Friday, November 16, 2007

Chinese Civil Nuclear Energy


November 16, 2007

ABSTRACT – With 1.3 billion people China is the most populous country in the world and has a fast growing economy. In the last ten years, China’s G.D.P. has grown almost with a two digit rate every year. In order to support this dynamic economy, China requires always additional quantities of electric energy. The aim of this paper is to analyze the actual Chinese development with reference to civil nuclear energy and to explain that an important drive toward an increase of nuclear energy is mandatory for China if the country wants to continue to sustain its economic growth. In particular, it is of clear evidence that all the other sources of energy cannot provide a reliable support for this country, which now has the fourth largest economy in the world (when measured by nominal G.D.P.) and which is predicted to surpass Germany at the beginning of 2008 becoming the third largest economy.

Introduction –   Since the last couple of years it has emerged a trend toward a sort of nuclear renaissance all around the world. According to the International Energy Agency (I.E.A.) in 2005 "5.2 percent of the world's electricity was produced by nuclear plants, compared with 3.3 percent in 1973."[i]


In particular, this trend is principally centered on Europe and on Asia. In the latter, China, India and Russia are undertaking important programs with the aim of building new nuclear reactors in order to increase their nuclear civil capacities. In addition to this, "they are making nuclear energy available to other nations"[ii] and they are trying to develop a new generation of nuclear power plants. In fact, despite a recent increase also in renewable energy sources, like wind and waves power, these account for only a very low percentage of energy generation and cannot guarantee the economic development of any developing country. The tendency to expand nuclear energy is driven by the necessity to have always more and more available energy. In specific, if China and India want to continue in the next decades with the incredible economic growth that they have sustained in the last years, they have to increase the quantity of available energy given their increasing energy demand. In general, the following three big issues contribute together to the advancement of the development of civil nuclear energy:

  • First, the rising prices of commodities. A barrel of oil is around $90 in November 2007.
  • Second, if, on the one hand, oil and gas create problems linked to the high prices, on the other hand, they are found in the so-called “difficult countries” like Persian Gulf states, Russia, countries previously belonging to the Soviet Union, Angola, Nigeria and Venezuela; just to mention the principal owners of oil and gas. On the contrary, uranium is located principally in friendly places like Australia and Canada, which are very stable politically.
  • Third, there exist environmental concerns linked to the fact that the other principal alternatives to nuclear energy, for instance oil and coal, are without any doubt dirtier. Nuclear power-plants are considered in China clean sources of energy — this obviously putting aside the problem of how storing the spent fuel that notwithstanding years of study still persists.

The aim of this paper is to try to photograph the actual Chinese situation with reference to civil nuclear energy and to show that if China wants to continue with its impressive economic growth an increase in the production of civil nuclear energy is a very mandatory step.

1. China’s Energy Panorama It is a matter of fact that China's very rapid economic development has been accompanied by an increase in energy demand. From the beginning of 1990s the Chinese primary energy consumption has risen by more than 70 percent. This increase is mainly due to low energy efficiency and to an impressive economic growth. From one side, it should be noted that according to the Asian Development Bank (A.D.B.), China “uses four times the amount of energy to produce a unit of G.D.P. than the Group of Seven developed countries”[iii]. On the other side, in comparison with Western countries the per-capita consumption is very low with a huge difference between coastal and rural areas[iv].  There is already a tendency to increase the per-capita consumption and this is linked first and foremost to the urbanization and motorization of large groups of Chinese population. The People’s Republic of China is the world’s most populous country (1.3 billion of people) and today it is the second energy consumer behind the United States. Given these two considerations, it is understandable how China’s rising oil demand and oil imports have turned the country into a very important player in world oil markets. The essential dependence on conventional fossil fuels — principally coal and oil, but also natural gas — have already created huge environmental problems at the domestic level, with a very dramatic increase of greenhouse gases. China is today the largest producer and consumer of coal in the world (and it is presumed that China has large coal reserves to be developed yet). In light of the high consumption of coal (probably the most pollutant way to generate electric energy), it is really plausible that in 2008 China will overtake the United States as the world’s largest emitter of carbon dioxide. China also produces a high amount of oil (3,858 thousand barrels per day, 5th producer in the world). In fact, the country has sizeable proven oil reserves. Its most important producing oil fields are mature and production has already peaked, so now the attention is devoted to the internal western provinces and to offshore fields where it seems to be 20.5 billion tons of oil reserves of which 9 billion tons already proven[v].

One relevant issue that contributes to raise problems for the Chinese energy production is the distribution of the domestic energy commodities. In fact, coal and natural gas are located principally in western provinces while hydropower in the southwest. Oil is instead located offshore in the Bohai Sea in the northern part of the country where there are 28 oilfields and 60 platforms[vi]. Energy demand is high in the eastern part of the country along the coast (provinces of Guangdong, Zhejiang and Jiangsu, cities like Shanghai, Beijing and Tianjin). It is of public evidence that in recent years during peak seasons many Chinese coastal areas have sustained severe blackouts. The Chinese government in the last years started to take some actions in order to improve energy efficiency and to push for the development of the so-called clean energies in which it included nuclear energy. According to this target, the present 11th Five-Year Plan (2006-11) states that China has to reduce energy consumption by 20 percent of its G.D.P. by 2010 and to increase the share of renewable energies up to 15 percent of the energy portfolio. Chinese energy development pushes also for a fivefold increase of its nuclear capacity by 2020. And the share of nuclear energy will pass from the actual 2 percent to 4 percent. Compared to some Western countries where the share of nuclear energy is around 15 percent to 25 percent (apart from the 70 percent of France)[vii] this value is still not very high, but considering the huge dimensions of the country it means that by 2020 China will build up at least 30 new nuclear power plants with an investment of $50 billion. In any case, China is already the third biggest nuclear energy producer in Asia after Japan and South Korea and nuclear power is in China the third most-important way in order to generate electricity after coal and hydropower[viii].


2. China’s Nuclear Energy Program and the Related Institutions —   China considers nuclear energy to be part of the group of the so-called clean sources of energy. For this reason, in all the international negotiations China has always pushed for the inclusion of nuclear energy into the Clean Development Mechanism (C.D.M.)[ix]. Its civil nuclear program started in the 1980s. At that time it was first designed and then constructed a 300 MW pressured water reactor (PWR) 100 km southwest of Shanghai, in Zhejiang Province. Then followed the two units, Daya Bay 1 and 2 (with French and Canadian technology), which are located near Hong Kong (70 percent of their power is transmitted to Hong Kong, while the remaining 30 percent goes to  Guangdong Province). These three first nuclear power plants started their commercial operability in 1994. Up to the late 1990s, the development of the Chinese nuclear energy had been very slow. One of the reasons was the Asian financial crisis in 1997. In other words, projects already prepared were put on hold because the economic panorama was not very clear and big investments could be unsafe and not pay back. With the 10th Five-Year Economic Plan (2001-05) the development of nuclear energy was set up again as one priority and in the last seven years eight nuclear plants have been added to the national power grid. Four of these new power plants are located in Zhejiang Province, two in Guangdong Province and two in Jiangsu Province. All these new power plants are situated along the coastline in the eastern part of the country and have the task of providing electric energy to the most developed part of the country.  


Then, according to the 11th Five-Year Economic Plan (2006-11), while China necessarily wants to develop its nuclear power, it now also deems important to start setting up some environmental goals in order to gain always more and more energy efficiency while protecting the environment. Today, China has ten nuclear reactors in commercial operation while unit Tianwan 2 is already connected to the electric grid but it is not commercially active. Four additional units are now under construction while the building of four other units will start by the end of this year. In 2007, the Chinese State Council has approved a plan to increase fivefold the Chinese nuclear capacity by 2020. Instead, by this year, China should be capable of generating units by a total of 23 million kilowatts. If China accomplishes this result by 2020, it will have a total of 40 million kilowatts through nuclear power[x]. Then, in the following decade there will be a three-to-fourfold additional increase in the Chinese civil nuclear power to 120-160 GWe. The country also wants to acquire the necessary know-how to design and build nuclear reactors, as well as to master all the aspects related to the fuel cycle[xi]. In fact, at the moment eight out of the eleven existing nuclear power plants have to import their most important components from France, Canada or Russia. China is now conducting experimental work with reference to develop its fourth-generation pebble-bed high-temperature reactor. The Chinese plan is to become independent of foreign conventional fission technology and by 2017 to build up its first pressurized water reactor in operation. The running projects are nonetheless linked to foreign technologies, in particular with the United States and Russia. In 2006, China and the United States signed an agreement that would permit to Westinghouse Electric Co. to build four nuclear reactors in China. According to this contract, Westinghouse AP1000 (third generation nuclear technology reactor) will be used for four reactors two in Sanmen (Zhejiang) and two in Yangjiang (Guangdong)[xii]. Today there are more than 300 international companies (from Canada, France, Germany, Japan, Russia, Spain and the United States) that are providing technologies and/or know-how to the Chinese nuclear industry.  

In China, the National Development and Reform Commission (N.R.D.C.) decides the targets for energy development and approves all the projects related to nuclear energy. Then, the China Atomic Energy Authority (C.A.E.A.) is in charge of all civil nuclear energy programs and international cooperation. It is the key body for planning and managing civil nuclear energy and for approving all the feasibility studies. With reference to the safety regulations and their compatibility with international agreements the leading center is the National Nuclear Safety Administration (N.N.S.A.), which was created in 1984, at the beginning of the Chinese nuclear energy program. The State Environmental Protection Administration (S.E.P.A.) and the Chinese Environmental Ministry monitor radioactive pollution and also waste management. Several corporations are working in the nuclear field. Among them, the most important is the China National Nuclear Corporation (C.N.N.C.), which was created in 1988. It is involved with research and development, uranium exploration and mining, uranium enrichment, fuel reprocessing and disposal. This state conglomerate for nuclear power produced 22.68 billion kilowatt-hour of electricity in 2006 and has operated very safely Qinshan-1 nuclear power plant for 15 years. Last, China Nuclear Engineering and Construction (C.N.E.C.) is responsible for the construction of nuclear plants.     
3. What Considerations Can Be Drawn in Relation to the Chinese Nuclear Program?     
The trend for China in order increase its nuclear power is totally reasonable. Three are the most pressing contingencies:
  • Environmental concerns
  • Commodities prices (oil and gas)
  • Political instability in the countries where the commodities are located

Summing up, all of these contingencies are pushing China to expand strongly its nuclear civil power. In the past decade, China although it has ratified the Kyoto Protocol, it has seen a massive increase in its domestic greenhouse emissions. The difficult environmental situation derives from a high utilization of coal. In fact, in China there are hundreds of coal-fired power plants often very old and absolutely not environmentally friendly. In 2005, China built 117 government-approved coal-fired power plants. In addition to these power plants, local and provincial governments built other non-authorized coal-fired power plants. According to the International Energy Agency (I.E.A.)[xiii],  five Chinese cities are among the top 10 most-polluted cities in the world and this is directly linked to coal-fired power plants.  The effect of this massive use of coal is already easily visible in the short run. In fact, today one-third of the Chinese territory receives acid falls and one-third of the urban population breathes heavily polluted air. The Chinese power sector is the main responsible for this situation. It releases in the air around 44 percent of sulfur dioxide, 80 percent of nitrous oxide emissions and 26 percent of carbon dioxide. It is a matter of fact that China has to decarbonize its power-generating structure. It is not a question of not being able to comply with the Kyoto Protocol, the environmental problem is real. And for China, pushing only on economic growth without considering the devastating environmental impact may also have negative economic result. In fact, the environmental problems may also slow down the economic growth of the country.[xiv]

With reference to the prices of commodities the problem lies principally with oil. An oil barrel priced over $90 is a huge cost on an economy that is developing so strongly like the Chinese economy. In October 2007, the country’s energy officials had a meeting “with OPEC officials for the first formal meeting in two years”.[xv] According to Chinese policymakers, for China the problem is not anymore how to find crude. China in the last years has put into action a very strategic network of agreements with countries in all the continents in order not to incur in any oil shortage (many agreements have been signed with African countries and in specific with Angola). Instead, the problem for China lies in the price of oil, which is definitely too high (China has access to oil but this is very expensive). If Chinese industries falter, given the lack of broad resources of cheap oil, this could slow the economic growth depressing the financial markets. This event could really undermine the expansion of the Chinese middle class “and could drive the economy into a prolonged slowdown”[xvi] with problems spreading all around the world.   

In addition to the previous two points, it is true that oil and gas are located principally in difficult areas of the world, areas politically unstable like the Middle East, Venezuela and Russia. Instead, nuclear power plants require uranium that is to be found in friendly, stable and democratic countries like Australia and Canada[xvii]. Also on the uranium side, Chinese officials have moved very diplomatically in the recent years. Premier Wen Jiabao has been traveling the world to secure contracts for the uranium needed to power nuclear reactors. At this regard, in 2006, China reached an agreement with Australia. The latter had to procure uranium to China on condition that China would not use it for military purposes. Still in 2006, China and Canada signed agreements in Beijing to develop uranium mines and oil reserves.[xviii] In addition to these agreements, China signed a deal also with Niger. The only problem linked to uranium is that — given all these activities on the international markets — the price of uranium is rising. In December 2000, according to UX Consulting[xix], a U.S. firm that publishes benchmark uranium prices, one pound (about 454 grams) of uranium was $7.1, while in November 2007 it is now more than $90. In general, there exists the possibility that China’s shift to nuclear energy will push up the price of uranium on the international market.     

4. Conclusions — Given all the factual conditions it is absolutely normal and plausible an increase of the utilization of nuclear energy in China. Beijing has to work a lot to improve the efficiency of the energy it produces with all the different energy sources that it currently uses, but nuclear energy is the only viable solution, especially with reference to the huge environmental problems linked to pollution, which China is already facing (the main reason are all its coal-fired nuclear plants). At the same time, it is true that nuclear energy should not be considered as completely clean, because still persists the problem associated with the spent fuel. In order to try to solve this problem, China is organizing in the desert of Central Asia a storage point (a sort of Yucca Mountain in the United States). The Beishan Mountains — this is the name of the Chinese storage place — “are a lonely outpost, with the closest permanent residents more than 60 miles away. The only people who venture here are nomadic Mongolian herdsmen with goats and camels. They move from one small oasis to another in what is otherwise a desolate, gray desert for hundreds of miles around.”[xx] This project is still to be developed and at the moment China is testing the area in order to understand whether these mountains could have the prerequisite to store nuclear spent fuel. What is already sure is that in China the development of nuclear energy has undoubtedly more pros than cons and it is very obvious that the Chinese government will speed up this process more and more in the next years.  

[iii] WISE/NIRS Nuclear Monitor, Development of Civil Nuclear Power Industry in China in Antenna 10,  accessed November 15, 2007  
[iv] A Chinese citizen consumes only one-eighth of the consumption of an American citizen.
[vi]CNOOC Ltd, China's biggest offshore oil producer, plans to more than double production at the Bohai Bay field to more than 27 million metric tons, or about 542,000 barrels a day, in five to six years as new fields come on stream”. In:, accessed November 15, 2007.
[vii]“Of the 30 countries with nuclear power, the percentage of electricity supplied by nuclear ranged widely: from a high of 78 percent in France; to 54 percent in Belgium; 39 percent in Republic of Korea; 37 percent in Switzerland; 30 percent in Japan; 19 percent in the USA; 16 percent in Russia; 4 percent in South Africa; and 2 percent in China”. in Nuclear Power Worldwide: Status and Outlook, in, accessed November 16 2007. Nine countries in the world get 40% or more of their electricity through nuclear power but normally worldwide nuclear power supplies only 17% of the total.   
[viii] In:, accessed November 16, 2007.  
[ix] The Clean Development Mechanism (C.D.M.) is an arrangement under the Kyoto Protocol allowing industrialized countries with a greenhouse gas reduction commitment (called Annex 1 countries) to invest in projects that reduce emissions in developing countries as an alternative to more expensive emission reductions in their own countries. The most important factor of a carbon project is that it establishes that it would not have occurred without the additional incentive provided by emission reductions credits.
[x] If China reaches this target, it will produce 260-280 billion kilowatt per hour in 2020. 
[xi] In:, accessed November 13, 2007.  In addition, “China has placed great importance on the development of its own technology to build nuclear reactors. The CNP 1000 technology of CNNC will be used to build two 1,000-megawatt reactors in Fangjiashan, not far from the Qinshan project in East China's Zhejiang Province. And China Huaneng Group, the nation's largest power company, also launched the construction of its first nuclear power plant using high temperature gas-cooled reactors. Its Shidaowan plant, located in Rongcheng, East China's Shandong Province, will have an installed capacity of 200 megawatts and require an investment of three billion Yuan. Seventy percent of the technology used in the project will be developed by China.” in, accessed November 16, 2007. Moreover, China has recently been involved in the construction of a smaller nuclear plant in Pakistan and probably this will not be an isolate event but the beginning of cooperation between the two countries in the nuclear energy sector.   
[xii]In:, accessed November 16 2007. This is probably the reason for which the Japanese industry Toshiba in 2006 spent $5.4 billion to acquire Westinghouse Electric. The idea is that China in the next 20-30 years – although its will to develop an autonomous nuclear technology – will have to use a lot the expertise of Westinghouse that is one of the most important players in the field of civil nuclear energy.  
[xiii]International Energy Agency (I.E.A.),, accessed November 16, 2007.   
[xiv]SAIGET, R., J., China’s Coal Addiction Causing Environmental Disaster, in Agence France Presse, in, accessed November 16, 2007.       
[xv]REUTERS, Oil Prices Are Too High, China Tells OPEC, in International Herald Tribune,, accessed November 16, 2007.
[xvi]McINTYRE, D., A., China Oil Crisis Could Cripple World Economy, in 247Wallst,, accessed November 16 2007.
[xvii] China has its own uranium resources in western China but needs to import relevant resources from other countries.
[xviii]DELANEY, R., McKINNON, I., China, Canada Agrees On Oil, Uranium Development, in   From The Wilderness,, accessed November 16, 2007.
[xix]UXC:, accessed November 16, 2007. 
[xx]CHA, A., E., China Embraces Nuclear Future, in Washington Post, May 29, 2007.