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Why China is eager to promote atomic energy by SHIBATA Narumi

“API Geoeconomic Briefing” is a weekly analysis of significant geopolitical and geoeconomic developments in the post-pandemic world. The briefing is written by experts at Asia Pacific Initiative (API) and includes an assessment of burgeoning trends in international politics and economics and the possible impact on Japan’s national interests and strategic response. (Editor-in-chief: Dr. HOSOYA Yuichi, Research Director, API & Professor, Faculty of Law, Keio University)

This article was posted to the Japan Times on December 6, 2020:

https://www.japantimes.co.jp/opinion/2020/12/06/commentary/world-commentary/china-nuclear-energy/

   

API Geoeconomic Briefing

December 6, 2020

Why China is eager to promote atomic energy

SHIBATA Narumi, Program Officer, Asia Pacific Initiative (API)

 

 

 

 

The Fukushima No. 1 nuclear disaster in March 2011 put the nuclear industry in a complex situation. In Japan, time has gone by without the government being able to put forward a clear policy on nuclear energy, while some other countries with nuclear power plants — Germany, Belgium, South Korea and Taiwan — have taken the decision to close them sometime in the future. The European Union, on the other hand, has tied a reduction in nuclear power to a comprehensive recovery plan to repair the economic damage caused by the COVID-19 pandemic, focusing on a green recovery — measures to fight climate change and become carbon neutral. But while renewable energy has become mainstream, nuclear energy, by contrast, has lost its position in Europe. But around the globe, demand for nuclear energy, which is highly fuel efficient and carbon free, is expanding, especially in emerging countries whose economies and electricity demand are growing sharply. In China, in particular, the amount of electricity generated by nuclear power is forecast to increase ninefold by 2040 to 1.2 trillion kilowatt hours from 135 billion kilowatt hours in 2014. China’s primary energy consumption is expected to depend much less on fossil fuels by 2040, with coal-fired power generation accounting for 35% of energy, followed by renewable energy with 27%; oil 18%; natural gas 7%; and nuclear energy 7%. Nuclear energy supplied 2% of primary energy consumption in 2019. It is also notable that interest in nuclear power is increasing in the Middle East, with the construction of nuclear power plants being planned or proposed in the region. According to estimates by the International Atomic Energy Agency released in 2013, nuclear power generation capacity in the Middle East and South Asia totaled 6 million kilowatts as of 2012, and the capacity was expected to rise by between 4.5 times and 9 times by 2030, indicating a continued trend of nuclear reactors being built mainly in emerging countries. Such a trend has also accelerated in China in recent years.

 

Major exporter China’s nuclear industry was hit severely by the Fukushima nuclear plant disaster and new plant constructions were not approved for some years after. But approvals resumed in 2019, with the Chinese government issuing construction licenses for units 1 and 2 of the Zhangzhou nuclear power plant in Fujian province and for units 1 and 2 of the Taipingling nuclear power plant in Guangdong province. All of the projects adopt China’s homegrown third-generation Hualong One nuclear reactor technology. On Sept. 2, two more construction projects were approved to invest more than 70 billion yuan (¥1.087 trillion) to build Hualong One reactors at the Changjiang plant in Hainan province and the San’ao plant in Zhejiang province. In addition to the construction of plants within the country, China has also increased its presence as a major exporter of nuclear power. In 2013, Beijing set a policy of boosting exports of nuclear reactors as its national strategy, and has been promoting it along with its Belt and Road economic diplomacy initiative. Since 2013, President Xi Jinping’s administration has been working on creating gigantic nuclear power firms through merging state-owned nuclear enterprises as a part of a national strategy to strengthen global competitiveness of the nation’s nuclear energy industry. China has also been promoting the development of homegrown nuclear reactors. As well as pressurized water nuclear reactors such as Hualong One, the country is developing a multipurpose small modular reactor, known as ACP100, and a so-called fourth-generation high-temperature gas-cooled reactor and a fourth-generation fast breeder reactor. Backed by such nuclear technology, China has been actively winning overseas contracts for nuclear power plant construction. The contracts include China General Nuclear Power Corp. (CGN) and China National Nuclear Corp. (CNNC) signing an agreement in October 2015 to invest in a nuclear construction project at the Hinkley Point site in the United Kingdom, led by French energy group Electricite de France (EDF), followed by another deal between them to build a Hualong One reactor at the Bradwell nuclear site in the U.K. China also signed a cooperation agreement with Argentina for the construction of a Hualong One reactor in that country and agreed with Iran to offer two nuclear reactors. Another Chinese-designed reactor is under construction in Pakistan. China is also cooperating on ongoing projects in Eastern Europe, the Middle East and South America to construct Chinese-developed nuclear reactors and high-temperature gas-cooled reactors. The growing influence of China as a nuclear exporter is the biggest factor in the structural changes to the international trade of nuclear power plants.

 

Nuclear security risks Nuclear power is a highly strategic and politically sensitive dual technology that can enable a country to obtain nuclear weapons. This strategic nature is what makes many nations adopt nuclear energy despite various challenges. In that sense, global trading of nuclear power is not a mere business activity but will add another aspect of international security. For instance, low enriched uranium can be used to produce fuel for nuclear power plants while highly enriched uranium can be used to create nuclear weapons. Iran, which receives support from China in nuclear technology, claims its nuclear activities are solely for peaceful purposes, but it has insisted on producing enriched uranium within the country and had been rejecting, until August, inspections by the IAEA. There are also concerns over how much China can get involved in the new nuclear power markets mainly in emerging economies in terms of human resources, technology and regulations, when it is simultaneously working on building new reactors at home. U.S. Energy Secretary Dan Brouillette claimed it is problematic from the viewpoint of national security and nuclear non-proliferation that many countries of geopolitical importance are largely turning to China and Russia for the technological support needed to build nuclear reactors. Brouillette stressed the need for the U.S. to reclaim its traditional position as the world leader in nuclear energy through facilitating exports of nuclear technologies, equipment and fuel and funding advanced research. The main reason behind the recovery of China’s nuclear industry after the Fukushima disaster was that, in addition to strengthened safety systems including regulations and personnel, and a large increase in energy demand, the nation had to cope with serious air pollution at home. The Chinese government re-evaluated and positioned nuclear energy as a clean and low-carbon energy source along with renewable energy and began actively promoting it. For example, China’s authorities aim to turn Hainan, a resort island where nuclear power already provides one-third of electricity needs, into a “clean energy island.”

 

Ties with the Middle East China’s strategy of promoting nuclear energy as a clean and low-carbon source is also reflected in its foreign policies regarding climate change and zero emissions. In his address to the United Nations General Assembly in September, Xi said China aims to have CO2 emissions peak out by 2030 and carbon neutrality achieved by 2060. Xi’s commitment was regarded as a strong message by the world’s biggest CO2-emitting country to lead the world in climate change issues as Joe Biden leaned heavily into climate change issues in his successful presidential campaign. Today, China is aiming to expand its influence in the Middle East by strengthening relations with countries in the region through its government-led nuclear business. During his visit to the Middle East in January 2016, Xi signed a nuclear cooperation agreement with Saudi Arabia and Iran, as well as agreeing with Iran to build two Hualong One reactors in the country. Saudi Arabia and China inked an agreement in 2012 to enhance cooperation in the development and use of atomic energy for peaceful purposes. In 2017, CNNC signed a memorandum of understanding with the Saudi Geological Survey to explore and assess uranium and thorium resources. While Iran remains isolated internationally due to suspected development of its nuclear programs, countries like Israel and the U.S. are also expressing concerns over Saudi Arabia, following a report in August that the country has built a facility for extracting yellowcake uranium concentrate from uranium ore with help from China, an allegation the Saudi Arabian government denies. These cases show that China’s recent policies on nuclear energy involve utilizing the nuclear industry on a large scale with both the public and private sectors working to serve national interests and increase the nation’s geopolitical influence to create an advantageous situation. Japan and the U.S. are facing an urgent need to cope with China and Russia’s intensifying moves to strengthen competitiveness in the global nuclear energy market. In order to minimize possible risks posed by China’s promotion of nuclear power plants and maintain Japan’s influence in the global community, establishing a presence in the international nuclear energy market through exporting nuclear power plants might be an effective policy. But that is a hard decision to make, considering the low public support for nuclear power in Japan after the Fukushima disaster, as reflected in the slow progress on restarting dormant plants across the nation. Moreover, nuclear power plants, with high costs associated with safety and operational risks, become less price-competitive when developed in countries like Japan and the U.S. with liberalized markets led by the private sector, compared with state-led projects developed in nations like China and Russia. The challenges regarding nuclear technology will remain in the future.

 

Disclaimer: The views expressed in this API Geoeconomic Briefing do not necessarily reflect those of the API, the API Institute of Geoeconomic Studies or any other organizations to which the author belongs.
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