How China Gains from Fukushima (Page 2 of 3)

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.

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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.

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