Energy

China Needs Nuclear Power—and Regulations


As the Ninth China International Exhibition on Nuclear Power Industry opened in Shenzhen on Apr. 6, drawing 300 companies from around the globe, the near-meltdown at Japan's Fukushima Dai-Ichi plant was on everyone's mind. "Three Mile Island and Chernobyl shocked the world. But they didn't stop people from continuing to develop the peaceful use of nuclear power," said Zhang Huazhu, chairman of the China Nuclear Energy Assn., at the opening ceremony. "We have grounds to believe that the accident at Fukushima Dai-Ichi does not suggest any end to the nuclear renaissance. It may be a catalyst to continuing the safe development of the industry." Attending were industry leaders Areva and Hitachi, as well as mainland companies that may someday challenge them: China Guangdong Nuclear Power, China National Nuclear Power, and China Power Investment.

China still seems committed to boosting its nuclear power from 10.8 gigawatts, or 2 percent of its energy mix today, to up to 80 gigawatts and 5 percent by 2020. To get there, China has to bring 10 new reactors online every year. The accident in Japan "will not affect China's overall strategy," Zhang Guobao, the former director of China's National Energy Administration, told the audience at the Shenzhen conference.

The challenge is to develop safely. As an industry that China has targeted for heavy investment and fast growth, nuclear reactor construction not only benefits from state subsidies and low-interest loans, it also gets expedited approvals from regulators in Beijing. That has encouraged some local governments to launch projects even before getting all the approvals needed. Building a nuclear reactor creates lots of jobs and adds as much as $300 million annually to a local economy, estimates Bo Kong, a professor at Johns Hopkins University School of Advanced International Studies in Washington. "There is an inherent conflict between development and safety in China," he says, citing reactor projects in Rushan and Jiujiang as examples of cities that jumped the gun on approvals. While China's nuclear industry has had no serious accidents, Bo, a specialist in energy and resources policy, credits that to its relative youth.

China is taking steps to strengthen oversight. On Mar. 16 the government announced a freeze on approvals for new reactors as regulators carry out an examination of safety procedures. The State Oceanic Administration announced on Apr. 7 that China will limit future building on the coast. China's 13 operating reactors, as well as 28 more under construction, are near the Pacific and could be vulnerable to tsunamis.

The National Nuclear Safety Administration, a department under the Environmental Protection Ministry, will expand its staff of inspectors and other personnel from around 300 today to more than 1,000. By contrast, the U.S. Nuclear Regulatory Commission has nearly 4,000 people overseeing 104 reactors, according to the NRC website. "Nuclear safety is back again as a global concern. We should put it at the core of things," Wang Yiren, secretary general of the mainland's second main regulatory agency, the China Atomic Energy Authority, said in Shenzhen.

Despite more than 20 years of deliberation, China still lacks a comprehensive nuclear industry law. Regulators are far weaker than the powerful National Development and Reform Commission, the body in charge of expanding nuclear energy. At least 10 government organizations have overlapping responsibilities for nuclear safety, according to Bo. Those include the Health Ministry, the Public Security Ministry, and the State-owned Assets Supervision and Administration Commission, which oversees major personnel changes in top enterprises. "If there is an accident, who is in charge?" asks Jeff Briner, PricewaterhouseCoopers's nuclear specialist.

China's three largest nuclear enterprises have joined the World Association of Nuclear Operators, the London-based group charged with improving nuclear performance and safety. And they've opened their doors to inspectors sent by the association to run reviews of China's reactors. "China companies are very, very involved," says Laurent Stricker, chairman of the association.

Stricker, however, says much of what goes on inside the regulators is opaque. Repeated phone calls requesting an interview with the National Nuclear Emergency Coordination Committee were answered with staff telling one reporter, "You have the wrong number" or "We're busy." The media department of the Environmental Protection Ministry—which oversees the nuclear safety administration—answered calls yet could not arrange an interview.

The bottom line: China will have to monitor its safety procedures closely as it builds 10 reactors a year to satisfy its hunger for affordable energy.

Dexter_roberts
Roberts is Bloomberg Businessweek's Asia News Editor and China bureau chief. Follow him on Twitter @dtiffroberts.

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