In September 2014, China announced its intention to become a world nuclear power, just two months before agreeing to a groundbreaking climate change deal with the United States. If that deal—which calls for China to increase non-fossil fuel energy from 10 to 20 percent of its energy mix by 2030—is to go through, then China will have to dramatically increase its nuclear capacity in the next 15 years. Can the world’s largest emitter of greenhouse gases do it?
Nuclear energy made up less than 1 percent of China’s energy mix in 2011, which was dominated by coal. Coal—which historically has fueled China’s households and its industrial growth—made up 69 percent of China’s energy mix, followed by oil at 18 percent, hydro and other renewables at 7 percent, and natural gas at 4 percent, according to the US Energy Information Administration (USEIA). And while coal is the main source of power in all areas of China, population centers are plagued by coal plant-produced smog that has garnered public outcry over its detrimental health effects.
China’s policymakers are finally coming to grips with its environmental problems, and central planners are seeking to diversify away from coal. As early as 2011, they set a goal for non-fossil fuels to provide 15 percent of China’s energy mix by 2020. So the recent climate change deal, while a landmark globally, was not groundbreaking domestically. As Rolling Stone reporter Jeff Goodell points out, “To meet the goal, the Chinese will essentially have to build the equivalent of the entire US electrical system in the next 16 years—and do it with wind, solar, and nukes.”
The deal does show China’s willingness to move away from traditional greenhouse gas-generating fuels and adopt more ambitious goals, among them to increase non-fossil fuels’ share of total generating capacity and to increase production of clean energy. Unfortunately, due to a number of variables—from international agreements emerging from this year’s UN Climate Change Conference to fallout from another nuclear disaster—it is impossible to say how this will affect growth in China’s nuclear industry.
‘Steady development with safety’
China began its nuclear energy program in 1970, and Chi-Jen Yang, an energy policy research scientist at Duke University, says that since then it has steadily gained momentum with the exception of the period surrounding Japan’s 2011 Fukushima Daiichi disaster. “China is cautiously and firmly moving forward with its nuclear energy agenda,” he said. But the Fukushima incident effectively stalled the development of China’s nuclear program. Before Fukushima, says Yang, there were rumors China might raise its 2020 nuclear capacity—which is currently 18.9 gigawatts (GW)—to as high as 80-90 GW. After the Fukushima incident, China kept its 2020 target at 58 GW and halted government approval procedures for new reactors.
China finally commenced new plant approvals in October 2012. It also conducted safety reviews of all nuclear projects to make sure they complied with International Atomic Energy Agency standards, which had not been required previously. After the Fukushima incident, China’s State Council also changed its nuclear policy from “positive development” to “steady development with safety.”
China’s nuclear reactors are located along its coastline near major industrial and urban population centers. These coastal areas are far from areas where traditional fuels are mined, but they are close to two things: the massive amounts of water needed to cool reactors during energy production and industrial and household consumers. According to the US Energy Information Administration, industry accounts for 75 percent of China’s total energy consumption. This, along with rising demand from a growing population, creates an ever-increasing demand for energy in China.
China said in December 2011 that it was committed to making nuclear energy the foundation of its power generation system over the next 20 years. China’s State Council passed the Nuclear Energy Safety Plan (2011-2020) and the Mid-and Long-term Development Plan for Nuclear Energy (2011-2020) in the same year. Another state plan calls for nuclear generating capacity to triple in the next six years, while still another calls for China’s generating capacity to reach 150 GW by 2030.
Foreign support for domestic ambition
Until recently, China has relied primarily on outside countries like the United States, France, Canada, and Russia to support its nuclear ambitions. American companies like Westinghouse and French companies like Areva have provided technology for the majority of China’s reactors, operational and planned. In 2007, Westinghouse signed a major deal with China’s State Nuclear Power Technology Corporation (SNPTC) not only to build four nuclear plants in China, but also to share with the Chinese technology for its third-generation AP1000 reactor.
For its part, Westinghouse is making significant gains in market share. Since 1999, the company has gone from providing offshore support for China’s nuclear industry to providing it onshore, opening its first Chinese branch in October 2014. Localization has allowed the company to support new building projects in China and to lend its expertise to Chinese companies building and running the country’s growing number of nuclear plants, says Westinghouse spokesperson Jun Gong. Its operations in China have allowed Westinghouse to become a solid part of China’s nuclear supply chain. This is important since, as Gong pointed out, China is projected to be the largest nuclear power market in the world by 2030.
Stepping up domestic competition
But China’s reliance on outside countries is starting to change. Though the majority of China’s reactors are based on foreign technology, they are domestically built and designed. Chinese companies like SNPTC have already begun marketing their own technology overseas, entering into contracts in Pakistan, Romania, and Argentina and starting negotiations with Turkey and South Africa.
In 2006, Chinese nuclear experts decided to adopt Westinghouse’s AP1000 as China’s main reactor technology. But it wasn’t until the Chinese government established SNPTC exclusively for international cooperative ventures in 2007 that the country was able to initiate licensing and technology transfers. SNPTC produced its own domestic design in 2014, the CAP1400, based on Westinghouse technology. Meanwhile, China’s other major nuclear power companies—China National Nuclear Corporation (CNNC) and China General Nuclear Power Group (CGN)—joined forces in 2012 to create China’s first wholly-domestically produced third-generation reactor, the Hualong 1, which was also approved by China’s National Nuclear Safety Administration last year.
Currently, only CGN, CNNC, and China Power Investment Corp. (CPI) are licensed to own and operate nuclear power plants in China. Until now, But as of February 3 SPTNC—formerly only authorized as a reactor vendor and not allowed to run its own plants—will merge with CPI in a move that Yang says may level the playing field.
The Will to Power?
China’s high demand for energy and the government’s renewed commitment to fighting climate change may create an opportunity for the nuclear power industry to expand in China, but Yang says nothing is certain. Morgan Stanley seemed to agree in its recent research report that since industry is moving inland, and the country is developing better infrastructure to minimize power waste, there might soon be an overabundance of energy in coastal regions. Additionally the process of building a reactor can take decades, especially when grappling with the newer models.
The fact still stands that China has committed to raising energy use from non-fossil fuels to 20 percent of its primary energy consumption by 2030, and has announced its commitment to becoming a world nuclear power by 2020. Its new grid system, to be completely online by 2020, will not only increase efficiency but also distribute energy to a wider area. The government is also developing fuel reprocessing facilities, and ramping up mining of its nuclear materials in areas like Xinjiang and Inner Mongolia as well as overseas to assemble a national stockpile. Finally, China is implementing a two-step plan to improve its power grid system, the first step of which was completed in 2012. It is also researching and developing nuclear fuel reprocessing facilities, which are slated to come online in 2017.
China’s plans for the future of its nuclear power industry are to focus on third-generation pressurized water reactors for the near future—the AP1000, CAP1400, and the Hualong No.1—before moving to high temperature gas-cooled reactors, and then fast neutron reactors, which are more fuel efficient than their predecessors.
[author] Lauren Dodillet ([email protected]) is assistant editor at the US-China Business Council’s Washington, DC office. [/author]