By staff reporters Wang Yichao and Li Qiyan

Controversy continues over China’s ambitious nuclear power program as several world nuclear power giants, including the French firm Framatome and the American company Westinghouse, intensify a bidding war over four one-million-kilowatt reactors in Guangdong Province. Sources tell Caijing the result of the bidding process will be released in 2006.

The program’s high price tag aside, several touchy issues stand in the way of China’s development of nuclear power. The current reactor fight could have real consequences for the direction of the country’s nuclear power development, as well as for how similar programs are financed in the future. 

The State Council earlier this year decided to push forward aggressively with its nuclear power program, rather than continue the moderate pace of development it had previously planned. Some experts believe that the policy shift was due to the increasing demand for power across the country, with recent power shortages in many provinces.

But the issue is in fact more complicated. During the 1970s, the United States, France, and Japan rushed to develop their nuclear power programs, but China’s State Council did not approve its first nuclear power station until 1981. Since construction took over ten years, the country’s program now lags at least two decades behind that of other nations. China’s abundant and inexpensive coal resources and the high cost of expanding under-funded nuclear power programs have further hampered the country’s nuclear power development.

The situation started changing earlier this year. Nuclear power has assumed a more important role in China’s domestic energy strategy since coal prices rose and the country began to experience more severe energy shortages. That mirrors a wider trend of increased interest in nuclear power around the globe, as oil and gas prices reach new highs and the horrific Chernobyl accident fades from memory.

China announced last year that it would install reactors with a total capacity of 40 million kilowatts by 2020, doubling nuclear power’s share of the country’s energy base from 2% to 4%. But the government’s insistence on buying new “third-generation” reactors from foreign providers has slowed the construction process, as the technology is unfamiliar and has yet to mature worldwide. The insistence on new technology has also made it difficult for Framatome or Westinghouse to lower their bidding prices.

Bernard Esteve, Framatome’s executive vice president, told Caijing in an interview that such “third-generation” technology is safer and more environmentally sound. But Qian Jihui, the vice-director of the International Atomic Energy Agency (IAEA), told Caijing that such technology is just a slight upgrade from the previous line.

“We can’t squander China’s opportunity to aggressively develop nuclear power simply because we want to introduce third-generation technologies,” he said.

Gu Zhongmao, a professor at the China Institute of Atomic Energy, echoed that sentiment, saying that second-generation technology is more reliable and economical. And the newer technology is not a good short-term solution: even if China were to introduce it successfully, he said, it would still take five years to reach full-scale production.

An official from the energy bureau of the National Development and Reform Commission disagreed. The official, who spoke to Caijing under the condition of anonymity, pointed out that the current negotiations are in line with China’s long-term aims, and that the time spent was necessary to lay a solid foundation for future development.

Two companies presently control China’s nuclear power industry: China Guangdong Nuclear Power Holding Co., Ltd. (CNGPC) and China National Nuclear Corporation (CNNC). But many electricity companies are eager to secure a share of the nuclear market, and how to distribute the potential economic windfall that nuclear power development presents has long been a topic of debate. The monopolistic domination of the industry only slows nuclear power development; if electricity companies were allowed to enter the industry, they would infuse necessary funds into an already capital-intensive industry.

The dispute between electricity and nuclear power companies further confounds the debate over using second- or third-generation nuclear technology. Adopting the older technology would be likely to help preserve the status quo, allowing the two current nuclear giants to continue to use their accumulated experience and weight to dominate the industry. Using third-generation technology might level the playing field, giving electricity-generation companies more breathing room to develop. Even several insiders in the nuclear industry told Caijing that they believe their companies’ lack of initiative and fresh insights is impeding China’s nuclear power development.

But many still worry about the potential complications involved in increasing competition in an industry that requires such precise control and operation. Both systems exist internationally: the United States and Japan have more competitive nuclear power industries, while France, Russia, and the United Kingdom generally have more monopolistic systems. It is difficult to judge which is better, or more importantly, which is better suited to China. But the government must be aware that that if industry supervision is not adequate, overinvestment will likely occur and bring with it extra risk.

Just how to fuel these reactors is a separate and equally important concern. He Zuoxiu, an prominent physicist and academician at the Chinese Academy of Science, told Caijing that existing nuclear fuel sources will generate power for at most 50 years. Other experts noted that nuclear fuel is trade around the world, and China can now purchase uranium ore from Canada and Australia. Japan, which has little uranium ore of its own, has been buying from abroad to develop its nuclear power industry. And China has been accelerating the development of a technology that would increase the power yield of uranium ore to more than sixty times its current strength.

But the public seems more concerned with the safety issue. Premier Wen Jiabao has emphasized that public safety is the government’s highest priority when it comes to nuclear development, and technology has progressed significantly in the nearly two decades since the 1986 Chernobyl disaster. But some experts warn that the government must still focus on developing a sound supervision system and a reasonable, reliable emergency plan.