Reactor relief

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Chalk this up as one of those big "I told you so" moments for the anti-nuke lobby and a symbol of the shifting power dynamics in energy politics unfolding on both sides of the border.

Energy Minister George Smitherman announced on June 29 that the cost of building two new reactors at Darlington was officially billions too high to consider without a federal bailout.

That was bad news for the troubled Atomic Energy of Canada Limited, which had "won" the bidding process, and for nuclear stakeholders around the world whose various problem children (numerous other cancelled projects and cost overruns) are also garnering less than glowing investment ratings in the new global credit environment.

Let's just say that recession and climate politics are combining to shake up the pro-nuclear narrative big time. This is despite the high-profile support of old-school techno-fix enviros like James Lovelock and shocking pro-nukers taking up This Magazine cover space last month. And it's despite industry hopefuls who thought the atomic option was poised to become the winner of the low-carbon sweepstakes, an idea dissed by most climate campaigners.

Back in 2005, with Premier Dalton McGuinty committed to shutting down coal-fired plants, the Ontario Power Authority (OPA) drafted a plan that crowned nuclear as the only and cheapest way to keep 50 per cent of the province energized over the long term.

That's the kind of grid-hogging behaviour that limits growth for other alt-options, driving down their business potential and driving up their costs. Not a good thing. The OPA plan was based on cost projections provided by the industry and energy-use data that estimated continuously increasing demand.

Based on past performance and third-party analysis, the likes of Greenpeace's Shawn Patrick Stensil and Pembina's Cherise Burda have been telling anyone who'd listen that the cost numbers were not to be trusted and that the demand-side projections never gave conservation its due.

With a little help from the recession, they appear to be right. Even before last December, energy use in Ontario had been trending downward for several years. Now, with the downturn, Ontario's electricity regulator (called the Independent Electricity System Operator) projects use to decline by 4 per cent this year and 0.3 per cent in 2010, despite more forecasted economic activity.

According to the Renewable Is Doable coalition of eco-NGOs, the usage drop is the result of "ongoing, long-term structural changes in the economy away from energy-intensive activities, natural conservation that occurs as older equipment is gradually replaced with more efficient equipment and the success of conservation programs." So there.

This isn't counting the 15,000 megawatts of renewables that Burda says the OPA has identified as in the planning and development phase. "Many of these will be shovel-ready over the next three years," she says.

What a difference a week makes. In separate comments, Ontario Power Authority officials and McGuinty let it be known that, with the recession, they see no reason to hurry toward a nuke commitment.

This is a sweet moment. Usually environmentalists' predictions are only proved correct when a foreseen disaster occurs (global warming, for example). In this rare case, the disaster is postponed. And it looks like the public purse could actually be spared a new, well-predicted misadventure that would have stymied energy innovation for a generation -- despite the Green Energy Act.

That is, as long as Smitherman's request for a federal nuclear sweetener doesn't get a nod from the PMO. But here, too, the recession is a player that makes federal billions for Ontario nukes seem like a long shot.

Just a few days ago, the Office of the Parliamentary Budget Officer, led by former Finance official Kevin Page, said federal deficits would be longer and deeper than Finance Minister Jim Flaherty had predicted. More billions for nuclear from a government that won't even fork over dough for Toronto streetcars?

Stensil is "cautiously optimistic." As he says, "The Harper government has been consistent with their own values on this file."

These are the odd and somewhat hopeful ironies that come into play these days as the fact of energy restructuring dances so intimately with the new economic realities. South of the border, this is also producing uncharted and somewhat chaotic political conversations.

In the U.S., the speedy passage through the House of Representatives of the American Clean Energy And Security Act on June 26 is a huge relief, but major pitfalls, like targeting only a 17 per cent emission cut by 2020, make it also a heartbreak.

Enviro groups are divided, with Greenpeace, Friends of the Earth and Public Citizen actually calling for the act's defeat, while most eco orgs, though critical, are lobbying with all their might to get it passed.

Now, as the bill moves into Senate hearings this week, it looks like the U.S. could have cap and trade in hand by the end of summer. Senate votes are dodgy, so the act might be much worse for its Senate wear or, less likely, somewhat improved. And of course, it could fail altogether.

The bottom line is that new winners and losers are emerging quickly, and it's time to be vigilant about all our assumptions as we two-step into the new known unknown.

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