With Japanese Prime Minister Naoto Kan’s popularity sagging over his administration’s handling of the triple earthquake, tsunami and nuclear crisis, and with concerns growing over the safety of nuclear power, it seems little wonder that he announced last week that the country’s energy policy needed to ‘start from scratch.’
The announcement, which included a decision to abandon plans announced last year for 14 new reactors, came shortly after the government had been forced to lean on Chubu Electric Power Co. to shut down the Hamaoka nuclear plant over safety considerations. But the implications of Kan’s announcement stretch well beyond Japan’s shores. Other Asian nuclear democracies such as South Korea and India have also called for safety reviews, while renewing their support for nuclear power. With Western media continuing to run periodic scare stories about the fallout from Fukushima, it’s clear there could be one big winner from Japan’s crisis—China.
Less fettered by popular opinion, China could use its massive nuclear build-up to become the cornerstone of the nuclear industry, with global implications. Even before Fukushima, Chinese authorities believed that rapidly expanding energy demand meant the country had to look beyond its traditional reliance on coal.
And look beyond it China certainly has—while anti-nuclear advocates made much of China’s decision to suspend new approvals pending a review, the fact remains that China already has 13 nuclear power reactors in operation, with more than 27 under construction and dozens more planned. As Zhang Lijun, vice minister for environmental protection, stated in the wake of Fukushima: ‘China will not change its determination and plan for developing nuclear power.’
Looking to indigenize its nuclear power sector as other nations have, China has plans for a first-of-its-kind ‘nuclear city’ at Haiyan. More importantly, by 2012 it will put in place the world’s greatest Reactor Pressure Vessel (RPV) building capacity. This indigenous capability to construct large reactor components has culminated in its offer of two 1000 MWe reactors to Pakistan.
As a result, China seems poised to benefit from any downturn in the Japanese nuclear industry. If this should be followed by a slowdown in any of the other Asian heavyweights, China could well emerge as the undisputed key mover by cornering, through its sheer size, the necessary technology and nuclear resources. Toshiba-Westinghouse, for example, has already transferred enough know-how to China for the latter to up-rate Toshiba-Westinghouse’s signature product, the AP-1000, into the CAP-1400, the first of which is scheduled to be built in 2013.
This is all in stark contrast to Japan, which seems set to turn away from nuclear power, after having embraced it to compensate for its scarcity of fuel resources. The nuclear option was a logical choice to power Japan’s postwar economic rise, since it allowed for the generation of electricity continuously over extended periods at high capacity—key requirements for satisfying the needs of energy intensive industrial and commercial activities.
Successive Japanese governments have made investment in nuclear energy development a strategic priority, meaning that Japan has become a hub in the nuclear supply chain. For example, Japan Steel Works accounts for 80 percent of the world market for reactor pressure vessels (RPV), the key component of the majority of reactors in existence today. Besides having a major commercial nuclear energy sector, Japan is also a world leader in the research and development of nuclear technologies ranging from advanced proliferation resistant fuel cycles, to waste management and reactor safety. Fukushima in some ways is a testament to Japanese build quality, since these very old reactors actually withstood the 9.0 earthquake and had to written off only when a tsunami destroyed the back-up diesel generators that were required to keep the reactors’ cooling system running.
Japan’s centrality to the nuclear industry became even more pronounced as safety worries following the accident at Chernobyl had knock-on effects for the nuclear industry in the United States—the US hasn’t built a single new reactor in more than 30 years, and continues to rely plant extension programmes to keep its 104 reactors operational.
The lack of new orders has made the US nuclear industry look elsewhere, and today most of it is either owned directly by the Japanese or is part of a joint venture with a Japanese major. Indeed, this could be one of the reasons why the United States hasn’t bothered to temper the hysterical reaction that Fukushima has generated there. Despite the US Nuclear Regulatory Committee approving a dozen licenses for new reactors, few if any are likely to be built anytime soon since the lack of a domestic supply base has made new nuclear construction prohibitively expensive in the United States. As John Rowe, CEO of Exelon, the largest nuclear plant operator in the United States, points out: ‘In any event, new nuclear plants are not economic investments with today’s natural-gas forecasts.’ So Exelon will ‘concentrate on keeping its existing plants safe.’
Not so in Asia. Japan’s bullishness (at least until Fukushima) on nuclear power has been shared by all major Asian economies. South Korea, which has sought to emulate Japan’s experience in the manufacturing sector, followed in Japan nuclear footsteps. Today, nuclear accounts for more than 35 percent of South Korea’s electricity generation. The South Korean government was also quick to re-affirm its commitment to nuclear in the wake of Fukushima. ‘Our answer to the nuclear industry is that we need to keep going,’ South Korean Minister of Knowledge Economy Choi Joong-kyung said in speech at a business event recently.
Importantly, Choi added that: ‘Part of our manufacturing industry’s competitiveness comes from nuclear power, thanks to its cheap energy costs. Therefore, it is hard to give up.’ In addition, South Korea has also emerged as an important cog in the global nuclear supply chain, allowing it to pip French and Japanese-American rivals to win a $40 billion nuclear contract for the United Arab Emirates in December 2009.
The UAE isn’t the only state in the Middle East that is turning to nuclear energy to meet electricity needs, and Seoul’s early contract win must give South Korea hope that it can secure further success. Still, although the government remains upbeat about nuclear power, the media has raised concerns about safety issues, and it hasn’t gone unnoticed that South Korea could overtake Japan as the country with the greatest density of nuclear plants.
South Korea isn’t the only place where there are worries over safety; India, too, has announced that it is reviewing operations at existing plants. This comes as the country looks to have 63,000 MWe of atomic energy in place by 2032, with about half of that capacity being made up of imported Gen III designs supposedly able to avoid Fukushima-style problems.
Indian heavy engineering companies are already entering into tie-ups with global nuclear majors to put in place the heavy forging capabilities required to build massive nuclear components such as RPVs. In addition, the oldest civil nuclear programme in Asia has over the years developed its own nuclear technology. For example, India is exchanging small reactor technology (less than 300 MWe in capacity) with countries such as Kazakhstan and Namibia that have modest sized grids in return for natural uranium to power its indigenous reactors.
Yet as in South Korea, the media in India is awash with stories of the crisis at Fukushima, and there is considerable public unrest over a proposed nuclear site at Jaitapur in the state of Maharashtra. The site, set to host six French-supplied reactors, is the target of anti-nuclear groups who say it is being constructed in an earthquake prone zone that also poses a danger to the local fishing industry.
But safety worries over nuclear power in Asia may well be overridden by climate change concerns, especially in China.
China’s low-tech mass manufacturing mega boom has been based around coal. But this has had a terrible impact on the health of many Chinese cities, some of which are regularly rated the most polluted in the world. In 2007, for example, the World Health Organization estimated that more than 600,000 Chinese were dying prematurely each year because of air pollution.
If nuclear fears really do hit Japan’s nuclear sector hard, or lead to more protests in India, then supply and demand could ensure that nuclear manufacturing ultimately moves to China in the same way that many other industries are now almost wholly concentrated there. This could also allow China to eventually possess the most carbon-competitive industrial sector in the world, and raises the prospect of China one day becoming a net nuclear exporter, with all the geopolitical leverage that implies.
One day the United States and Europe may have no choice but to look beyond gas and once again embrace nuclear energy. When they do, they might just find the only place to turn is China.
Saurav Jha is the author of 'The Upside Down Book Of Nuclear Power'' (HarperCollins India 2010). He researches global energy and security issues and writes regularly for World Politics Review, Deccan Herald and Geopolitics.