Energy security demands some hard thinking now and in the years ahead

This month the first of Japan's 50 nuclear reactors came back on line more than a year after the Fukushima disaster, as the government continued to walk the tightrope between fierce industry lobbying and fervent public opposition.

Its leaders are struggling to define a long-term policy that will guarantee the country's energy security in the decades ahead. Before the reopening of the reactor at the Ohi plant in western Japan, the country was without any nuclear-generated electricity for the first time since 1970. As a result the country's reliance on fossil fuel imports soared. Oil and gas imports more than doubled on the previous year, contributing directly to the record trade deficit of $32 billion (26 billion euros).

The trauma of Fukushima has also called for a major rethinking over the use of nuclear power in Europe. The likes of Germany, Italy, Belgium and Switzerland have all scaled back their nuclear power projects.

In May, even France, more than 75 percent of whose electricity is generated by nuclear power, announced a plan, after Francois Hollande was elected president, to reduce its dependence on nuclear power.

However, the story outside Europe is vastly different. Many countries, in particular emerging countries with rocketing energy demands, are all looking to expand their nuclear power programs.

In China 12 reactors are being built, accounting for 41 percent of the world's total. Late last year the National Energy Administration made it clear that nuclear energy would be the foundation of the country's power generation system over the next 10 to 20 years.

It raises the question: why is China so determined to develop nuclear energy amid such controversy?

Research by the International Energy Agency has found that nuclear energy is particularly suitable for countries that have established nuclear energy programs, and are experiencing rapid growth in energy demand but are unable to find alternative economically viable resources. China ticks all three boxes.

China has long depended on coal for its primary energy supply. However, the uneven resource distribution has placed a weighty burden on its road and rail networks, which adds to considerable environmental damage.

Although the proven coal reserves in China are rich - it boasts 13 percent of the world's total and meets half of the world's coal demand every year - the country consumes so much coal that it became a net importer in 2007.

For the other two fossil resources, natural gas and oil, the proven reserves in China are 1.3 percent and 1.2 percent of the world's total respectively.

As with coal, uneven geographical distribution has again limited the use of these two resources. In 2010 more than half of China's oil demand was satisfied through imports.

Despite having diversified its oil supply toward more secure sources, such as Brazil, Russia and Australia, such a high dependency on external supply has inevitably exposed the country to serious energy security problems.

On renewables China is ambitious. The government has set a target of increasing the share of non-fossil fuel energy to 15 percent of its total energy consumption by 2020 and 30 percent by 2050.

However, the distribution of hydropower and wind resources is again way out of kilter. Large hydropower projects have been highly controversial, with opponents arguing that they damage biodiversity, affect water quality and destroy cultural heritage.

And due to the intermittent nature of wind power, grid companies are reluctant to make additional investments to link up more wind power sources to electricity networks. Only 60 percent of wind power capacity is connected to the national grid.

Add to this the fact that the cost of renewable energy is significantly higher than the coast of coal, and it is clear that China has got a long way to go to make the wider use of non-fossil energy commercially viable.

The other option then is nuclear - and all the evidence points to its huge potential in mitigating China's severe energy shortage.

Although nuclear energy comprises only about 2 percent of China's electricity supply, the country has built an extensive infrastructure network and developed key technical capabilities that are ripe for large-scale expansion.

The initially slow development of nuclear energy in China was not down to lack of money or technology. Instead, it was due to the misguided belief that the country could rely on its abundant coal reserves and so had no need to invest in expensive alternatives.

The harsh reality of energy shortage has forced the country to realize the strategic importance of nuclear energy. Ambitious plans have been designed to support the expansion of the nuclear power industry despite the Fukushima disaster.

China has set a medium-term target of achieving 40 gigawatts in nuclear power generation capacity by 2020. It has yet to decide whether it should aim for 120 gW, 240 gW or 360 gW - 30 percent of its total energy generation - by 2050.

In China's case the development of nuclear power has several advantages.

First, nuclear fuel is a highly concentrated energy resource that can be stored or transported easily. Uranium resources are considered to be more evenly distributed geographically, and this has effectively reduced the risk of supply disruption.

Despite limited reserves of uranium in China, it is regarded as a quasi-domestic resource and can easily be bought on the international market relatively cheaply. Therefore, China could start to build up its strategic reserves.

Second, the generating costs of nuclear plants are much lower than those of coal-fired or liquefied natural gas plants. Fuel costs account for about 40-60 percent of the total cost for the latter two types of plant, whereas this figure is only 5 percent for nuclear power plants.

Although the construction of nuclear power reactors may incur high initial costs, nuclear energy is more cost effective in the long run, particularly when the cost of fossil fuels is constantly rising due to severe supply shortages and increasing demand.

Moreover, the Chinese public seems more willing to accept and embrace nuclear technologies, and this directly determines the extent to which nuclear power can be developed as an important alternative to fossil fuels.

Surveys show most people believe clean energy has the potential to play a key role in the country's future energy mix.

Local governments are also keen to cooperate with nuclear investment corporations, as they believe nuclear plants may help local economies grow, lessening the problem of electricity shortfalls, increasing local tax revenues and creating employment.

Last but not least, the location of nuclear power plants is also believed to be less sensitive to weather and resources. They can work under extreme weather conditions and can be built across the country. This is particularly important for China as it may help the country resolve serious issues of energy shortage in its coastal regions.

Despite all these advantages, the development of nuclear power in China faces tough challenges, namely lack of nuclear technology and the treatment of nuclear waste.

Nevertheless, nuclear energy has become an inevitable choice for China. It may yet help the country meet its soaring energy demand while keeping environmental issues under control.

Dan Luo is lecturer in business and finance at the School of Contemporary Chinese Studies, University of Nottingham, and Wenjun Shi is a chemical engineer in the energy department of the engineering and design consultancy Atkins Global. The views do not necessarily reflect those of China Daily.

(China Daily 07/13/2012 page8)