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Global ambitions fuel China’s nuclear power strategy

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A dome is installed over a Hualong One nuclear power unit at Fangchenggang nuclear power plant in Guangxi Zhuang Autonomous Region, China, 23 May 2018 (Photo: China Daily via Reuters).

In Brief

Over the past several years, there has been a monumental shift in China’s energy policy towards nuclear power. And Beijing’s nuclear ambitions aren’t limited to its own borders. Its ‘Made in China 2025’ blueprint envisages vastly expanding China’s role in nuclear power generation in developing economies worldwide.

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Western environmental and energy policy communities have long berated China for refusing to abandon its reliance on thermal coal. But China’s commitment to expanding renewables has actually been extraordinary. Solar energy only became a viable solution in most OECD economies in 2013 after China poured into the market and made cells affordable. A similar story occurred in 2016 with batteries for electric vehicles and hybrids.

It is true that China’s coal emissions have not peaked. While renewables are taking a larger share in China’s energy mix, they are still mired in curtailment and subsidies. Fossil fuels are slated to dominate China’s energy generation until at least 2030.

Still, one important policy change will affect not only China’s emissions targets, but also the future energy options of less developed countries: China’s subsidised inland nuclear power reactors.

China nearly doubled its nuclear-generated electricity output between 2013 and 2016. It has surpassed Japan to become the world’s fourth-largest nuclear-power country, with a total operating installed capacity of 42.9 gigawatt electrical (GWe) in 2018. Nuclear is set to expand to as much as 281.8 GWe by 2030. This would take nuclear-generated electricity from 2 per cent to up to 20 per cent of China’s energy mix.

Expanding on its 45 current reactors, China has 43 more under construction, with a further 92 slated to begin construction by 2020. China plans to reach a total of 56 working reactors by 2020, to be the world’s second-largest nuclear country.

To achieve these goals, investment of around 540 billion yuan (US$80 billion) is needed, according to Zhefu Holding Group, a private company that makes nuclear equipment. A technological gap must also be breached, with the rollout of China’s third- and fourth-generation nuclear reactors.

Inland civil nuclear systems require river water for coolant, a problem China is solving by using the Yangtze River basin. The deployment of next-generation nuclear reactors using river water for coolant has no precursor in terms of scale.

But if China’s model proves successful, it will likely be replicated across river systems throughout the developing world. This means both exporting nuclear energy components and equipment, as well as exporting the factories and technologies to manufacture them. While initial nuclear exports have targeted advanced economies such as France and the United Kingdom, the majority of the rollout will be directed toward the Middle East, Africa and South America.

Beijing’s ambitions for nuclear power-generation indeed go well beyond its domestic economy. Internationally, exports of China’s nuclear reactors to Belt and Road economies are designed to replicate the export-oriented development policies of countries such as Germany, Japan and South Korea. A single nuclear plant generates approximately 30 billion yuan (US$4.5 billion) in economic output value, the export equivalent of 300,000 vehicles.

The Made in China 2025 blueprint is the vehicle for China’s nuclear power industry to go global through the promotion of advanced nuclear power equipment. Two indigenous large-sized pressurised water reactors — CAP1400 and Hualong One — have been selected as the leading technology to facilitate the global strategy. The development of high-temperature reactors and fast-neutron reactors are also seen as important for the industry’s global influence. The development of small modular reactors is planned to allow China to acquire intellectual property rights in the area of civil nuclear power ship technology and produce a 100 billion yuan (US$15 billion) market for offshore oil drilling.

Armed with third-generation nuclear power technology, China has already signed contracts or is discussing cooperation with 20 countries including Argentina, Egypt and the United Kingdom. China has also signed agreements with Saudi Arabia and Iran to provide energy equipment plants to feed into the countries’ planned nuclear plants. Exported nuclear plants along the Belt and Road are expected to reach 100 by 2030.

Cooperation with developed economies in civil nuclear power will likely have geopolitical strings attached. For example, projects in the United Kingdom and France would reduce the two United Nations Security Council members’ room to complaint if other countries, like Iran or Egypt, accepted similar offers for China to build civil nuclear projects.

Chinese enterprises developing nuclear power will also experience enhanced market competitiveness with other nuclear powers — Russia, the United States, France, Japan and South Korea — if Hualong One is successfully built in the United Kingdom.

In less-developed economies, China has already begun administrative processes to export nuclear equipment and nuclear equipment capacity plants. A civil nuclear memorandum of understanding with South Africa is designed to tap into China’s experience, especially in personnel training, technical support and nuclear facility monitoring. Elsewhere, the China National Nuclear Corporation is to build Argentina’s fourth nuclear power plant under a US$6 billion deal. China General Nuclear Power will also build four Hualong One nuclear reactors in Kenya, to be operational by 2030.

If China intends to sell nuclear equipment abroad, it must first understand the technological and safety risks in its own backyard and ensure that its technology is dependable. A domestic nuclear accident coinciding with a flood on the Yangtze River could be catastrophic. It must also ensure that it promotes effective safety protocols and standards alongside its exports of energy equipment. For civil nuclear power to solve China’s environmental policy woes, it must be policy-complete enough not to export environmental risks.

Tristan Kenderdine is Research Director at Future Risk.

A longer version of this article originally appeared here on Global Asia.

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