Great power relations: How the US, China and India will forge new partnerships on nuclear energy in 2016
James Wertsch, Shen Dingli and Swaran Singh say this year will see greater collaboration between the world’s three largest polluters – the US, China and India – following their pledges to move away from fossil fuels
This year is set to be the year when the US forges new nuclear partnerships with China and India, and could explore joint projects in third countries, with Westinghouse Electric and the Hualong nuclear power company in negotiations for such ventures. But, given previous mutual security and non-proliferation concerns, this newfound enthusiasm may also be breeding new anxieties.
To begin with, complicated and long-winded structural integrity tests have just been declared successful for two of the four Westinghouse AP1000 nuclear power reactors being set up in China’s Zhejiang ( 浙江 ) and Shandong (山東) provinces. These should become operational in September and December respectively. Westinghouse is also in final stages of negotiations for six of the same type of reactor for Gujarat in India.
At a price tag of some US$5 billion to US$6 billion per reactor, such reports are boosting the share price of Westinghouse, which is negotiating to buy parts of the French nuclear reactor manufacturer Areva. It reportedly needs US$7.7 billion to balance its books. Areva’s losses are also allowing China’s Hualong to emerge as the new cost-effective player in the sensitive global nuclear market. That explains why US firms are tying up with China.
The US is also building energy partnerships beyond nuclear technology: General Electric last month signed a US$2.6 billion contract for electrifying Indian railways and won a US$15.5 billion contract to supply turbines for China Three Gorges Corporation’s Wudongde hydropower plant.
These US firms are partly owned by Japan’s Toshiba and Hitachi, which explains the changing geopolitics as Prime Minister Shinzo Abe last month signed the long-awaited Indo-Japanese deal clearing the decks for American firms to deliver nuclear technology to India.
The Fukushima nuclear accident in 2011 briefly revived traditional concerns about the proliferation of nuclear technologies that are increasingly expressed in terms of safety and security of civil nuclear assets. But business lobbies are now capitalising on their shared commitments at the Paris climate change summit, where the world’s three biggest polluters promised to move their economies away from fossil fuels to achieve higher cuts in carbon emissions. And, among the various alternatives proposed, nuclear power is seen as the only technology that is ready to be put in place now to achieve large-scale increases in power generation.
China, the world’s leading polluter, is seeing an unprecedented push for nuclear power. It has 30 nuclear reactors in operation, 22 under construction and proposes to sign up for 30 more by 2020. Likewise, India has 21 nuclear reactors in operation, six under construction and plans for 30 new reactors by 2032. In this decade alone, the nuclear markets in China and India are expected to be worth US$1 trillion and US$200 million respectively, making the US – which already has 100 nuclear reactors producing 800,000GW of power – their most enthusiastic benefactor.
Facilitating this change is the politics around India’s membership of the Nuclear Suppliers Group that will come to a vote this June. China remains reluctant to say yes, and has previously said Pakistan should be bracketed with India in any review.
New Delhi, accordingly, is all set to ratify next week the IAEA’s Convention on Supplementary Compensation for Nuclear Accidents, which has been a bone of contention with American firms.
The coming together of the US, China and India in building nuclear partnerships has been expedited because Russian, French, Canadian and Kazakh firms have not been deterred by India’s domestic situation or legislation. Given this reality, the US – which originally facilitated India’s entry into global nuclear commerce – was beginning to look like a loser. Russia remains India’s largest supplier of nuclear reactors and the two last month signed another agreement for an additional 12 reactors.
Most interestingly, 2016 will see China entering the Indian market as well; not necessarily as a partner with US firms but as a new competitor. As well as working with India as members of the International Thermonuclear Experimental Reactor, China has a history of supplying heavy water and uranium fuel to New Delhi. The two began negotiating nuclear cooperation during President Xi Jinping’s ( 習近平 ) visit to India in September 2014 and China is keen to help build India’s energy security infrastructure. Beijing has also been exploring markets in Southeast Asia.
China’s Hualong One nuclear reactor has earned enough experience at home and prestige abroad to make it suitable for exploring new global partnerships. Last October, during Xi’s visit to the UK, he announced US$9 billion worth of investment for France’s EDF and China General Nuclear Power Corporation to build three power plants in the UK, which is expected to see Hualong-designed reactors go global.
India, as always, is never far behind. Since 2010, it has been offering to export its pressurised heavy water reactors, which may be ideal for states with smaller power grids. Last month again, during Prime Minister Narendra Modi’s visit to Moscow, Russia and India began negotiations on exploring joint third-country projects.
The recent shale revolution may have reinforced US energy supremacy, but it has also seen oil prices fall relentlessly, making large oil importers like China and India save their dollar reserves and invest in expensive nuclear technology. All this is whipping up US business interests that will redefine the proverbial “American exceptionalism”, especially in the global governance of nuclear commerce. It will also see the US explore more innovative ways in co-opting the interests of a rising China and emerging India, giving them a greater say in global nuclear decision-making.
James Wertsch is vice-chancellor for international relations at Washington University in St Louis, Shen Dingli is associate dean at the Institute of International Studies, Fudan University, Shanghai, and Swaran Singh is professor of disarmament studies at Jawaharlal Nehru University, New Delhi