had to give up on the quaint, outdated notion of national champions able to do everything by themselves. AREVA was created in 2001 through the merger of French, German and American companies. And in 2007, we partnered with Mitsubishi to create ATMEA, a joint-venture for new plant design and for the development of new nuclear fuels. My accent may have made you think otherwise, but the truth is that I am not representing a French company at all; I represent a multinational company headquartered in Paris. This company does not sell a French technology, but a global one. A technology that evolved out of an U.S design thanks to the common work of French and German engineers, who for our next products will be complemented by Japanese teams; and that was proven out of experience feedback from China and Finland. Out of the 102 nuclear plants that AREVA built or is currently building, only 59 are in France and the rest can be found in ten different countries over four continents.
And this is the only way it can be today. AREVA was not the only company to gain a global industrial foothold in the last decade; all our major competitors did. In 2006, Toshiba purchased Westinghouse, creating the third-largest nuclear company in the world, straddling the Pacific Ocean. In 2007, General Electric and Hitachi joined forces in a series of joint-ventures. This is the new face of nuclear -large multinational companies reaching across the continents, which can bring together R&D teams of thousands and invest billions of dollars in the development of new designs. AREVA spent 1.2 billion dollars in research and development last year; this does not include Mitsubishi’s share of our new reactor developments.
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