Expanding U.S. commercial nuclear power abroad could become the Trump administration’s strongest lever against Chinese hegemony and Russian expansion in the global market.
The U.S. Department of Energy, which is leading the national initiative, is on an aggressive timeline—five to seven years—to bring new advanced nuclear reactors for electric power to the international market.
A senior Energy Department official told Forbes it’s a matter of national security.
China and Russia’s aggressive plans to expand into the global nuclear energy sector pose a “significant risk” to “the U.S. economy, energy security, foreign policy, and national security, as well as that of allies,” said Dr. Rita Baranwal, DOE’s Assistant Secretary in its Office of Nuclear Energy. “The U.S. is losing its competitive global position as the world leader in nuclear energy to state-owned enterprises of Russia and China that underbid Western competitors.”
Long before Covid-19 and a metastasizing anti-China sentiment surrounding that, President Trump was talking about China, its celebrated Belt and Road Initiative, and the threat it poses to U.S. national security. He initiated a number of protective measures.
But a year ago, President Trump asked his Energy Secretary, Dan Brouillette, to assemble a nuclear energy working group to find ways to expand the U.S. nuclear energy industry in an effort to compete globally.
This would be the fulcrum of the diplomatic lever.
This May, DOE released Restoring America’s Competitive Nuclear Energy Advantage, a blueprint to transform a U.S. nuclear industry notorious for massive facilities, long construction timelines, cost overruns and a sour public opinion.
Despite the pandemic, riots and unrest across the country, Brouillette and Baranwal, appear to be making great progress by most measures.
Baranwal has launched the $230 million Advanced Reactor Demonstration Program (ARDP) currently calling on the U.S. private sector to apply to demonstrate they can construct smaller, more efficient, more affordable advanced reactors that can be commercially available within five to seven years. Applications are due August 12.
Baranwal said “she’s encouraged, pleasantly surprised” at the level of interest and caliber of the applicants, many of which are start-ups.
The assistant secretary, who has a doctorate in materials science and engineering, said the core of the technology being developed is not new. What DOE is doing is setting an aggressive timeline to build on existing basic technology that was explored decades ago.
Washington policymakers and thought leaders are seizing on this development. Not long after DOE released its blueprint, the Center for Strategic and International Studies (CSIS) hosted a webinar on the momentum of nuclear energy development.
“We’re moving forward to ensure the United States regains its nuclear energy leadership building upon [its] leadership in innovation and advanced technologies,” Baranwal told the Center for Strategic and International Studies during a recent webinar.
Surprisingly, the issue is bipartisan, giving it breath to continue regardless of who wins in the presidential election in November.
In his current energy and environment plan, former vice president and presumptive Democratic nominee Joe Biden includes nuclear energy and advanced reactors as a priority to help reduce global carbon emissions.
John Kotek, former staff director to then-President Obama’s Blue Ribbon Commission on America’s Nuclear Future, said, “We’re seeing growing recognition that a strong civil nuclear energy and export sector does contribute to our national security, global influence, balance of trade. It can create tens of thousands of well- paying jobs.”
Kotek, who is now the Nuclear Energy Institute’s vice president of policy development and public affairs said, “There are a lot of reasons to want to have a strong nuclear sector and one of those reasons is competing and winning in the global marketplace.”
During the Obama administration, the justification for nuclear expansion was not predicated on the threat of Russia and China.
Kotek said he applauds President Trump’s commitment to protect U.S. national security and the security of U.S. allies with the support of the U.S. nuclear energy industry. He said the global effort must be driven by a public-private partnership.
While the most recent U.S. reactor was exported more than a decade ago, in 2007, Kotek said more than half of global nuclear reactors are based on U.S. technology.
The national labs are in gear
“Our national labs play a critical role, perhaps most significantly in nuclear energy,” Ashley Fineman, Director of the National Reactor Innovation Center (NRIC), told CSIS in a recent webinar.
NRIC is housed in the Idaho National Lab and will enable the new reactor demonstrations and the development of the U.S. Versatile Test Reactor.
“The U.S. really developed a rich infrastructure and body of expertise in nuclear technology research, development and demonstration during the first wave of nuclear energy development which was largely government driven,” Fineman said.
For about a dozen years, the U.S. government poured money into nuclear energy research and development (R&D) at DOE’s national laboratories. Now, the U.S. government will use those existing platforms, resources, materials and expertise to help commercialize private sector innovation and bring new nuclear reactors to the world market.
“Rather than relying on each company to develop these infrastructure capabilities, the labs allow the nation to invest in platforms that can support any of these private sector innovations,” Fineman said. “We can have a regular cadence of innovation. This is not a one-time event. Innovation is never a one-time event.”
Government Financing for Nuclear is Lining Up
DOE’s blueprint tacitly instructed the U.S. Development Finance Corporation (DFC), formerly the Overseas Private Investment Corporation, to remove legacy policies that prevented it from investing in nuclear power projects overseas.
A few weeks ago, DFC did just that. It said it would “prioritize support of advanced nuclear technology in emerging and frontier markets that adheres to the highest safety standards.”
DOE also cited a role for the U.S. Export-Import Bank (EXIM Bank). Last November, Republican and Democratic lawmakers agreed to President Trump’s request to reauthorize the country’s export credit agency. EXIM Bank is chartered to finance and facilitate the sale of U.S.-made products for export. Forbes reported extensively on the long-term value of the reauthorization, proving useful for global nuclear energy.
Safe and Secure
As the U.S. pivots hard toward nuclear energy, Dr. S.T. Hsieh, Director of the US-China Energy and Environmental Technology Center at Tulane University, said the U.S. has something China and Russia don’t—the highest safety standards.
“The U.S. has the best record and standard for safely operating nuclear power plants; it must play a critical role in global nuclear energy expansion,” Hsieh said.
“As new, advanced reactor designs are developed and commercialized here in the U.S. and abroad, we expect our domestic suppliers and manufacturers to grow to meet the global market demands, with an increasing share of these parts, components, and commodities being made in America, supplied by American companies,” Baranwal said.
“We also believe that [DOE] research and development efforts to develop advanced manufacturing techniques and capabilities that will reduce cost and improve quality of these parts will drive more of this market toward our domestic manufacturing enterprise,” Baranwal said.
Most industry stakeholders say carving out an international market must begin now as the other wheels are in motion.
“The tough challenge for exporting U.S. nuclear power technology will be establishing 123 agreements, including a new one among the US, Russia and China,” Hsieh said.
Section 123 of the U.S. Atomic Energy Act requires any transfer of nuclear technology or material from the U.S. to other nations to have a peaceful cooperation pact with those receiving countries to prevent those countries from using the nuclear technology for weapons, enriching uranium or reprocessing plutonium from the nuclear reactors for the development of nuclear weapons.
When They Were Friends
Chinese officials told Forbes the country would be willing to sign new 123 agreements with the U.S. and welcomes continued cooperation, not an adversarial relationship.
China and the U.S. established a 123 agreement about two decades ago led by the DOE’s assistant secretary of international affairs in the Clinton administration, Robert Gee, now president of Gee Strategies Group in Washington.
Zheng Dongdong, director of China’s Department of Energy Research, said, “Nuclear energy expansion is a global issue that should be considered with global perspective.”
Zheng is also China’s assistant secretary-general of the Energy Investment Professional Committee under the Investment Association of China, an administrative arm of China’s Ministry of Civil Affairs, which promotes global investment in China.
Zheng said the energy relationship with the U.S. has not always been strained.
In 2007, China, the United States, France, Japan, and Russia jointly established the Global Nuclear Energy Partnership, a multilateral effort to share R&D of advanced nuclear energy technologies, adopt safe, reliable global nuclear energy power systems and promote nonproliferation.
“This is a good platform and a very effective means to strengthen global nuclear energy cooperation,” Zheng said.
In 2014, Hsieh’s U.S.-China Energy and Environmental Technology Center at Tulane University organized an international trip of U.S. DOE officials and state lawmakers to see the construction of China’s first nuclear power station using the U.S.-based Westinghouse AP1000 advanced reactor design at Sanmen Nuclear Power Station in the eastern part of China.
China has four of Westinghouse’s AP1000 reactors. Two are under construction at Southern Company’s Vogle plants in Georgia.
The group went inside the reactor and spent the night at the Sanmen facility. Optimism was high and cooperation was strong, Hsieh said.
“But, construction was eventually delayed because The Shaw Group saw Westinghouse nearing bankruptcy and transferred the construction contract to Chicago Bridge & Iron,” Hsieh said.
“That experience left China sour and insecure about constructing more facilities using the new AP1000 technology. China then decided further construction would be based on the modified CAP 1400 design,” Hsieh said. “Sanmen residents had been excited for the new reactor. It was a poor fishing port and nuclear power had been its vision of hope for 30 years.”
Zheng said whoever dominates the technology leads the world on global nuclear energy. “Technology is the primary productive force.”
While France and Japan are still leading the world on developing advanced reactors, there’s still room for a global leader, he added.
Zheng admits China’s technology lags behind that of the United States, Japan, France and other countries, but “only in terms of cost.”
More than sour grapes
Since 2014, the U.S.-China relationship on nuclear has turned competitive.
“A nuclear power project represents an 80-year relationship. The Chinese are taking advantage of the fact that the U.S. is entirely absent from the growing nuclear reactor market,” said Retired Rear Admiral Michael Hewitt, CEO of Allied Nuclear and parent, IP3.
Allied Nuclear is a U.S.-based global nuclear energy advisor, a start-up, which helps international governments procure U.S. nuclear technology, tailor financing, and assist countries in starting nuclear energy programs.
“In many respects, the recent concerns over China’s tech giant Huawei and its global expansion of 5G along the Belt and Road is analogous to the concerns we have about China General Nuclear Power Group and its expansion,” Hewitt said.
Hewitt said a new nuclear energy partnership is critical, but not one that includes China.
“U.S. allies and developing countries want clean energy but they also want energy security; nuclear energy offers both,” Hewitt said. “But these countries are taken advantage of by China and Russia with all-encompassing and heavily-subsidized power plant offers that come with insidious ‘build-own-operate’ terms and predatory financing.”
Hewitt said Allied Nuclear has developed an approach that allows the U.S. and its allies to compete against adversary state-owned competitors by leading with the strengths of the U.S. industry while addressing the disadvantages of other vendors in the nuclear energy supply chain.
Hewitt said his company wants to help global allies “stay clear of ‘debt traps’ and national security risks posed by China’s Belt and Road Initiative investments.”
“Infrastructure development and energy security should not come at the expense of a country’s national sovereignty or financial interest,” Hewitt said.
U.S. trust in China has deteriorated over its aggressive energy expansion into the developing world, but also intellectual property theft by Chinese interests which extends into replicating patented U.S. energy technology innovation.
The Trump administration took early efforts to protect the country from these threats.
In 2017, the U.S. National Security Strategy called China “a strategic competitor of the United States.” That policy has driven the Trump administration’s regulation of exports of U.S. nuclear technology and assistance.
In 2018, the Trump administration developed and implemented the U.S. Policy Framework on Civil Nuclear Cooperation with China. Under the framework, licensing authorities have been strengthened to prevent China from diverting U.S. nuclear power-related technologies, material, and equipment for military use or unauthorized purposes.
“The Trump administration could not ignore the national security implications of China’s efforts to obtain nuclear technology outside of established processes of U.S.-China civil nuclear cooperation and in violation of U.S. law,” Baranwal said. The administration said China was engaging in “inappropriate behavior,” and named China a ”Country of Risk” an effort to protect U.S. innovation from being stolen.
Baranwal said, “Expanding commercial nuclear power with innovative technologies is one of our strongest levers, but it is not the only resource the U.S has to offer.”
“The U.S. has other levers to marshal such as the unmatched expertise in the U.S.-based nuclear supply chain, developments in advanced fuels for current and future technologies, and a robust nuclear regulatory framework,” she added.