US think tank reports China as world leader in nuclear energy innovation

The US Information Technology & Innovation Foundation (ITIF) has published a report entitled “How Innovative Is China in Nuclear Power?” which indicates that China has become the world’s leading proponent of nuclear energy. The 32-page report notes: “Chinese firms are well ahead of their Western peers, supported by a whole-of-government strategy that provides extensive financing and systemic coordination.”

ITIF is a US non-profit public policy think tank based in Washington DC incorporating five specialised centres: The Center for Data Innovation; The Center for Clean Energy Innovation; The Schumpeter Project on Competition Policy; The Center for Life Sciences Innovation; and The Hamilton Center on Industrial Strategy. ITIF also spearheads the Global Trade & Innovation Policy Alliance, an international network of more than 50 think tanks on six continents that conduct evidence-based research into policies “that can foster greater trade liberalisation…and encourage governments to play proactive roles in spurring innovation and productivity.”

The China report, by Stephen Ezell, was prepared by the Hamilton Center. The key takeaways are:

• China intends to build 150 new nuclear reactors between 2020 and 2035, with 27 currently under construction and the average construction timeline for each reactor about seven years, far faster than for most other nations.
• China has launched the world’s first fourth-generation nuclear reactor [HTR-PM], for which China asserts it developed some 90% of the technology.
• China is a leader in the development and launch of cost-competitive small modular reactors (SMRs).
• Analysts assess that China likely stands 10 to 15 years ahead of the US in its ability to deploy fourth-generation nuclear reactors at scale.
• China’s innovation strengths in nuclear power pertain especially to organisational, systemic, and incremental innovation. Many fourth-generation nuclear technologies have been known for years, but China’s state-backed approach excels at fielding them.
• Analysts assess that the US and China are likely at par in efforts to develop nuclear fusion technologies, but warn that China’s demonstrated ability to deploy fission reactors at scale gives it an advantage for when fusion comes online.
• With respect to nuclear energy, China ranks first in the H-index, a commonly used metric measuring the scholarly impact of journal publications.
• From 2008 to 2023, China’s share of all nuclear patents increased from 1.3% to 13.4%, and China leads in the number of nuclear fusion patent applications.

The report says: “From framing the economics of the sector, to coordinating ecosystem actors, to streamlining regulatory and permitting procedures to supporting R&D investments in the sector, China’s state guidance has been critical in driving China’s nuclear sector…. Indeed, China has benefited greatly from a coherent national strategy and whole-of-government approach to promoting nuclear energy.”

It continues: “About 70% of the cost of Chinese reactors are covered by loans from state-backed banks at rates as low as 1.4%, far below rates nuclear power companies can receive in other nations. The role of China’s government has been particularly important in framing the economics of the industry. In particular, China’s government has supported the sector with inexpensive financing as well as subsidies, known as feed-in tariffs, that decrease the cost of consumption. These factors have driven down the price of nuclear power in China to about $70 per MWh, compared with $105 in America and $160 in the European Union.”

The Chinese government envisions nuclear as a key future export, particularly to countries participating in China’s Belt & Road Initiative (BRI). Chinese officials have set a goal of selling 30 overseas nuclear reactors to BRI partners by 2030. Chinese officials anticipate that BRI nuclear projects could earn Chinese firms as much as CNY,000bn ($145.5bn) by 2030.

China (like Russia) is not bound by Organisation for Economic Cooperation & Development (OECD) guidelines on minimum interest rates and loan repayment terms, which is already enabling it to offer more attractive export financing packages.

However, the report notes that China still has a long way to go here, as it trails the leading exporters of nuclear reactors, notably Russia, which as of 2022 held an 18.1% share ($545m) of nuclear reactor exports, followed by the US with a 16.4% share ($492m) and Sweden with a 16.3% share ($488m). That’s followed by Germany, Spain, and France, while Japan’s share has fallen to just 3.34% and China’s is just 1.5%.

As to what the US should do, the report says it should “develop a coherent national strategy and whole-of-government approach to reanimating the deployment of modern nuclear reactor technology”. Policymakers “will need to both fund the future and provide necessary funding today to appropriately maintain America’s existing fleet of nuclear reactors.”

The report references the Department of Energy’s (DOE’s) Advanced Reactor Demonstration Program (ARDP), launched in 2020 noting that in total, DOE is supporting 10 US advanced reactor designs to help mature and demonstrate its technologies.

With respect to the growing number of new designs being developed in the US, the report comments that “none of these are expected to enter even the demonstration stage until 2030, at the earliest, which means China has opened a significant lead over the United States in the development of fourth-generation nuclear technology”.

It adds: “And even considering the prior generation of reactors, notably the Westinghouse AP1000, China was deploying their versions of them as early as 2017, while … the Vogtle unit 4 has just now come online, meaning that China is years ahead of the United States in even deploying our country’s own technologies.”

The US “needs to revamp its approach to supporting next-generation nuclear initiatives”. Notably, both ARDP and the Nuclear Regulatory Commission (NRC) “need more resources, in terms of funding and manpower, in part so they can pay market rates to the staff that will be needed to evaluate the wider variety of proposed nuclear designs to come”.

Better support is needed if nuclear energy is going to again become a considerable export product for the US. The United States should develop a one-stop-shop approach, including the US Export-Import Bank, the State Department, and other relevant agencies so that foreign buyers “can deal with a single entity rather than multiple agencies to complete deals (as Russia’s Rosatom does)”.

The US could also expand the Foundational Infrastructure for Responsible Use of Small Modular Reactor Technology (FIRST) program to include more countries. “The United States also has to negotiate civil nuclear cooperation agreements with foreign governments (123 agreements in total) and has been quite slow in doing this; enhanced staffing at DOE and the State Department could better support this, along with making a list of priority countries in the Global South with which to promote US nuclear technology exports.”

The report says “technical, scientific, and commercial competition will be fierce between China and the United States in the years ahead”. For this reason, recent administrations have clamped down on the transfer or export to China of nuclear technologies. “China has become America’s leading geostrategic competitor, and America needs to completely cease any sharing of its nuclear technologies with the country.”

The US needs to work more closely with its own allies – France, Germany, Japan, South Korea, and Sweden (among others), “to collaborate on R&D for advanced nuclear technologies and to help promote nuclear exports from techno-democracies to third-party markets”. The United States could also further relax import or export control of non-fuel or non-nuclear safety-related components (e.g., vessels, piping, testing services, etc.) to and from allied nations.

DOE could forge more bilateral agreements with allied R&D centres (e.g., the French Alternative Energies and Atomic Energy Commission (CEA), the UK Atomic Energy Authority (UKAEA), and the Korea Atomic Energy Research Institute (KAERI)) to provide funding to advance joint small R&D projects and data sharing. The United States could also explore joint financing of projects among allies.

The report concludes: “Ultimately, every nuclear project America, France, Germany, Japan, South Korea, or Sweden (or other allied countries) completes instead of China and Russia in developing countries or other third-party markets represents a win for democratic, free-market economies.”