Running scared from safe nuclear power
The Fukushima Daiichi nuclear disaster seems to be having a bigger impact on energy policy in Europe than in Japan itself. While the Japanese say they are sticking with nuclear power, Switzerland and Germany both are moving to phase it out. But their decisions are based on fear, rather than sound science. And Canada would do well not to follow in their footsteps.
Germany has shut down eight of its 17 reactors, and voted last week to close the rest by 2022. Switzerland's lower house of parliament voted to phase out its five reactors by 2034. Both decisions were made in reaction to public campaigns -not on the basis of counsel supplied by scientific experts.
Nuclear plants have been operating since the 1950s, and have proven to be a safe and reliable source of power. The two examples that are often cited to make the case against nuclear energy are Chernobyl and Three Mile Island. The 1979 incident at Three Mile Island resulted in no loss of life and caused virtually no adverse effect on public health. The 1986 disaster at the Chernobyl nuclear plant in the Soviet Union was considerably more devastating, but entirely preventable. It would never have occurred in any Western country, such as Canada, employing state-of-the-art safety protocols.
At Fukushima, moreover, the disaster was caused by a once-ina-century seismic event coupled with protection shortfalls. And even in this case, the total amount of released radiation was only about a fifth of that released at Chernobyl. Such a disaster could not occur in the seismically stable regions where nuclear plants are situated in Canada and other Western nations.
There have been far fewer deaths resulting from the production of nuclear power than other sources of energy. According to a study published in the Journal of American Physicians and Surgeons, "The risk to the average American from having all of our electricity generated from nuclear power is equal to the risk of a regular smoker smoking one extra cigarette every 15 years, or to the risk of an overweight person increasing his weight by 0.012 ounces."
The biggest problem with nuclear energy is not the health risks, it's the cost. A 2009 interdisciplinary MIT study found that the cost per kilowatt hour of producing nuclear energy is 29% more than energy produced from natural gas and 35% more than coal. And thanks to increasing construction costs, it keeps getting more expensive. Much like green energy, nuclear is simply not economical without large government subsidies for the massive upfront costs involved with construction.
This is what makes the German and Swiss decisions to mothball existing reactors so bone-headed: Nuclear power stations are incredibly costly to build, but relatively cheap to run. All the more reason to keep existing plants in operation, as long as they are deemed to be safe.
Nuclear power also is an environmentally friendly option: Unlike oil, gas or coal, nuclear reactors do not produce the man-made greenhouse gasses that are warming the planet (which is why many pragmatic environmentalists are so conflicted about enviro-purists' campaign against nukes). Switzerland currently gets 40% of its power from nuclear and the rest from hydro, meaning that the country produces very little CO2 in the production of its energy supplies. Phasing out nuclear will likely make the Swiss more dependent on fossil fuels.
Every energy source comes with its own set of risks. Wind and solar take up huge swathes of land, produce relatively little power and cost large sums of money. Carbon-based fuels not only warm the planet, they also pose the risk of direct, acute environmental disaster, as we saw in the Gulf of Mexico last summer. Even hydro power can have widespread negative impacts: Just look at the millions who have been displaced by the Three Gorges project in China. The minor risks associated with nuclear power must be seen in this wider context.
By basing public policy decisions on public fears stemming from the ongoing Fukushima crisis, Germany and Switzerland will likely be forced to use more costly, less environmentally friendly and possibly more dangerous energy supplies in the future.
Who is villain in Sino-Forest meltdown?
To say that the value of Sino-Forest Corp. shares are uncertain at the moment is not saying much. The company's market cap has gone from $4.5-billion to about $1-billion in one week, driven down by a report from a research firm that essentially portrays the China-based TSX-listed company as something of a fraud.
In return, Sino-Forest and its backers are essentially accusing research firm Muddy Waters of itself engaging in something of a fraud for having turned out a false report on Sino-Forest. All of which leaves the rest of us with a coin toss as to who is telling the truth. The Ontario Securities Commission, suddenly alert to a lot of muddy water lapping up against its regulatory system, has launched an investigation.
Regulators have to keep busy, of course, but this dispute looks like something that should be allowed to run its course in the market a bit. Either Sino-Forest is the solid, tree-rich company it claims to be or it is an overblown company that "massively exaggerates its assets" and "overstates" its timber resources.
As to whether Sino-Forest has the trees it says it has is impossible to know, and it's unlikely the bureaucrats at the OSC are in a better position to unravel the conflicts than, say, investors and lawyers with a vested interest in getting at the facts.
Among those facts is a "forest valuation" report by the Beijing office of an international consulting firm, Pöyry Consulting, which appears to back the company. It shows colour pictures of Chinese employees of Pöyry out in what looks to be the uninhabitable wilds of northern China, measuring the width of some very thin trees as part of a vast acreage owned by Sino-Forest. Pöyry sets the value of the forests at US$2.6-billion.
Those of us who lived through the Bre-X gold mine disaster recall similar pictures of experts standing knowledgeably over drill cores extracted from the Indonesian jungle. The drill cores, supposedly filled with indications of gold, proved to be just rock.
Adding to the uncertainty over the value of Chinese forests were comments from a leading regulator, the outgoing head of the Hong Kong Securities and Futures Commission. Martin Wheatley said China is "the new dot.com," an investment market marked by a "rush of Chinese companies" that are not being properly scrutinized by investors.
Is Sino-Forest part of dot.China? Or is it the victim of an aggressive short-seller who is perpetrating his own fraud by going after Sino-Forest, making the Chinese company the victim of a fraud?
Both story lines cannot be true at the same time, unless both are involved in creating an investor scam. Sino-Forest may not be the company it claimed to be, and Muddy Waters may be pulling its own scam by engaging in its own exaggerations and misrepresentations. Maybe they are both messing with investors.
What can the Ontario Securities Commission do about all this? It certainly had no capacity -legal or otherwise -to handle the Bre-X fiasco. It may still lack the wherewithall to get to the bottom of the Sino-Forest situation. China isn't exactly an open book. The Muddy Waters report on Sino-Forest contains pages of supporting documentation in Chinese that would take a forensic linguist to unravel.
What the OSC should avoid is a campaign against Muddy Waters on the grounds that it broke various disclosure rules or engaged in market manipulation. At this point, that's not at the heart of the Sino-Forest case. The main issue is who is right about Sino-Forest's valuations, accounting and financial reports. If Sino-Forest is a solid company smeared by Muddy Waters, then Muddy Waters rightly becomes the target of investigation.
On the other hand, if Muddy Waters' conclusions on Sino-Forest prove reasonably accurate and the company is a valuation scam, then Muddy Waters and its owner, Carson Block, should be hailed as the hero of the global investment community -no matter how much money they made short-selling Sino-Forest or allowing others to make money shorting the company.
The point is that before the OSC goes off on a hunt for alleged short-seller misbehaviour, it should first establish whether the allegations brought by Muddy Waters are valid. If they are, then Muddy Waters is exactly what market-based investment research is all about. They will have done what the securities regulators have not done.
Yet again, the PQ eats its own
the measure of longevity, the Parti Québécois has been a success: It will turn 43 in November. But revolutionary movements such as the PQ do not seek survival. They seek extinction through victory. As with religious millenarians whose rapture never comes, the continued survival of the PQ sect has become a source of awkwardness, even embarrassment, for the faithful.
The onset of middle age has caused the PQ to become divided into institutional and revolutionary constituencies. On one hand are the democratic-minded functionaries who want to build a big tent and win elections. On the other are the uncompromising, old-school "shouting sign painters" with still-vivid memories of René Lévesque and ongoing fantasies of the victorious referendum that's just around the corner. At times, these two camps go to war. And this week is one of those times.
The casus belli was purely pretextual: PQ leader Pauline Marois' jingoistic support for Quebec City's arena project (including her party's dubious scheme to insulate the city and its Quebecor corporate partners from legal claims arising from contracting-process favouritism). The real issue was sovereignty, and how hard the PQ should push it.
Ms. Marois has been true to the PQ's strategy since the 1995 referendum, soft-pedalling separatism until such time as "winning conditions" are achieved. Given the stunning rejection of the Bloc Québécois in last month's federal election, now would seem like an especially sensible time to implement this go-slow approach. But patience isn't good enough for Jean-Martin Aussant, one of four prominent PQ MNAs who quit the party this week, and now sit as independents. "I'm [in politics] to work on sovereignty," Mr. Aussant told a news conference. "And I don't think [Ms. Marois] is the one Quebecers will want to follow, at a very high rate, toward sovereignty."
The trio of other disaffected MNAs -Pierre Curzi, Lisette Lapointe and Louise Beaudoin -were more guarded in their commentary. But as former PQ premier Bernard Landry emphasized, it is clear that the separatism issue lies just below the sur-face of their complaints: "[Mr.] Lévesque did not found this party to govern the province of Quebec. [Our focus] should be public service -not taking power. It's better to take power later -but to take it with dignity."
Ms. Marois' position may become unsustainable in coming days (notwithstanding the 93% leadership approval she won at the PQ's recent convention), forcing her to step down. If so, she will be in good company: The PQ leader will not be the first hardheaded realist to be thrown overboard by the party's purists.
Scratch the surface of the PQ's left-wing, social-democratic cant, and you will find a party founded on two layers of tribalism. The first and most obvious is the creepy ethno-linguistic tribalism scandalously trumpeted by Jaccques Parizeau following the 1995 referendum. The second -which exists within the first, likes two nested Russian dolls -originates with the cultish in-group of lifelong PQ die-hards who regard the sovereignty-or-bust line as inviolate dogma.
Outsiders assume that the charismatic, workaholic Lucien Bouchard inhabited this inner circle. Far from it. He had worked with the federal government before coming to the PQ, and was therefore forever suspect as a man from outside the tribe. He was also a political and fiscal realist, and sounded the alarm about Quebec's irresponsible spending practices. This irked those elders who inhabit a dream palace where the act of independence makes all other problems disappear, including debt.
Mr. Bouchard nearly killed himself for the separatist cause -quite literally -and his efforts in the 1990s cost him his marriage. Yet in the end, he was mortified by the lacklustre support he received from within his own party. The final straw was the hostile reaction to his condemnation of perceived anti-Semitism from PQ hard-liner Yves Michaud. Like Ms. Marois, Mr. Bouchard had tried to present separatism as the creed of a tolerant and cosmopolitan people. Instead, he saw that the PQ elders were more fixated on circling the wagons around one of their own than admitting they had a problem with the acceptance of non-ethnic Quebecers.
Pauline Marois is more of an insider than Mr. Bouchard ever was. But she also is aware that separatism is a dead issue for most of the citizenry. She has tried to appease the base with contrived policies such as forcing French-language colleges on anglos, which she knows will never fly, all the while looking for ways to actually get elected. But as with her predecessors, the effort to square the circle has become impossible.
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