Greetings!

In this issue we highlight the potential for a strategic nuclear power partnership between the United States and South Korea as tensions between the United Kingdom and China rise. We also note a remarkable statement by Secretary of State Mike Pompeo in which he pledged the U.S. to assist the U.K. in the development of its civil nuclear industry as an alternative to dependence on China. Finally, we bring attention to a possible change in U.S. policy regarding the financing of civil nuclear projects overseas, as the International Development Finance Corporation (IDFC) proposes that nuclear energy is a tool for sustainable development and ensuring nonproliferation.
U.K. Offers an Opportunity to Heal U.S.-Korea Nuclear Rift
For about the last 18 months the U.S. and South Korea have been engaged in a highly unproductive freeze on their civil nuclear cooperation. But the recent threat by China to pull out of a nuclear deal in the U.K. because Prime Minister, Boris Johnson, is reconsidering Huawei’s 5G communications network, presents an opportunity to heal the split and create a powerful partnership that can counterbalance Russia’s and China’s nuclear export ambitions.

This fight between close allies has its origins in the competition over the reactor tender put forward by Saudi Arabia. Both nations, along with France, Russia, and China, are in the running. The essence of the battle is over the U.S. content in the ROK reactor, the APR-1400+, which is based on a Westinghouse design. Korean executives contend this design is now completely indigenized with their technical content. Westinghouse and the U.S. government disagree. What began as a technical dispute has now hardened into a political standoff.

The truth is that the Saudi’s are not going to move forward with their reactor tender until after the November U.S. election and even then, with oil prices in a COVID-fueled decline, they may decide to delay any decision much further. So, the root of the conflict has become a competition over a currently nonexistent business opportunity.

The reality is that the U.S. and Korea need one another as partners in the new civil nuclear landscape. While they are fighting, Russia has locked up new reactor deals in Egypt, Turkey, Hungary, and Belarus. And China is angling to assert its dominance in the future nuclear market.

The U.K.-China nuclear deal is an important opportunity for China General Nuclear (CGN) to build and operate its indigenous reactor, the Hualong One, in an OECD nation with a strong, independent nuclear regulatory authority. Success would strengthen China’s ability to compete for large reactor sales in other nations. Both Russia and China could then effectively box out South Korea and the U.S. by wielding the state-financing weapon that underwrites their attractive nuclear package deals.

The U.S. has been warning the U.K. for several years about the political and security dangers of a long-term lock-up with China on nuclear power and other sensitive technologies. Recently, U.S. officials ratcheted their concern about China having control over more than a quarter of Britain’s electric supply, a message that has resonated with some U.K. officials.

In a remarkable statement this week, U.S. Secretary of State, Michael Pompeo, pledged that the U.S. is prepared to assist Britain in building nuclear power plants in response to China’s “coercive bullying tactics.” That was followed by a declaration from the U.S. International Development Finance Corporation (DFC) that it plans to allow financing for nuclear projects, a reversal of a ban applied by its predecessor organization, the Overseas Private Investment Corporation (OPIC). DFC explained its shift by citing the importance of zero emission energy, U.S. nonproliferation standards, and the need to offer “an alternative to the financing of authoritarian regimes.”

But can the U.S. build these reactors alone? As the new report of the U.S. Nuclear Fuels Working Group (NFWG) has stated, “America has lost its competitive global position as the world leader in nuclear energy.” Proposals for nuclear reactor co-financing are being surfaced.

The U.S. has been successful in helping push China out of a nuclear deal with Romania, and signed a nuclear cooperation Memorandum of Understanding (MOU) with that nation last Fall. Discussions on the potential construction of new U.S. reactors have been incrementally progressing, as they have been with another MOU partner, Poland . But this is occurring against the background of the struggle to complete construction of two reactors at Plant Vogtle in the state of Georgia, the first new builds in the U.S. in decades.

It is not clear that the U.S. has the muscle memory, workforce depth, and hot supply chains that would allow it to build several new reactors, likely the Westinghouse AP-1000, at home and abroad simultaneously without a strategic partnership. The most suitable partner is South Korea which has capabilities that complement U.S. strengths in the nuclear power field.

The Koreans are successfully constructing, on budget and roughly on schedule, four reactors in the United Arab Emirates (UAE). The process has not been flawless and there have been delays in certifying the first reactor for operation. But Korean industry has proven that it can successfully perform reactor construction, which has been a challenge for U.S. firms, and its supply chains are operating. The problem for Korea is that since the UAE deal a decade ago, it has not inked another major export agreement. Some of its major companies are suffering financially as a result.

The U.S. government has made the decision to reenter the international nuclear market and it is taking steps to strengthen its positioning. But decades of weak sales have impacted its readiness. The Korean government has made clear that it has a decreasing interest in domestic nuclear energy but supports its export. The strengths of each nation complement one another.

It makes little sense to sustain a conflict over a winner-take-all strategy for a shrinking number of large reactors sales. What makes more sense is to put the U.S.-Korea tension over the delayed Saudi bid on the back burner and look at the U.K. as a new opportunity for strategic partnership. That would address a number of the economic, clean energy, and geopolitical challenges that both nations face as well as giving a boost to global security.

Ken Luongo, Partnership for Global Security
Twitter ‌ LinkedIn ‌
Spotlight

The U.S.’s International Development Finance Corporation (IDFC) has opened a 30-day period for public comments on proposed changes to the agency’s nuclear energy policy. The move follows a proposal by the Trump administration to enable the use of nuclear energy as part of IDFC’s Environmental and Social Policy and Procedures, meaning that the agency would end a ban on supporting civil nuclear advancements for development purposes.
Nuclear Collaborations
Three leading nuclear corporations have formed a partnership to develop, build and operate a Micro Modular Reactor (MMR) at Canada’s Chalk River Laboratories. Global First Power (GFP), Ultra Safe Nuclear Corporation (USNC) and Ontario Power Generation (OPG) have all agreed to cooperate on the 15MWt, 5MWe high-temperature gas-cooled reactor, and hope that the MMR will serve as a model for the deployment of future MMRs across Canada.

Japanese corporations Tepco and Toshiba will work together to upgrade Japan’s Kashiwazaki-Kariwa Nuclear Power Plant (NPP) after signing a Memorandum of Understanding (MOU) to modernize units 6 and 7. The plant is the world’s largest nuclear generating station, representing 20% of Japan’s total nuclear capacity.
Nuclear Policy, Governance, and Geopolitics
China’s ambassador to the United Kingdom (UK), Liu Xiaoming, has signalled that China’s cooperation in building new NPPs in the UK is conditional upon the nations’ partnership in other sectors, such as the rollout of the 5G network and the HS2 high-speed rail. In response to these threats, the U.S. government has condemned the “coercive bullying tactics” of the Chinese Communist Party (CCP), offering to assist the UK in the development of its civil nuclear industry and urging other democratic nations to avoid “economic overreliance” on China as an international trading partner. 

The construction base of Hinkley Point C Unit 2 has been completed as the UK’s next NPP edges towards completion. The milestone comes as recent figures show the project exceeding in its contributions towards the local economy, which currently stands at GBP1.7 billion since 2012.

Romania’s state-owned nuclear corporation, Nuclearelectrica, has officially ended negotiations with China General Nuclear (CGN) regarding the construction of two nuclear plants. The entities have failed to come to an agreement since CGNs initial partnership bid in 2014, leaving Nuclearelectrica partnerless in its desire to build the country’s third and fourth nuclear reactors. 

The European Commission has omitted nuclear power from its recent coronavirus recovery plan. The Director General European nuclear trade organization, Foratom, regretted the decision noting that nuclear is an essential tool for decarbonizing the European economy and providing equitable access to energy across the EU.
Domestic Civil Nuclear Developments
In preparation for next-generation non-light-water reactors, the NRC has approved a new streamlined and more predictable process for licensing advanced reactors. The unanimous decision is consistent with the 2019 Nuclear Energy Innovation and Modernization Act , which calls for a “risk-informed, performance-based and technology inclusive licensing process” for next-generation reactors.

The U.S. Department of Energy (DOE) has proclaimed its “strong support” for risk-based emergency preparedness requirements for Small Modular Reactors (SMRs), as recently proposed by the Nuclear Regulatory Commission (NRC). Discussions on the issue are largely focused on the size of Emergency Planning Zones around SMRs and other new technologies, which the DOE says is “crucial for the US nuclear industry and the overall development of the technology."

The Trump administration is actively seeking to buy uranium for a proposed uranium reserve “as soon as possible”, according to the DOE’s Executive Director of the Office of Strategic Planning and Policy, Benjamin Reinke. This follows a DOE report last month that detailed a $150 million uranium proposal as part of a plan to enhance the nuclear industry. 

The Trump administration is seeking to revoke an Obama-era ban on the federal financing of civilian nuclear energy projects abroad, arguing that access to affordable and reliable power must be a key element of the U.S.’s international development policy.
Nuclear Security and Emerging Technologies
The world’s first blockchain technology for safeguarding nuclear material has been demonstrated in Helsinki as part of a partnership program by the Stimson Center, Finland’s Radiation and Nuclear Safety Authority (STUK), and Australia’s University of New South Wales (UNSW). The project, known as SLAFKA, tests the potential for blockchain to increase the efficiency, trust and transparency of managing nuclear safeguards information.
Noteworthy Research
A recent report by the IAEA seeks to outline the steps necessary to create a sage and strong working culture within all organizations in the nuclear sector. The working document, titled ‘A Harmonized Safety Culture Model’, draws an explicit link between workplace culture and nuclear safety, particularly within organizations that deal directly with ionizing radiation. 

The International Energy Agency’s (IEA) recent Sustainable Development Scenario has concluded that the United States is not on track to meet its energy related Sustainable Development Goals (SDGs). The report also outlines a scenario in which the three main energy-based SDGs are met, citing a significant transformation of the global energy system. 

Jessica Lovering, a doctoral student at Carnegie Mellon University, has published a report, ‘ How Advanced Nuclear Technologies Could Accelerate Deployment Across Africa ’, that assesses the prospects of next-generation nuclear reactors in Africa. The report concludes that African nations should begin to build preparatory frameworks for advanced nuclear technologies given that they will soon be readily available for developing nations.
The Nuclear Conversation
World Nuclear News, June 12

Energy for Growth Hub, June 10

Forbes, June 7

Nuclear Engineering International, June 4

The Japan Times, June 2

RealClear Energy, June 2

World Nuclear News, June 2

Financial Post, May 31

Defense One, May 28

MIT News, May 27
For more than two decades, the Partnership for Global Security (PGS) has developed actionable responses to global security challenges by engaging international, private sector, and multidisciplinary expert partners to assess policy needs, identify effective strategies, and drive demonstrable results.
1400 I (Eye) St. NW, Suite 440
Washington, DC 20005
202-332-1412