Chinas Position in the Global Nuclear Industry - Dissertation Example

Chapter 4: Summary and Recommendations Chapter 4: Summary and Recommendations China’s position in the Global nuclear industry As statistics has shown, the global nuclear industry has been on a growth pattern with an over 100 percent growth in the power output since 1980. The worldwide nuclear power output in 1980 stood at 684 billion kilowatts hours, and as of 2012, the global output was at 2345 billion kilowatts hours (World Bank, n.d). China has not been left behind in this growth as can be seen from its overall nuclear power generation as of 2014. Figure 1: Map showing nuclear plants in China Source: [WNA, 2015b] Table 2.1 on the operational reactors shows that China’s output of the global nuclear power is at 2.4 percent with 23 operational reactors and 26 reactors under-construction reactors. China has the largest number of reactors under construction, showing its commitment to increase its nuclear output. China’s Increasing Influence in the International Nuclear Field China has been a country intent on developing in all aspects whether economic, political, or social. The fight for hegemony in Asia has seen China move at a fast pace to secure its position in the international arena, and its investments beyond the country’s borders show just how focused China is. With regards to nuclear energy, not only is China having massive influence in Asia, it is extending beyond Europe and the United States. In 2013, as Britain was establishing its nuclear power plant in Southwest England, Chinese corporations were buying stakes in the power plant as ways of extending their influence beyond Asia. China National Nuclear Corp and China General Nuclear Corp bought a stake of up to 40 percent in the plant (Davis, 2013). The UK is not the only country that shows China’s nuclear influence in the international field. Some of the country’s corporations have supplied nuclear parts in the construction of the US nuclear plants and even engaged in contractual activities in the field. China’s growth at home has made it a trustworthy partner in international co-operations regarding nuclear energy. More so, china’s growing influencing can be attributed to the idiosyncrasies of its manufacturing eco-system that largely affect supply chains in nuclear power (Florian, 2012). Chinese policy on nuclear power has always focused on the importation of nuclear power as a way of going global, and this substantially influences its position in the global nuclear power. China Has entered the First Phalanx of the Worlds Nuclear Power Development The commitment of the Chinese in becoming a global nuclear powerhouse is evident in the construction of new reactors, and international co-operations that help the country stamp its international presence. Even as its global presence and nuclear output increases, the country was not always inclined to nuclear initiatives. Before the 1980s, China was opposed to any nuclear engagements even when neighbors and allies seemed to be going the nuclear way. The opening up of China to world markets and international organizations in the late 80s saw it slowly embrace nuclear initiatives (Horsburgh, 2015). China joined organizations involved in the regulation of nuclear energy such as the Conference on Disarmament (CD), and it was able to mimic nuclear policies from other nations. Such steps marked the beginning of china’s journey to becoming a global nuclear phalanx. Although the nuclear order was more inclined towards nuclear weapons and issues of disarmament, China’s entry in the order marked a change of view with regards to nuclear energy. Much of china’s energy is produced from coal, implying that the country has high rates of pollution. In a bid to reduce carbon emissions from these fossil fuels, China began to differentiate its sources of power, and nuclear power was the best option with regards to reduction in pollution levels. Even though China had been producing nuclear energy for sometime (since the 1980s), the last decade has seen increased commitment in the industry as it seeks to shut down its coal plants. China may be yet to achieve a nuclear boom, but it is well within reach of its goals to becoming the top nuclear energy exporter. As of 2015, the country is expecting to begin operations in 8 of the newly built reactors but is still seeking to double its number of operational nuclear plants (Tiezzi, 2015). Part of the rush in commissioning new nuclear plants is due to the decreased investments experienced in the country in 2014 after it failed to commission any new power plant. In 2014, nuclear energy accounted for 2.4 percent of the entire energy output in China (WNA, 2015a). The country looks to increase this output from the current 2.4 percent to 6 percent by 2020. With the proposed increase in nuclear output comes the need for more reactors that may n turn lead to a shortfall in labor, fuel, and equipment. For China to maintain its phalanx, it has embarked on investments in uranium mining not only in the country but also internationally. The main aim is to ensure that it maintains a constant supply of fuel for the growing number of reactors in the country. Some of the uranium used in China is exported from countries such as Canada, Uzbekistan, Kazakhstan, Canada, Namibia, Niger, and Australia (Mark, 2005). The table below shows the country’s investments in international uranium sources Table 4.1 showing Chinese equity in international uranium mining Source: [WNA, 2015a] All the countries that China has invested in are the countries with a lot of uranium reserves in the world as Table 2.4 depicts. The investment in large uranium deposits is a sign of commitment to increasing the number of reactors in the country. By 2030, China intends to have its national nuclear power output at 129 GWe, while the US intends to have an output of 126 GWe. The implication is that China will be the leading producer of nuclear energy by 2030. Opportunities Opportunities presented by the government and policy support The Chinese government has been supportive of the nuclear energy industry through policy and provision of the right regulatory environment. Local investors stand to gain from government regulations that give full ownership to three Chinese companies while other domestic and foreign companies are only allowed minority stakes (Zhou and Hinze, 2015). The three companies are the China National Nuclear Corporation (CNNC), China Power Investment Corporation (CPIC), and the China General Nuclear Power Group (CGNPG). The National Nuclear Safety Administration (NNSA) approves the participants in this industry and regulates the companies approved. The control exercised by the government through regulation is aimed at ensuring safety especially following the Fukushima accident, and reducing leakages of resources from the sector. Other supportive policies that provide opportunities for nuclear investments in the country regard the decreased dependency on fossil fuels. Policies seeking to reduce dependence on fossil fuels are by high cost of producing energy from fossil fuels. A policy shift towards support for nuclear energy come amidst concern for climate change and high levels of carbon emissions coming from China. China’s State Council made a commitment to ensure a reduction in carbon emissions from 2005 levels by 40 percent by the year 2020. Also, the government made a commitment to reduce fuel generation from fossils by 15 percent as of 2020. Opportunities for investors lie in investing in nuclear power production and uranium mining to support the industry. Another government policy facilitating investment opportunities in the nuclear power sector regards the need for rapid economic growth, and a need to diversify the economy. Such a policy is supportive of the nuclear energy sector as export of nuclear energy will bring about economic development and the needed economic alternative. Nuclear energy is also a cheap source of energy considering the reduced carbon emissions. Opportunities presented by technology, experience, management, etc China’s technology growth is without a doubt one of the significant factors that places it on the global stage and aids in the development of other sectors. The increased demand for nuclear energy from the country has led to increased demand for supporting technologies that increases efficiencies while reducing operational costs and risks. The CPR-1000 reactor design is China’s development that borrows technology from France’s Avera M310. Though the CPR-1000 may be considered a Chinese design, its intellectual property rights belong to France. The further development of this sector implies that China can develop its nuclear technology that it can export as its own. As the country expands its nuclear output through the construction of new reactors, there is a need for advanced technology to support these projects. Though the country provides some of the technological facilitation, much of the technology for the reactors come from abroad. Westinghouse Corp from the US has been one company providing AP-1000 reactors to China (Ong, 2010). The opportunities evident are more investments in the technological sector for China to support its production. Hualong 1 is one of the indigenously developed reactors in China that was approved in April 2015 (Tiezzi, 2015). Categorized as a third generation reactor, the country intends to use this technology in its Fuqing plant and also export it as part of being a leader in the nuclear energy industry. As such, economic opportunities abound in nuclear technological development. Management and labor experience in the nuclear energy industry are in low supply in China. The increasing number of reactors implies that workers have to be distributed to facilitate operations at these new sites. The current concern is that the number of skilled laborers in the nuclear industry may not be sufficient to support the industry. Opportunities available include the development of new talents to occupy this industry. Other countries may also export their labor force to China due to the reduced labor market. Opportunities presented by the strategic position of nuclear power in Chinas energy development China is a country that has been experiencing continued economic development, urbanization, and improved living standards for its citizens. The implication is that all these developments need energy for sustenance, and the demand for energy is only likely to increase. Economic development in the country has been stimulated by rapid industrialization that may account for a larger share of the energy demand. China has been relying on coal as a source of its energy, and even though the country has 12 percent of the world’s coal deposits, the deposits are not sufficient to support the energy demands of the 1.3 billion Chinese (Wenquan, 2009). The strategic position of nuclear power in the country’s energy development will support increased industrialization and the further stimulation of the economy. The imbalanced distribution of energy resources and its consumption is another factor addressed by nuclear power. While most of the coal reserves are in the north, the much-needed water resources to support coal energy production are in the southwest region of the country. Due to the imbalanced distribution of these resources, transportation costs are added to the production costs of coal, and the result is increased prices for the coal (Damao, 2005). The strategic positioning of nuclear power in the county’s energy development provides a cheap alternative from coal and the possibility of balancing demand and supply. The possible balancing of demand and supply implies that there will be enough energy to support further industrialization, economic development, and foreign investments. The government will also collect more revenue from this sector, which means that there will be opportunities for further national developments in areas such as infrastructure and national security. Another opportunity for nuclear power development is the possibility of increasing energy output while reducing environmental impacts. The energy structure dependent on coal has had negative implications for the environment through increased carbon emissions. Opportunities presented by the Chinese strategy of going global The Chinese strategy of going global includes exportation of nuclear power, as well as exportation of nuclear technology. The exportation of nuclear power depends on the country’s ability to produce enough power that will sustain its local use while exporting the surplus. Available opportunities regard uranium mining, where other countries/investors can capitalize on exporting uranium resources to China, for purposes of supporting its burgeoning nuclear needs. Exporting countries such as Niger, Australia, and Uzbekistan stand to gain from the increased demand for uranium by China. China’s development of its nuclear technology such as the Hualong 1 will aid in its global strategy through exportation of the technology. Currently, the country has been exporting some of its technology to Pakistan, the US, Argentina, and the UK. The export of technology will bring in additional revenue to the country, and also aid the importing countries in the development of nuclear power. In July 2014, Chinese President and Argentina’s president signed an agreement that would see China export its technology and equipment in the building of the Atucha 3 (WNA, 2015b). Such agreements place China on the global nuclear map and gains returns from such investments. The table below shows prospects and sales for China’s technology exports in different countries as of 2015. Table 2 Technological export sales and prospects Source: [WNA, 2015b] Problems and Recommendations Existing problems One of the existing problems in China’s nuclear power strategy is the need to improve economics while factoring in safety measures. The scaling factor of nuclear power can only be improved through large scale deployment, but the construction of more reactors increases the risks to the population (Yuanhui, 2009). To reduce reactor construction, the only possible approach is increasing unit capacity and improving safety performance. To do so, the country has to embark on designing reactors that can fit such specifications and also meet the world standards. Although the newly developed 3rd generation may be better than the 2nd generation reactors, technology is yet to produce a risk-free system. Another problem that China is facing in nuclear power development is the achievement of a domestic capability to design and manufacture its nuclear technology. Until the development of Hualong 1, China had relied on foreign technology that it has improved but is yet to gain full ownership. The challenge lies in gaining the capability for domestic design and manufacturing, considering that it intends to export its technology. Decreasing uranium resources in the country pose another challenge in increasing nuclear power output. China’s domestic uranium is not enough to supply a quarter of the country’s nuclear needs (Jieying, 2015). Future nuclear projects can only succeed with enough uranium resources implying that only importation can serve these needs. With importation comes the problem of additional costs that are transferred to the costs of power output. Construction of nuclear reactors requires large capital costs that are inflated by the importation of uranium and the need to impose the highest safety standards. The challenge existing is that of acquiring investments in the sector, yet the government restricts majority stake to three local companies. Insufficient resources are part of the problem that the country has to deal with in achievement of its 2030 nuclear power goals. Recommendations for development China needs to invest more in research and development that will aid in design and manufacture of high-end nuclear technologies. Safety remains a chief concern for the production of nuclear power, but research can aid in identifying areas off prime concern and reduce the risks associated with nuclear power production. Improved safety features will also be a deterrence to possible natural disasters. China has been on a rapid expansion with the intention of increasing its nuclear power output, but the county should slow down on expansion and focus more on safety. With rapid expansion comes the increased risk of radiation and other negative impacts in case the country experiences a natural disaster. The country’s focus should be on improving the capacity of existing units, development of designs that factor in increased safety, and increased investment in safety imperatives. Another recommendation is that the country should seek to invest in renewable energy and reduce their focus on nuclear power production. China’s increased investments in nuclear power production are partly based on the reduction of carbon emissions, but there exist other approaches to carbon reduction while having minimal risks. As compared to renewable energy sources, nuclear energy production has the highest risk factors. Also, considering that uranium deposits in the country are reducing, investing in renewable energy conserves the planet’s resources and reduces the costs of energy production. As the number of nuclear plants in China increases, there is a need to improve on the issue of nuclear waste management. Currently, China manages its waste through storage (Kadak, 2014), but these storages are filling up. The recommendation is that China should consider recycling of its nuclear waste such as happens in France to reduce the possibility of nuclear contamination or disaster. References Damao, X. (2005). Developing nuclear power—the only path to adjust China’s energy-mix. Presentation at the International Conference on China Power & Alternative Energy Summit 2005. Shanghai, China. Davis, C. (2013). China’s increasing role in global nuclear power. New York Journal. Retrieved on October 31, 2015 from http://usa.chinadaily.com.cn/world/2013-11/07/content_ 17086701.htm. Florian, M. (2012). Global nuclear power supply chains and the rise of Chinas nuclear industry. Massachusetts: MIT. Horsburgh, N. (2015). China and global nuclear order. 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