The FDI angle:

• The US has the world’s largest fleet of nuclear reactors, but they are ageing and will need to be replaced.
• China is ahead of the US in its development of small modular reactors (SMRs), which are seen as a game-changer for country’s meeting climate goals.
• Russia is currently the world’s only supplier of the enriched uranium used in most SMRs.
• Why does this matter? US efforts to reboot their domestic nuclear industry are overshadowed by “aggressive” moves by its adversaries Russia and China.

The US’s efforts to reboot its ageing fleet of nuclear reactors received a boost on June 10, when start-up Terrapower broke ground on the country’s first new-generation facility in 40 years. But such efforts have to face up to China’s ability to rapidly deploy new generations of nuclear reactors and Russia’s stranglehold on the supply of enriched uranium used to power them.

Terrapower, a start-up backed by Microsoft founder Bill Gates, is developing its Natrium reactor demonstration project with support from the US Department of Energy near to a retiring coal plant in Wyoming. Despite its high ambitions, the project is already facing an uphill battle as the design of its novel sodium-cooled reactor is yet to receive approval from the Nuclear Regulatory Commission. The project is not expected to be finished until 2030 at the earliest. 

The US is currently the world leader with more operating nuclear reactors (94) and generation capacity (96.95 gigawatts) than any other country, according to data from the International Atomic Energy Agency. But the average age of its reactors is 42 years old with 22 commercial reactors in the US currently in various stages of decommissioning. Meanwhile, China is building 25 new nuclear reactors and could overtake the US in nuclear-generation capacity as early as 2030.

Governments have become more interested in nuclear power to electrify their economies and boost energy security after Russia’s full-scale invasion of Ukraine sent natural gas prices soaring. Some 25 countries agreed to triple global nuclear energy capacity by 2050 at Cop-28 in December 2023. Others, like Germany, reiterated their commitment to phase out their nuclear capacity that traces back to the aftermath of the Fukushima nuclear disaster in 2011.  

Advocates argue that nuclear power can provide reliable, cost-competitive and scalable baseload power to the grid when weather conditions mean that wind, solar and hydro projects do not produce as much power. Its detractors emphasise its safety risks and the long-term environmental impact of radioactive waste.  

“There’s a great deal of excitement [about nuclear]”, says William Magwood, the director general of the OECD Nuclear Energy Agency. This is particularly for new, simpler technologies such as small modular reactors (SMRs) that offer more flexibility, lower costs and higher levels of safety, he adds. 

But the pace of deployment of new nuclear technologies varies across the globe. China is leading in its development of SMR demonstration projects, including LingLong One in Hainan, according to the World Nuclear Association (WNA). A report by Information Technology and Innovation Foundation (ITIF), a US think tank, estimates that China is 10 to 15 years ahead of the US in its ability to deploy this latest generation of nuclear reactors at scale. 

“China is the only country now building all six of the different types of nuclear reactors,” says Stephen Ezell, vice president for global innovation policy at ITIF and the report’s author. 

The country has managed to close the gap with the US in new nuclear technologies in part through state-backed financing and active support for research and development. From 2008 to 2023, China’s share of all nuclear patents increased from 1.3% to 13.4%, according to data from the World Intellectual Property Organization. China has also greatly increased the number of academic citations among top academic publications in nuclear science and engineering, according to ITIF analysis of OECD bibliometric index data.

The concentration of the nuclear supply chain is another cause for concern in Washington. Currently, Russian state-owned company Tenex is the world’s only commercial supplier of high-assay low-enriched uranium (Haleu), the fuel needed for most SMRs, according to the WNA. China is the only other country to have the infrastructure to produce Haleu at scale. 

On 13 May 2024, US president Joe Biden signed a bill that will ban imports of uranium from Russia 90 days after the law was enacted. The US aims to restore its domestic uranium enrichment capacity through $2.72bn of federal funding from the Department of Energy and a pledge in December 2023 to collectively invest $4.2bn with allies like Canada, France, Japan and the UK to expand uranium enrichment capacity. 

A milestone was reached in November 2023 when Centrus Energy produced 100kg of Haleu at its facility in Piketon, Ohio, which marked the first time in over 70 years. 

Ted Jones, the senior director of national security and international programs at the Nuclear Energy Institute, a US industry association, says that the US is “on the path to independence from Russia in the fuel cycle”. Nonetheless, the US government is concerned about Russia and China “moving aggressively” to become the supplier of these new technologies and “does not want to cede leadership” in nuclear safety, security and broader foreign policy influence. 

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