The world is in the midst of a nuclear crisis that has nothing to do with Iran or North Korea, but has a lot to do with the revival of the US nuclear power industry in an unexpected place: China.

Once upon a time, China had more energy reserves than it could use and it was a net exporter of oil. Not so anymore. With the fastest growing economy in the world, China now imports oil. The Chinese government is busy securing long-term oil contracts not just with its neighbor, Russia, but with nations as far away as Angola, Nigeria, and Brazil. Battling air pollution problems, China has decided to move away from a reliance on coal-fired power plants, but its chosen substitute--building dams to generate hydroelectricity--has met with increasing unrest among China's rural population. Violent riots and militant demonstrations have slowed China's development plans for new dams.

So China has turned to another source of energy: nuclear power. The Chinese government has announced a plan to build as many as 30 new nuclear reactors by the year 2020. China already operates nine reactors built by a mish-mash of companies from France, Canada, Russia, and Japan. The new plan, however, calls for an initial group of 4 new reactors--a single, standard design--built by one company or group of companies, making this the biggest single nuclear contract since the 1970s.

We might expect the Bush administration to be alarmed by this new development, given that China is a suspected supplier of nuclear technology to both North Korea and Iran. But the US government has strongly supported China's turn to nuclear power, for two reasons.

First of all, one of the main bidders for the Chinese contract is the US nuclear giant Westinghouse. The Bush administration is always willing to bend over backwards to support US corporations, regardless of the potential environmental damage or security risk. In fact, why simply ignore the potential harm, when the Bush administration can actively lobby on behalf of Westinghouse? In April of this year, when Vice President Dick Cheney visited China amid an orchestrated media campaign to condemn North Korea's nuclear program, he spent much of his time singing the praises of Westinghouse's newest nuclear plant design.

Nor was Dick Cheney alone in shilling for Westinghouse. In early October Energy Secretary Spencer Abraham met with Chinese officials to assure them of the safety of Westinghouse's new pressurized-water AP1000 nuclear plant design, which has yet to be built anywhere in the world, much less tested for safety. The US Nuclear Regulatory Commission (NRC) fast-tracked the approval process for the AP1000 specifically so Westinghouse could participate in the bidding process for the new Chinese contract. In a further sales pitch, the head of the NRC, Nils Diaz, touted the AP1000 to China in late October, assuring them of his support for the design.

Nor is the Bush administration alone in supporting nuclear power for China. The Clinton administration began the process in the mid-1990s, sending then Energy Secretary Hazel O'Leary to Beijing to win contracts for Westinghouse to supply steam turbines and other parts for China's nuclear facilities. The Export-Import Bank approved a loan for $322 million for China to acquire Westinghouse parts for its plants, in spite of evidence that China was supplying "dual-use" nuclear technology to Iran, Iraq, and Pakistan.

If China selects Westinghouse as its main partner in its newest nuclear project, the potential profits are enormous. The AP1000, designed to be built in pairs, will cost between $2.2 to $2.7 billion per pair to build. With potential cost overruns figured in, the first 4 plants could total nearly $8 billion. The Bush administration sees this as a major part of its effort to address the huge trade gap with China.

The second reason the Bush administration wants Westinghouse to win the China contract is that it will give a boost to nuclear power here at home. The profits from China's purchase of the new AP1000 plant will be used to market the design here in the US, where it could be sold to a variety of private energy contractors, including Exelon Corp. and Entergy Corp. Both of those companies have already joined with Westinghouse and GE in a consortium to file an application for a new reactor license from the NRC. If the NRC approves their request, a revival of nuclear power in the US could occur by 2010.

No new nuclear power plants have been built in the United States since 1973, for obvious reasons. Even business analysts still refer to nuclear power as a "moribund" industry because, although it has low marginal costs (nuclear plants are relatively cheap to run), it has high capital costs (the plants are expensive to build and equipment must be replaced frequently, at the first signs of wear). Missing from that assessment are the costs of environmental damage and the cost to the workers and down-winders exposed to radioactive contamination--costs that are typically covered by the government (and, hence, US taxpayers) or by the workers and down-winders themselves (when both the nuclear industry and the government refuse to acknowledge the long-term health effects of radiation exposure).

The issue of nuclear waste disposal is another long-term problem whose costs have historically been borne by taxpayers and not by the industry itself. With the development of a national waste depository at Yucca Mtn., the Bush administration sees this as the perfect time to help revive the industry. Westinghouse's newest plant design, the AP1000, is supposed to be cheaper to build and require less replacement of parts than previous designs, making it more attractive for investors. Once China has built the first plants and worked out the bugs, the AP1000 will be ready for its launch here in the US--at about the same time China will begin dealing with big nuclear waste disposal issues and emerging health problems from radiation exposure.

Nor is the US the only market for nuclear power plants. All of Asia is in search of stable energy sources, from Japan to South Korea to India to Taiwan. Today, of the 31 nuclear reactors being planned for construction worldwide, 22 are in Asia.

The real nuclear crisis is not the possibility that Iran or North Korea might one day build a single nuclear weapon; it's the revival of the most dangerous and environmentally destructive energy source known to man.

Sources:

"Cheney to pitch nuclear reactors during China trip," Associated Press, 4/9/04; "Energy secretary pitches Westinghouse to Chinese," Corilyn Shropshire, Pittsburgh Post-Gazette, 10/9/04; US NRC OKs Advanced Westinghouse Nuclear Reactor Design," Dow Jones Newswire, 9/13/04; "US nuclear regulator promotes Westinghouse design for Chinese market," Power Engineering Magazine, 10/19/04; "China: Westinghouse leads the way into nuclear market," The Risk Report, Wisconsin Project on Nuclear Arms Control, November 1995, "Nuclear giants eye up China," People's Daily Online (in English), 5/27/04; "China Seeks Overseas Supplier for $8 Bln of Reactors (Update 2)," Bloomberg News, 9/28/04; "U.S. Taxpayers Underwrite Global Nuclear Power Plant Sales, Project Censored, The Progressive, March 2000, http://www.projectcensored.org/publications/2001/5.html; "China nuclear deal buoys Islamabad," Farhan Bokhari, Japan Times, 5/13/04; and "Nuclear Power's New Deal," Navin Nayak and Jerry Taylor, The Cato Institute, 6/21/03.