Finding the Pathway for U.S.-China Nuclear Cooperation

The development of China’s nuclear market has been driven by a governmental elite, many of whom were trained as engineers. Their strategic thinking appears to be motivated in part by the challenges of climate change – to adopt lower carbon sources of electricity generation. As the vice president of the China Nuclear Energy Association has pointed out, nuclear power – rather than solar, wind or biomass – is “the only energy source that can be used on a mass scale” to achieve clean, low-carbon energy.

Just as significantly, though, China’s rapid expansion of nuclear power appears motivated by a desire to upgrade the Chinese nuclear industry by enticing foreign suppliers who want to participate in China’s market growth to share their technology with Chinese partners. The profit potential is vast in China, but other big emerging economies, such as India and Brazil, will be exploring nuclear installations in coming decades. To wrest some of that business away from established incumbents –such as France’s Areva and Japan’s Westinghouse – China is leveraging its low-cost labor and deep experience with major infrastructure projects. A Western-designed reactor can be built in China for 40% less cost and 36% faster than that same installation in Europe.

For China to become globally competitive its two major nuclear power companies — China National Nuclear Corporation and China Guangdong Nuclear Power Group — will need to improve in the knowledge-intensive end of the business. Of the 13 nuclear power plants currently operating in China, only three — all at the Qinshan site — rely on an indigenously developed design. Likewise, China has only limited experience selling its reactors in export markets; Pakistan is the only known foreign buyer to date. Finally, to compete globally, China will need to manufacture specialized components, for which it is currently dependent on foreign suppliers.

As for U.S.-China strategic cooperation in the nuclear field, there have been important undertakings but, to date the governments have not attempted anything on a broad strategic basis. There are interesting opportunities on the horizon. Former U.S. Ambassador to China, Jon M. Huntsman Jr., has reported discussing with Bill Gates a new kind of reactor “that runs for decades on a single fuel load, making and destroying plutonium as it runs,” thereby reducing the hazards of reprocessing and the dangers of proliferation. According to Huntsman, strategic cooperation between the U.S. and China to develop this American-pioneered technology could bring shared benefits. The technology could, for example, be certified and brought to commercial scale faster in China. A partnership effort could be envisioned where a joint American-Chinese company leads the construction, with co-development and commercialization rights apportioned between the partners. The end-result could be a cleaner and (marginally) safer form of energy brought to consumers quickly and at scale.

(This piece has been reprinted from G+ Insights, a publication series of the Gerson Lehrman Group at www.gplus.com.  The G+ piece, in turn, has been adapted from Sustaining U.S.-China Cooperation in Clean Energy,  a book publication authored by Terry Cooke forthcoming from the Kissinger Institute of the Woodrow Wilson Institute in November 2011).