Ken Silverstein
EnergyBiz Insider
Editor-in-Chief

China's nuclear program may be a harbinger of things to come in the industry. That nation, which now uses coal to fuel two-thirds of its electric generation, says that its eventual goal is to obtain a third of its power from nuclear energy.

Mainland China has eleven nuclear power reactors in commercial operation -- six of which it has brought on line since 2002, five currently under construction and several others in the works. The aggressive build-out is a response to its reliance on coal and the clean air issues it is creating there. Without change, it will assuredly impact its bustling economy. Unlike western nations, China is unfettered politically with respect to forging ahead with its nuclear expansion. Its experience is therefore going to weigh heavily on the path that developed nations will take.

China's economy is growing at 8 percent annually and it needs about $1.4 trillion to modernize its energy infrastructure. To get there, it's importing nuclear technologies from Canada, France and Russia. The country plans to build 30 new reactors by 2020. Altogether, China hopes to increase its nuclear portfolio from 2.3 percent of its generation today to 6 percent -- 40,000 megawatts -- by 2020. By 2050, the aim is to have at least 150,000 megawatts of installed nuclear capacity, or 22 percent of the mix.

Zhou Dadi, former director of the Energy Research Institute in China, says that China is capable of generating far more nuclear power than is now on the table. But, there has been insufficient funding to do that. That's why Zhou is leading a team of researchers to come up with national energy plan -- and one that is endorsed by leaders there who are actively promoting nuclear power as a way to deal with climate change.

"With the current development speed, we can without question fulfill our [nuclear power] goal by 2020," says Zhou, at a conference in China. "In the near future, it is possible that our nuclear power generation capacity will be hundreds of millions of kilowatts, instead of the planned dozens of millions."

Speaking at the same function, Wang Naiyan, a scientist at the China Institute of Atomic Energy, said China could increase its proportion of nuclear energy to 10 percent in 2035 and 30 percent in 2050. He maintains that such progression would be matched with newer fast neutron technologies that reduce radioactive waste and which use more abundant types of uranium that is what is available for today's reactors.

China is now awarding billions in contracts to build plants. France's AREVA, Russia's AtomStroyExport and Westinghouse have all won bids and all of which say they can offer the most advanced nuclear technologies available. In the largest nuclear power deal in history, China will pay $11.9 billion to AREVA to build two nuclear reactors.

Uranium Issues

The rise of nuclear power in China, however, is presenting another issue. China's own uranium production is declining and it may not have enough of the fuel source to power all of its proposed reactors. Presently, the country relies mostly on imported uranium to fuel the reactors, with the bulk coming from Russia, Kazakhstan and Nambia.

To meet future needs, it will have to secure long-term contracts at the time of inception as opposed to at the time of completion. AREVA, for example, will supply 23,000 tons of uranium to China over the next 14 years as it more-than-doubles its nuclear capacity in that time frame. The dilemma, though, is that the global demand for uranium is also expected to grow. Right now, 439 nuclear plants are operating worldwide while 94 more are planned for development and 222 others are proposed, according to the World Nuclear Association in the United Kingdom.

The International Atomic Energy Agency adds that the use of nuclear energy will grow because of environmental concerns over fossil fuels and the fact that they are a depleting resource. It predicts nuclear power will generate 27 percent of all worldwide energy by 2030 with most of that output occurring in Asia.

"There is only so much uranium available right now, and China is far ahead of the U.S. in the nuclear power race," says George Bell, CEO of UNOR, a Canadian uranium mining company. "China's expected growth will curtail western development because of a lack of supply to feed any new reactors in the U.S."

A recent study by the Massachusetts Institute of Technology supports that premise, noting that the nuclear industry has lived off commercial and government uranium inventories that are nearly depleted. Globally, uranium production now meets only 65 percent of current reactor requirements, which has led to uranium prices rising from $7 a pound in 2000 to as much as $120 per pound. Such prices are now around $95 a pound, which according to Bell is bargain and which should encourage nations with nuclear aspirations to push for new exploration.

Others disagree with the notion that uranium resources are scarce, arguing that higher prices will lead to more production and an ever-increasing level of investment flowing in. That, in turn, will speed the development of newer and safer uranium mining techniques along with the introduction of new technologies to allow spent fuel to be re-processed and then re-used. Next generation reactors will, furthermore, use a different type of uranium than today's plants and one that is more plentiful.

China can therefore embark on an ambitious nuclear program without cornering the market for uranium. By doing so, it will accelerate the development of cutting-edge technologies. Its experience will no doubt serve as a case study for developed nations, which like China, are searching for ways to reduce their fossil fuel dependence and instead use cleaner and safer alternatives.