China is well on its way to reaching its carbon reduction goals ahead of time after years of structural economic change that emphasised shifting to low-carbon hi-tech sectors. A recent study suggested that China’s carbon dioxide emissions may have peaked in 2013 and have seen a steady decline since. As Beijing aims to wean its economy off coal, other energy sources have been expanded, most prominently nuclear power.
In early June, China National Nuclear Corporation reached two deals with its Russian counterpart Rosatom for four nuclear power units at the Xudabao and Tianwan plants. The deals, which feature cutting-edge reactors, showcase China’s determination to achieve its goal of doubling nuclear capacity by 2040, even if this requires importing technology.
China is the world’s largest consumer and producer of primary energy, and discussions about its energy sector often portray a stark choice between fossil fuels (especially coal) and renewables, a dichotomy that overlooks a key facet of Beijing’s energy strategy – nuclear power.
Given the pressing need to curb its massive coal consumption and upgrade inadequate grid infrastructure to support the expansion of wind and solar energy, China has been zealously improving its nuclear power capacity.
However, realities on the ground have frustrated Beijing’s nuclear ambitions, as persistent industry and technical bottlenecks plague existing plants. Safety concerns and cost overruns are the most common problems. In February, the Westinghouse-designed AP1000 nuclear reactor in Zhejiang province yet again postponed the start of full operations after a series of delays, including a particularly serious issue in March 2017 when Westinghouse filed for bankruptcy.
The Zhejiang reactor is not the only Chinese nuclear project affected by bloated budgets and protracted timelines. Operations of China’s largest reactor, built by French company Areva, were postponed until April after cash flow issues and technical problems with the third-generation European Pressurised Reactor (EPR) technology led to three delays in the past two years.
This experience seems to have soured Beijing’s willingness to continue banking on French know-how for its nuclear needs. Consequently, another Areva project, a long-planned nuclear waste reprocessing plant, now seems unlikely to materialise.
While the AP1000 and EPR reactors have since been successfully connected to the Chinese grid, the problems have created a seemingly conflicting narrative surrounding China’s stance on nuclear energy: bold government proclamations and planning on one hand, and financial and technical complications on the other. Nevertheless, the country’s energy needs are so great and its need to decarbonise so urgent that China has no choice but to continue developing nuclear power alongside renewables.
Under these circumstances, Beijing’s decision to sign the US$3.1-billion Rosatom deal signals a strategic shift away from traditional Western nuclear suppliers. In so doing, China follows in the footsteps of many other countries hoping to build nuclear capacity. The Russian VVER 1200 reactors are the most exported model globally and sport a greater capacity than the next most popular design. The agreement also effectively ended a multi-year freeze on new plants, indicating that China considers its energy transition to be more likely to succeed with new partners.
After all, nuclear energy occupies a pivotal position in Beijing’s simultaneous search for energy security and decarbonisation because of its carbon neutrality and cost-effectiveness: at about 420 renminbi per 1000 kWh, nuclear power is much cheaper than renewables, on a par with coal-fired power. Under the Sustainable Development Scenario, investment in nuclear plants is projected to increase 24 per cent in the next 12 years – faster than investment in natural gas and renewables.
This investment isn’t only geared towards the domestic market; Beijing is aiming to export its nuclear technology. As of November 2017, China had agreements with Pakistan, Argentina and Sudan to export its technology, while being in talks with South Africa and Turkey on building reactors. This represents an important aspect of China’s Belt and Road Initiative.
There is tremendous room for the Chinese nuclear energy sector to grow. Nuclear power provides a mere 4.4 per cent of electricity in China. In 2016, the US’ nuclear energy consumption was 191.8 million tons of oil equivalent, while China’s was 48.2 million tons.
Chinese electricity demand is projected to grow 2.5 per cent by 2020, coupled with a 7.5 per cent rise in residential demand in China’s least-developed regions.
China has its work cut out, so Beijing’s willingness to diversify its foreign suppliers and draw technology from Canada and Russia, in spite of technical issues impacting individual projects, is understandable.
If the Chinese government hopes to achieve its goal of building 88GW of nuclear capacity, constituting 15 to 25 per cent of the national energy mix by 2020, it will need to build partnerships with a broader range of nuclear innovators. The huge potential for expansion, combined with the issue of technical obstacles, means China will need to be aggressive in advancing technological know-how and expediting carbon dioxide emission reductions.
With the renewed push for reactor construction amid a rising demand for energy, China stands in notable contrast to other leading economies that have begun to move away from nuclear power in the wake of the Fukushima disaster, particularly Japan and Germany. With the China-Russia nuclear deal, Beijing is betting high on nuclear and emphasising that the technology is there to stay.