GIS “Dossiers” aim to give our subscribers a quick overview of key topics, regions or conflicts based on a selection of our experts’ reports since 2011. This survey focuses on nuclear energy, which is increasingly becoming a critical factor in geopolitical decision-making for countries around the world.
You might also be interested in:
After the 2011 Fukushima disaster, governments around the globe put the brakes on their nuclear energy programs. Some countries slowed or completely stopped producing energy from nuclear reactors, while others put the construction of nuclear power plants on hold. Most famously, Germany decided to phase out nuclear power altogether by 2022 as part of its Energiewende (“energy transition”) program. 2012 marked the biggest decline in nuclear energy ever.
However, as GIS expert Dr. Carole Nakhle wrote in 2014, nuclear power has entered a new phase. Most governments reversed course and began pushing ahead with new nuclear plans. In 2013, there were 31 countries producing nuclear energy, compared with 15 in 1973. Dr. Nakhle pointed out that nearly 70 power plants were planned to be built or already under construction.
“These developments are impressive and will make a positive contribution to the fight against climate change, as nuclear energy produces carbon-free electricity,” she wrote. “However, it might be too early to start celebrating the onset of the nuclear age.”
While nuclear accounted for nearly 12 percent of energy production by 2011, it made up only a small fraction of global primary energy consumption. Once up and running, nuclear power plants are price competitive with fossil fuel-fired facilities, and unlike renewable sources do not depend on the availability of sun, wind or water. But the long construction times, as well as the hefty construction and decommissioning costs complicate matters. For now, the pendulum swings from pronuclear to antinuclear sentiment in the public debate are set to continue.
Japan: backlash and fossil fuels
The 2011 Fukushima disaster shook Japan to its core, bringing huge changes to the country’s politics and energy sector. In 2012, GIS expert Stefan Lippert explained how the country – which prior to 2011 had been the sixth-largest user of nuclear power – might be unable to restart its industry due to the residual public backlash against nuclear energy. At the time, 57 percent of the Japanese public was against restarting the nuclear reactors that had been shut down for routine maintenance. “The poor handling of the nuclear crisis by Japan’s establishment has exacerbated the trend toward distrust in the country’s government in particular and the political institutions in general,” he wrote.
The disaster also revealed the cozy relationship between the bureaucrats in the Ministry of Economy, Trade and Industry and the monopolistic energy sector. By 2013, Japan had shut down all its nuclear power plants.
Doing so was costly. The country was forced into an even heavier reliance on imported fossil fuels, wrote GIS expert Dr. Frank Umbach. Japan’s LNG costs surged from 3.5 trillion yen ($42 billion) to 6.5 trillion yen ($78 billion). The energy sector recorded $13 billion in annual pre-tax losses in 2012 because of rising imports and fossil fuel prices. Dr. Umbach predicted, rightly, that Japan would begin to bring some of its nuclear plants back on line to turn this trend around. Two nuclear reactors restarted the following year.
Japan: road toward phase-out
The so-called “nuclear village” – a network of pronuclear politicians, bureaucrats, industry executives, academics and journalists – though wounded, retained some of its influence, and no clear antinuclear political platform ever appeared in Japan. As the government of Prime Minister Shinzo Abe tested the waters for a gradual comeback of the industry, Dr. Lippert pointed out that the country still needed a solution for storing its nuclear waste. He predicted that 10-15 reactors would come back online, and that “Japan’s nuclear waste pile would keep growing, and with no final solution in sight. ... It appears that the Abe government has chosen this strategy in order to please key constituencies such as the nuclear village without significantly losing public approval.”
Officially, the Abe government wants Japan to generate up to 22 percent of its energy from nuclear by 2030. “The target is unrealistic, since it would require restarting practically all of the country’s remaining 43 operable reactors (58 were in operation before March 2011),” wrote Dr. Lippert in November 2015. Almost all of its reactors were built in the 1970s and 1980s and are rapidly approaching their 40-year age limit. Japanese regulations allow for their life span to be extended by 20 years, but only if expensive safety measures are implemented. Building new reactors is not an option, due to the financial constraints on the country’s utilities and huge political resistance.
In effect, this means that “Japan’s nuclear sector is on the way to silently vanishing,” wrote Dr. Lippert in March 2016. “The most likely scenario for Japan’s mid-term energy outlook is that nuclear reactors will account for a moderate ‘baseload’ of about 5 percent of the energy mix, equivalent to a maximum of 10-15 active reactors,” he added. “Japan will be nuclear-free by the 2030s – without an explicit German-style exit strategy and its associated political cost.”
Germany: puzzling decision
In 2011, 23 percent of Germany’s electricity came from nuclear generation. After Fukushima, however, the country turned strongly against the power source, immediately shutting down seven of its existing 17 reactors and announcing that it would stop producing nuclear energy altogether by 2022. Dr. Umbach discussed the fallout of this decision extensively in three reports in January 2012, pointing out that it increased Germany’s dependence on Russian energy imports. Already Germany’s dominant source of gas, Russia became its largest supplier of hard coal.
The decision to shut down nuclear reactors does not mean the end of nuclear-produced electricity in Germany
Moreover, the decision to shut down nuclear reactors “does not mean the end of nuclear-produced electricity in Germany. It has led to higher imports of nuclear produced electricity, at least partially from more unsafe nuclear reactors in neighboring countries,” he wrote. It was also made without consulting Germany’s neighbors, with whom its energy grid has become increasingly linked. Energy supplies in Italy and Poland could be at risk.
Ironically, the decision also made this very green-minded country much more dependent on fossil fuels, especially coal. This compromised Germany’s 2020 greenhouse gas-emissions targets. Calls grew for the country to stop using coal altogether and phase out all subsidies to the industry. But as Dr. Umbach predicted in June 2015, “Germany will depend on fossil fuels for decades to come,” since completely replacing coal with renewable energy would substantially raise costs and the country’s dependence on imports.
Moreover, as GIS guest expert Dr. Fritz Vahrenholt wrote in September 2016, wind and solar capacity fluctuates wildly – adding more of that capacity to Germany’s grid would make little sense until after 2022, when the last nuclear plants, which provide stable supplies, are shut down.
China: global ambitions
As Germany and Japan move away from nuclear energy, other countries are moving ahead full-steam. China, for example, has 33 operational nuclear power plants. These generate only about 2 percent of the country’s electricity output, but this share will rise quickly: Beijing plans to build seven new nuclear reactors a year between now and 2030. In 2015, China accounted for almost the entire global increase (1.3 percent) in nuclear power production, surpassing South Korea to become the fourth-largest producer of nuclear power (after France, the U.S. and Russia). Most of the new plants relied on foreign technology, but crucially, China has also become a force to be reckoned with in supplying nuclear technology to other countries.
“The Chinese National Nuclear Corporation (CNNC), one of China’s biggest nuclear companies, has improved on a 1990s French water reactor design to start offering its own power plants,” wrote GIS guest expert Joseph Dobbs in July 2017. “The Hualong One (HPR1000) reactor is currently planned for use in six locations under construction in China and is being pitched by Chinese companies to foreign customers.” It already has a deal to sell two to Pakistan.
In Romania, Chinese contractors will install two Canadian reactors. Though the deal does not introduce Chinese technology, Beijing is helping to finance the project, set to cost 7.7 billion euros. In both the United Kingdom and Argentina, China has agreed to finance projects in exchange for agreements that Chinese reactors could eventually be sold to those countries.
Through these deals, Chinese firms are quickly gaining experience, wrote Mr. Dobbs. Chinese companies have also signed memoranda of understanding in Iran, Turkey, South Africa, Kenya, Egypt and Sudan. However, it remains to be seen how many of these will develop into actual transactions.
Beijing’s ability to finance projects is its competitive edge, allowing it to break into markets where it otherwise would not have had much of a chance to sell nuclear power hardware. It also gives China significant economic leverage, sometimes allowing it to extract concessions on other issues.
Suppliers: geostrategic advantage
China’s push to supply nuclear technology around the world is a perfect example of the geopolitics involved in the industry. As concern over climate change grows and more countries try to limit their use of fossil fuels, many – including poorer states like Bangladesh, Senegal and Uganda – are planning to introduce nuclear power. But the costs of a nuclear plant are often beyond their budgets. Exporters of nuclear technology can therefore reap big geopolitical benefits, wrote Dr. Nakhle in January 2017.
Nuclear power deals are often “part of a wider package of establishing cooperation with economic and political ties aimed at spanning decades,” to match the long life cycle of the project,” she wrote. “Even if no power plant gets built, civil nuclear cooperation often triggers long-lasting economic cooperation between countries.”
Russia: increasing influence
Like China, Russia has used its nuclear energy industry as a tool for both economic and geostrategic gain. It has moved to sow discord within the European Union, offering Hungary a 10 billion loan on favorable terms to secure a deal for Rosatom to upgrade that country’s nuclear power plant. As GIS guest expert Peter Juhasz wrote in January 2016, the deal provided a “useful leash” attached to an EU member country.
Russia has used its nuclear industry to gain sway in the Middle East
Russia has also used its nuclear industry to gain sway in the Middle East. It is building the first ever power plant in Turkey – previously a rival but now a country with whom its interests are increasingly converging. It built Iran’s first nuclear power plant, and agreed to build eight more reactors in the country. In 2015, Russia and Saudi Arabia signed a deal to cooperate on nuclear energy. Also, Rosatom will build Jordan’s first nuclear power plant.
France: declining industry
Nuclear energy remains the main source of electricity in France, accounting for about 76 percent of production – the highest in the world. French multinational Areva is also one of the leading suppliers of nuclear technologies to countries around the globe. Nevertheless, France’s nuclear industry is weighed down by cost overruns, delays and mismanagement. As GIS expert Dr. Emmanuel Martin pointed out in 2015, much of this is due to France’s delusions of grandeur regarding “state capitalism.” The billions of euros in losses incurred by Areva after a failed investment in a company that owned three uranium mines in Africa was the result of technocrats making decisions instead of businesspeople, he wrote.
In November of the same year, Dr. Martin showed how France was losing its game of atomic chess with Russia. Rosatom has done deals in recent years with Jordan, Egypt, Turkey, Finland, Argentina, Iran and Brazil. Areva floundered, and its reactor business was sold to Electricite de France (EDF).
The game is not yet over: Areva signed partnership deals with China General Nuclear Power Group (CGN) and Japanese multinational Mitsubishi. However, Dr. Martin warned: “[T]he companies involved are state-owned, and all deal with a geostrategic good. … What Areva and EDF may find is that, by nurturing their eastern competitors, they have struck a Faustian bargain.”
India: new push
Indian Prime Minister Narendra Modi is making moves to increase his country’s ability to produce nuclear energy and export technology. Holding India back is its lack of membership in the Nuclear Suppliers Group (NSG), a multilateral body that sets global rules on the spread of nuclear technology. Since India has not signed the Nuclear Nonproliferation Treaty (doing so would force it to give up its nuclear weapons in the face of two nuclear-armed rivals in China and Pakistan), it has been barred from the group. That has limited the Indian industry’s access to fuel and technology.
India will probably fail to overcome Chinese opposition and will put its NSG membership plans on hold
Prime Minister Modi has made a big effort to gain India membership in the NSG. He scored a major victory when, in 2008, the United States allowed American firms to export fuel and trade technology with India. Since then, it has got many NSG member countries to support its bid, but regional rival Beijing continues to block New Delhi’s membership.
GIS expert Pramit Pal Chaudhuri predicted in August 2016: “The … most likely possibility is that India fails to overcome Chinese opposition and puts its NSG membership plans on hold. It would still try to import reactors, but because each reactor has components that are made in many different countries, it could get bogged down negotiating understandings with dozens of companies and countries. Similarly, nuclear technology exports would require numerous negotiated deals.”
Iran: sanctions lifted
Iran’s nuclear program has been the source of much worry and geopolitical maneuvering around the world. In 2012, the U.S. and EU imposed crippling sanctions on Iran, to get it to abandon its quest for nuclear weapons and bring it back to the negotiating table. In 2015, an agreement was reached that allowed Tehran to continue its civil nuclear program while, its proponents say, effectively blocking it from pursuing nuclear weapons.
The lifting of sanctions unlocked investment opportunities for Western companies and allowed Iranian oil and gas to flow back into global markets – further increasing the supply of both of those fuels and putting downward pressure on prices. It also reshaped the geopolitical dynamics in the region, raising Tehran’s status and immediately causing headaches for its rivals such as Saudi Arabia.
The administration of U.S. President Donald Trump has threatened to pull the plug on the Iranian deal. In July 2017, it imposed new sanctions on Tehran. The country’s nuclear program looks set to remain an issue of great controversy for the next several years.