China's Energy Sector after Fukushima Daiichi

IMGXYZ3039IMGZYXFollowing an unprecedented magnitude 9.0 earthquake and a devastating tsunami, Japan has struggled to avoid a full-scale nuclear power reactor core meltdown and spent-fuel rod leakage. The disaster at Japan’s Fukushima-Daiichi nuclear power plant poses a valuable learning opportunity for China as it considers further expanding its nuclear energy sector. 

The Carnegie-Tsinghua Center for Global Policy in Beijing, China hosted Chinese energy policy experts Deborah Seligsohn of the World Resources Institute, Sun Xia of the Shanghai Academy of Social Sciences (SASS), Lui Qiang from the Energy Research Institute of the National Development and Reform Commission (NDRC), and Yang Fuqiang of the Natural Resources Defense Council (NRDC) for a discussion on the challenges and opportunities for China’s future energy development resulting from the Fukushima disaster. Carnegie’s Kevin Tu moderated the discussion.

China’s Nuclear Development Target by 2020

While China’s installed nuclear power plant capacity was only 10.8 GW by the end of 2010, Beijing originally planned to increase its capacity to 40 GW by 2020. Before the Fukushima disaster, some experts believed the Chinese government would revise the 2020 target upward to as high as 86 GW, while others claimed a 100 GW output was achievable.  

• The Necessity of Nuclear Development: National targets for energy and carbon emission reductions and the government’s emphasis on environmental conservation are stringent enough that nuclear energy will be an important component of China’s planned energy development, even if the Fukushima disaster temporarily slows the sector’s growth, argued all speakers.
   
• Nuclear Shortfall: With approval of new nuclear power plants in China temporarily suspended, Tu argued that carbon reduction from nuclear energy might fall short of the initial projections for 2020. Liu and Seligsohn responded by stating a more robust oversight system stemming from Japan’s disaster may actually speed up the safety review of the planned plants, bringing them online in five to six years. Any short-term shortfall will have to be made up for by commensurate increases in efficiency measurements, fuel switching to lower carbon intensive one, or renewable energy use.

Lessons Learned from Fukushima

The ongoing nuclear crisis in Japan is expected to have a profound psychological impact on both decision makers and ordinary citizens alike in China, where the world’s most ambitious nuclear construction is scheduled to unfold in the coming decade.  

• Nuclear Oversight Reform: Yang stated there is no overarching law governing the nuclear sector in China and, and legal oversight has not kept up with the development of the industry. More specifically, Yang stated that the current nuclear oversight agency in China, the Department of Nuclear Safety Management, may not have enough authority under the Ministry of Environmental Protection to be effective. He emphasized that a more powerful and independent safety commission should be created under either the State Council or the National People’s Congress.
   
• Emergency Response System: Yang stated there is a need to setup and train an emergency response team to act effectively in case of a major nuclear accident. 
   
• Public Awareness and Information Transparency: Yang outlined the need for timely and transparent information release and education in the event of an accident. The cover-up in Japan may have exacerbated the crisis.
   
• Education of Nuclear Professionals: In the 1950s and 1960s many courses on nuclear energy were taught in universities, but fewer classes are offered in China due to ample opportunities in other sectors. Yang stressed the necessity of focusing more resources on training of nuclear engineers. 
   
• Safety Standards and Monitoring: Liu emphasized the need to keep the growth of the nuclear industry at a “reasonable rate” to ensure plants comply with high safety and monitoring requirements.

Energy Efficiency Opportunities and Beyond

The largest carbon reductions are expected to come from energy efficiency, but other low-cost ways to reduce carbon emissions also exist. Seligsohn cited a recent study by the Laurence Berkeley National Laboratory, which projects that China’s energy demand will peak around 2030 and level off thereafter due to the combined effect of economic growth slowdown, energy conservation and other policy measurements. 

• “Low-Hanging Fruit of Efficiency Opportunities”: China could adopt several easy, low-cost measures to improve energy efficiency, said Liu, such as decreasing air leakage from buildings and controlling the transit sector in cities. Additionally, planning development of the power sector and of energy-intensive industries at an early stage would avoid sunk costs and built-in energy inefficiencies.
   
• Incentives for Energy Conservation: A carbon tax or a carbon trading system could supplement regulations by giving companies incentives to reduce their emissions. Liu argued that such a system would have to be separated by province and by industry to be manageable and should be first piloted in economically developed regions.
   
• Improving Renewables: Participants emphasized that China could draw on global best practices to get more energy out of its existing renewable energy installments, such as improving grid connections and ensuring that wind and solar installations are connected to a smart grid and functioning properly.
   
• Distributed Solutions: Seligsohn argued that distributed solutions, such as incentive programs to encourage companies to operate efficiently and use their facilities for small-scale renewable energy projects, could make up for shortfall caused by slowed expansion of nuclear power.
   
• Industry Restructuring: Sun suggested that the development of the renewable energy industry, low-carbon development of traditional industries, and the use of innovation to optimize the industrial structure are necessary for China to improve the sustainability of its economy in the global market.
   
• Carbon Capture and Sequestration (CCS): Seligsohn stated that China’s over 400 coal-to-chemicals plants offer a promising opportunity for low-cost CCS programs. Tu commented that it is difficult for China to further expand its CCS activities beyond a few demonstration sites without a carbon pricing mechanism in place.

Due to rapidly increasing energy demand in China and the necessity to alleviate widespread environmental degradation and spiking carbon emissions, speakers all agreed that nuclear energy will have to be part of China’s energy portfolio in the foreseeable future. Nevertheless, they each expressed hope that China should take lessons from the Fukushima disaster and seriously strengthen safety of its rapidly expanding nuclear industry. As Yang Fuqiang said, “Three of the top four countries with highest levels of nuclear energy production in the world have experienced major disasters. When China is scheduled to become the top nuclear power producer in the coming decades, we must avoid the disasters that have befallen those leading nuclear power economies in the past.”