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Long Live Nuclear Power? The Test Case of China

Damned if you do, damned if you don't. Since the 2011 meltdown in Japan, that's been the worldview of atomic energy. The People's Republic is trying to undo the dilemma.

Take your pick: freeze in the dark, choke on filthy air, flip the switch and hope the lights will come on, flood the world's coasts by melting the Arctic, or live near an atom bomb that just might go off? For energy policy, these are the ugly options. Fossil fuels are dirty global warmers. Renewables are limited, expensive and sometimes unreliable. Atomic energy, by contrast, is relatively clean and affordable – yet every once in a while, somewhere in the world it goes bang.

The last time, four years ago when a tsunami triggered a meltdown in Fukushima, this seemed to sound a death-knell for nukes. Fallout from Tokyo Electric Power's failed reactors ruined for human habitation the surrounding 800 square kilometres (three-quarters the size of Hong Kong) and wrought damages of an estimated 100 billion USD (the annual output of Slovakia). But just as the industry eventually rose from the slag of the 1986 major-meltdown in Soviet Russia's Chernobyl (preceded by the 1979 mini-meltdown at America's Three Mile Island),  the nuclear phoenix might again be headed up. Its launch pad lies in the land that uses more electricity than any other, China.

Power Struggle

Not that the Chinese take the threat lightly. They know that over six decades of commercial nuclear power, accidents causing death or >100 million USD in damages number 25-30, and that Fukushima's costs are by far the highest. Indeed, the Japanese blast prompted China's State Council to cut its 2020 nuclear capacity targets by 25 percent, explains Credit Suisse's 2014 'China Nuclear Primer' report. Even though the country has reportedly had no serious atomic accidents, construction of new plants was halted for extraordinary inspections, and safety regulations were reviewed and tightened. At the same time, planners are acutely aware that they need to keep feeding the beast. China's hunger for electricity surpassed that of the USA to become global number one in 2011, and, predicts the US Energy Information Administration (EIA), by 2040 it will double again. True, this is not the double-digit growth of recent past, but still: the coming increase is about equal to the current generating capacity of Europe or North America. On top of that comes the challenge of King Coal. While the black stuff currently fuels two-thirds of China's electricity, it also fouls the atmosphere. Soot concentrations in Beijing, Shanghai, Xi'an and other major cities regularly clock in at 3-6 times the upper limit recommended by the World Health Organisation. 

A Nuclear Boom

So, the only way out is to go heavy on cleaner power: nuclear, wind, solar and natural gas. These, says the US EIA, will account for two-thirds of the new capacity to 2040, with coal taking the remaining third. A huge side effect here, as Credit Suisse's China analysts point out, is that by sometime around 2030, China will become the world number one in nuclear power generation. As of early 2015, says the World Nuclear Association, Sino projects account for one third of all capacity under construction, one quarter of that planned to start operations in the next decade and nearly half of that slated for start-up by 2030. As with existing nuclear plants, the new ones will be operated by Chinese utilities. But unlike the existing ones, for which technology is usually imported, the new ones also will mostly be conceived and designed by in-country companies. China's three biggest players in nuclear technology – China General Nuclear Power Group, China National Nuclear Corporation and State Nuclear Power Technology Company – will rival and perhaps surpass existing heavyweights such as Areva, GE-Hitachi or Toshiba-Westinghouse.

They Have the Technology

China's rise as a nuclear technology supplier has been a long one, starting with its successful test of an atom bomb in 1964. Along the way, plant designs have been imported from France, Canada, Russia and the USA, report Credit Suisse China analysts, and there is still a complex web of licensing and intellectual property agreements in place between the East and the West. Nonetheless, Credit Suisse detects a clear trend of domestication: Chinese companies are in the process of acquiring full rights to their reactor designs. They also are building a workforce. Nearly 30 Chinese universities now educate nuclear engineers from bachelors to PhD level, and another five offer programs in nuclear-fuel processing. Although today they are turning out some 2000 new professionals per year – about twice as many as the USA – there is still a brain gap. By boosting student support and starting salaries, the China Atomic Energy Authority says it hopes to see 5000-6000 new technologists arriving annually. This intellectual firepower is aimed not only at displacing imports, but at making China a global player in nuclear technology. So far success has been modest: four plants have been sold to Argentina, Pakistan and Romania. Still, it's a start, and with plenty of government support. In early 2015, reports the World Nuclear Organization, China's Cabinet approved a 100-billion USD program to support the industry's exports – on top of a similar program passed in 2014.

The Numbers Add up, But do the People?

Of course China's exporters will need to convince buyers that the economics of atomics are attractive. With one notable exception – natural gas – this seems to be the case. Analysis by the Credit Suisse China team shows that nuclear provides a higher return on investment than coal, hydro, wind or solar. Availability of nuclear also is better than the latter two; it keeps on when the sky is still or the sun doesn't shine. Surely the biggest hurdle to nuclear's growth, inside China and out, is not economic but social, the Fukushima phenomenon. According to researcher ChinaDialog.net, the country's nascent anti-nuclear movement has gained traction among the general population. In mid-2013, there was even an open protest in the southern Guangdong province that forced the government to cancel a 6-billion-USD uranium processing factory. Opposition does not appear strong enough to torpedo growth in general, but it could slow things down. Popular opinion seems to accept new nukes located on the coast, where in the case of an accident, there would be unlimited seawater to cool fuel rods and disperse radioactive pollution. Inland, dryer projects might be judged 'too risky' by residents: Credit Suisse reckons that stiff opposition could knock back growth rates by about one-third.

While the World Watches

That low-ball scenario, if it happens, could give the world's atomic industry a worse headache than it has now. Fukushima nipped a nuclear renaissance in its bud. Japan shut down its entire fusion fleet, 30 percent of national electric capacity. Germany and Switzerland, with respectively 15 percent and 35 percent shares of atomic electricity, decided that over time they would step out of nukes completely. Yet the pullbacks themselves highlight the energy dilemma. In the face of rationing (also known as brownouts) and much-higher electricity prices, Japan's government is moving to turn its closed plants back on. Germany and Switzerland already are struggling to implement their decisions; and the 32 or so other nuclear nations are mostly nudging forward with atomic operations and expansions. If yet another accident occurs, all bets are off, but in the present environment, it looks like nuclear is on the rebound, and China will be leading it.