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China eyes Argentina in global nuclear roll out

12 June, 2019
Lili Pike and Fermin Koop, China Dialogue

Costs, emissions and safety are at stake as Argentina and China look set to seal a nuclear power deal. In the midst of economic and political uncertainty, Argentina has doubled down on a major Chinese nuclear power deal. The new nuclear plant in Buenos Aires province will help meet Argentina’s energy needs with the support of Chinese technology and finance.

With China looking to increase its nuclear power exports and countries seeking low-carbon electricity, the project in Argentina could be the beginning of a China-led renaissance. However, concerns over the cost and safety of nuclear power continue to plague the technology.

Striking a deal 

Four years after formally agreeing to its construction, Argentina is moving forward with the Atucha III nuclear power plant that will likely become operational in 2021. In April, Argentine president Mauricio Macri’s administration signed a letter of intent with China’s National Energy Administration. The contract, which is expected to be signed in the coming weeks, will include a US$10 billion loan from the Industrial and Commercial Bank of China (ICBC), which will cover 85% of the plant’s construction costs. Foreign minister Jorge Faurie recently confirmed the project at the second Belt and Road forum in Beijing.

The Atucha III project is part of an agreement signed in 2015 by former president Cristina Fernández de Kirchner, which approved two nuclear plants: one using Canadian technology in Argentina’s existing plants, and one using Chinese technology. Macri scrutinised the deal on taking office, amid doubts over whether nuclear was a sufficiently economical energy source. He eventually approved construction, but Argentina’s economic crisis led one of the plants to be shelved to reduce the size of the loan.

“Argentina is going through an economic crisis and money is tight. Investing in nuclear requires a long-term commitment, but China can offer subsidised capital to its foreign customers,” said Mark Hibbs, senior fellow at Carnegie’s Nuclear Policy Program. “This gives China an advantage over other nuclear exporting countries.”

Strengthening ties

The nuclear deal is in line with Argentina’s “integral strategic alliance” with China, a high diplomatic status the latter reserves for only a few countries. Under Fernández de Kirchner, the two signed more than 20 treaties. Macri and Chinese president Xi Jinping then signed a joint five-year action plan (2019-2023) at last year’s G20 Summit in Buenos Aires, but Xi did not secure Argentina’s formal endorsement of China’s Belt and Road infrastructure initiative. The nuclear project was also expected to get the green light, but negotiations stalled.

The current government has now justified the project as a way of reducing the country’s energy deficit and fostering closer ties with China. “The agreement shows the level of maturity of our strategic relationship,” Diego Guelar, Argentina’s ambassador said recently. Macri agreed to build the plant using Chinese technology, a condition of the ICBC loan. State-owned China National Nuclear Corporation was originally slated to build the plant with Argentina’s state-owned Nucleoelectrica. The former’s presence at the letter signing last month signals that it will remain involved.

Backlash

The nuclear deal attracted criticism from a group of former energy secretaries, who claimed in a November press release that it would be cheaper to develop solar and wind projects. “Any future energy projects have to be part of a national and long-term energy plan, which now doesn’t exist. All new projects should be economically competitive and should be in line with the country’s mitigation commitments,” said Jorge Lapeña, a former energy secretary.

Environmental organisations that prioritise wind and solar proliferation agree. “We don’t consider nuclear as renewable energy, it has many risks regarding the functioning of the reactors and waste. It’s not suitable for Argentina,” said Andrés Nápoli, head of Fundación Ambiente y Recursos Naturales (FARN). He added: “A new nuclear plant would require risk and impact studies and we haven’t seen any.”

Argentina’s nuclear history

Argentina was the first country in Latin America to adopt nuclear power. The first Argentine nuclear project, the 362-megawatt Atucha I plant, started operation in 1974. It was followed by Atucha II, which is located in the same complex, and the Embalse plant in the interior Córdoba province.

Today, these projects account for around 3% of Argentina’s energy mix, which mainly relies on hydrocarbons, the production of which is subsidised. Solar and wind energy have scaled up recently after tenders for 147 projects totalling 4,466 megawatts. The original deal with China would have added Argentina’s fourth and fifth (Atucha III and IV) nuclear plants, adding 1,700 megawatts to the grid. The one plant will add 745 megawatts.

World''s top overseas nuclear power developers
Source: China Dialogue

 

Argentina has always imported nuclear power reactor technologies, but it also has an advanced research industry of its own. Created 40 years ago, state-owned Argentine firm INVAP develops nuclear reactors for global markets. INVAP has recently sold simpler research-scale reactors (which operate at lower temperatures) to the Netherlands, Saudi Arabia and Brazil, but does not have the capacity to export power plant-scale technology. “Argentina can only compete in a few areas on an international scale and developing nuclear reactors for research is one of them,” said Diego Hurtado, former head of Argentina’s nuclear regulatory authority.

A notch in China’s belt

As countries like Argentina debate whether nuclear power is worth pursuing, China has emerged as a global champion. Driven by air pollution, climate change and energy security concerns domestically, China now has the world’s largest pipeline of nuclear power projects. In the past, China has also relied on imported technology. But in recent years it has produced its own reactors, including the Hualong One reactor (HPR1000), to be used in Argentina. According to the government’s Made in China 2025 plan, China aims to use more domestic technology and make its nuclear industry a global leader.

The Argentina deal is one of the first success stories for Chinese nuclear overseas. Since 2000, Russia has dominated overseas nuclear power, supplying 45% of total capacity. China is the fifth largest exporter, supplying just 9%. So far, the only Chinese reactors constructed overseas are in Pakistan. Beyond the Argentina and Pakistan deals, it is unclear whether China’s nuclear power reactors will find other markets. “After the Fukushima accident, global demand for nuclear power hasn’t been strong, and the US, Germany, South Korea and others are phasing it out,” said Zhang Hua, a senior engineer at the State Power Investment Corporation’s Institute of Science and Technology. “Demand from South Africa, Turkey, Argentina and other countries is also not as high as expected. The current outlook for China’s nuclear power exports is not optimistic,” Zhang added.

Jiang Kejun, senior researcher at China’s Energy Research Institute pointed out that the reactor design China plans on exporting is Generation III, which has enhanced safety features compared to the era of reactor technology used in Fukushima. In 2014, China’s Hualong One reactor passed the International Atomic Energy Agency’s safety review and is now undergoing assessments in Europe. Alongside this, the economic competitiveness of Chinese nuclear exports will be a major determining factor in its success as cheaper forms of energy have made nuclear less attractive.

The US, home to the world’s largest fleet of nuclear power plants, has been prematurely retiring plants that cannot compete with cheaper natural gas and renewable electricity generation. The Hualong One’s deputy chief designer told the South China Morning Post that the reactor’s price would rival French and US technologies.

As China ramps up construction domestically, the cost of its reactors may fall significantly in the coming years, Jiang said. Although China also faces stiff competition from “legacy” exporters, especially Russia, its overseas nuclear expansion could benefit from domestic development. “If we make a good case for nuclear, I believe the world will come back,” Jiang Kejun said. Edwin Lyman, acting director of the Nuclear Safety Program at the Union of Concerned Scientists, said: “If the HPR1000 indeed delivers increased safety at reduced cost, then it would represent a significant advance in nuclear power design. But it will take considerable operating experience before its safety features can be proven.”

Is nuclear a solution to the climate crisis?

According to the Intergovernmental Panel on Climate Change’s landmark 2018 report, the role of nuclear power will increase under most scenarios that keep the global temperature increase below 1.5C. Nuclear power is one of few carbon-free options that can balance variable energy resources like wind and solar. Energy models show that utilising nuclear as well as carbon capture and sequestration (CCS) for fossil fuel plants makes the decarbonisation of the power grid cheaper than a switch to 100% renewable energy.

However, worldwide, new nuclear power plants are not keeping pace with retirements, meaning that a key source of zero-carbon power is decreasing. With less nuclear, countries would have to rely more heavily on other options like battery storage, better grid transmission, and CCS to balance a grid that approaches 100% renewable energy.

Weighing risks

Even as the climate crisis deepens, countries may reject nuclear because of concerns over safety and cost. While Generation III reactors are safer, nuclear power still poses myriad risks. These include radiation exposure from uranium mining, meltdowns like Fukushima and using the technology to produce nuclear weapons. Advocates say that even with meltdowns and accidents, nuclear causes far fewer deaths per unit of electricity compared to coal and gas.

Geopolitical tensions could also stymie China’s export ambitions. In the UK, where the utility China General Nuclear Power has gained a foothold through investment in nuclear plants and plans to build a Hualong One, critics have raised concerns over China’s involvement in sensitive infrastructure.

In markets new to nuclear power, researchers also warn that the regulatory environment may not be mature enough to assess and safely manage new Chinese plants. In Argentina, several civil society groups oppose nuclear. Rio Negro province has already passed a law banning it.

As the Argentina deal is formalised in the coming weeks, it will provide a test case for how open the public is to the risks of nuclear, and technology from a new exporter, in return for a long-term supply of zero-carbon electricity.

 

[This article originally appeared on China Dialogue]

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Adaptation & Resilience

All countries will need to adapt to some of the environmental, social and economic impacts of climate change that are already unavoidable. Food security, livelihoods, water resource availability and public health are some affected areas. People living in poverty are more vulnerable, having a lower capacity to adapt. Thus, it is essential to promote resilience building. The adaptation and resilience aspects need to be mainstreamed into planning by policy makers and the private sector as well as integrated into development strategies.

Biodiversity & Livelihoods

Nature protection is most sustainable if it essentially contributes to the long-term stability of human needs. Today many regions around the world are confronted with increasing destruction of the natural foundations of life. The consequences of wide-ranging resource destruction are no longer regionally limited, but rather represent a global threat. Those affected are mainly rural populations, who find the sources of their income and the foundations of their way of life swept away. The depletion and destruction of natural resources goes hand in hand with decreasing agricultural yields and increasing poverty, which in turn forces the affected populations to deplete the remaining resources.

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Capacity Building

On the one hand, conflicts are caused by structural factors, such as economic and social inequality or environmental destruction. On the other hand, conflicts are fuelled by a lack of democratic structures, deficient mechanisms of non-violent conflict settlement, inadequate rule of law, the destruction of social and cultural identity and the disregard of human rights. Against this backdrop, development policies have been dedicated to a broad concept of security, which comprises political, economic, ecological and social stability. As a consequence, development cooperation agencies and actors have developed a broad spectrum of approaches for conflict prevention and transformation as well as for sustainable use of natural resources.

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Civil Society

Civil society is the first victim of environmental pollution, under-development and conflicts. Economically disadvantaged and politically marginalized population groups are particularly affected by violent conflicts as well as increasing resource degradation. Simultaneously, civil society is a fundamental pillar for implementing sustainable development. It contributes in many ways to strengthening conflict prevention and plays a significant role in the peaceful and democratic development of states. It must be supported to strengthen civil rights, adherence to human rights in general and democratic participation.

Climate Change

Climate change resulting from the emission of greenhouse gases represents one of the vital challenges for international environmental policy. Flooding, droughts, shifting of climate zones and increasingly frequent and intense extreme weather events will have serious economic and social consequences for entire regions. The climate problem is also directly linked to the question of future energy generation.

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Climate Diplomacy

To address the challenges posed by climate change, a new profile of climate diplomacy is evolving. This utilises a full range of policies, including development cooperation, conflict prevention efforts, and humanitarian assistance, in addition to more traditional measures of climate change adaptation and mitigation. Moving from a risk analysis of climate-related threats to well-timed preventive action requires a greater commitment to integrating climate change concerns into development, foreign, and security policies. Examples include strengthening diplomatic networks, building new alliances with partners, and raising awareness – not only of potentially negative climate change impacts, but also of opportunities to embark on a sustainable transformation of our societies.

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Co-Benefits

Climate action entails an array of economic, social, political and environmental co-benefits. It provides an opportunity for economic growth and new jobs. Many investments can take into account climate considerations without becoming more costly. Further important co-benefits include: improved energy security, less local air and water pollution, health benefits as well as ecosystem and biodiversity protection.

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In order to overcome the structural causes of violent conflicts and thus bring about an improvement in the framework conditions for peaceful and fair development, it is essential to have long term and broadly planned peace development and peace advancement. Various governmental and non-governmental, national and international actors and groups are involved in these processes.

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Climate change and development are inextricably linked. Climate change endangers the development agenda and has the potential to reverse development goals. Furthermore, successful mitigation of climate change heavily depends on development choices around the world. Therefore, development strategies need to be climate-compatible to provide long-term success, and there are viable policy options that support this compatibility. Many mitigation and adaptation activities can present development opportunities to developing countries and avoid the lock-in to environmentally damaging technologies.

Early Warning & Risk Analysis

The reasons for the development and escalation of conflicts and the incidence of risks are multifaceted and complex. Simultaneously, the assessment of the specific causes in the form of risk and conflict analyses can contribute to a better understanding of these processes and make it possible to provide warning of negative developments, or ideally help prevent them. In the context of natural resource use, risks and conflicts have gained increasing attention in the past years. The debate on possible future water wars is merely one example.

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The well-being of individuals, communities and nations depends on the availability of energy resources. The gap between energy supply and demand appears to be growing, making the world vulnerable to serious economic shocks. At the same time, the burning of fossil fuels causing climate change is one of the vital challenges of international environmental policy. So far, only rudimentary approaches exist for shaping climate and energy security in a sustainable way. The components of a strategy that can contribute to reducing vulnerabilities related to climate change and energy policy include a greater role for renewable energies, the improvement of energy efficiency and a stronger decentralisation of energy supply.

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The economic, social and environmental consequences of climate change aggravate the breakdown of eco-system-dependent livelihoods and are likely to become dominant drivers of long-term migration. Natural disasters already cause massive shorter-term displacement and the number of temporarily displaced people is likely to further increase with climate change. For vulnerable populations in vulnerable regions, such as the Sahel zone or the Ganges delta, migration often becomes the sole survival strategy. In order to address climate-related displacement and migration successfully, knowledge of effective adaptation and an improved understanding of how environmental change affects human mobility is essential. 

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Climate finance, from all sources, plays a key role in supporting and enabling adaptation and mitigation action as well as climate and energy innovation. The Paris Agreement ensured that the Green Climate Fund and the Global Environment Facility are at the core of climate finance architecture as entities entrusted with the operation of the Financial Mechanism of the UNFCCC. Increasing climate finance from all relevant public and private sources is crucial. Furthermore, much needs to be done to redirect finance flows to sustainable paths, e.g. reducing fossil fuel subsidies, introducing maritime and air transportation taxes. The conditions for green investment in developing countries should also be improved.

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Forests are disappearing at an alarming rate. Competition for forest resources triggers, exacerbates, or finances numerous crises and conflicts in tropical developing countries. Illegal logging and timber trade foster instability and sometimes violent conflict by strengthening illegal and armed groups, increasing corruption and exacerbating use and claim conflicts among local communities, the state and the business sector. Forests are a vital resource to poor people but they can also become areas of conflict. Sustainable management of forest resources is therefore key to preventing violent conflict over and within forests.

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Gender

Gender plays an important role as a category of conflict for many reasons. The interlinkages between gender, environment and conflicts are complex and much research is still needed. Existing insights suggest that conflicts may worsen gender inequalities that existed before the outbreak of violence. The unequal distribution of land property rights in many parts of the world serves as an example. Moreover, women (and children) are among those most affected by both violent conflict and natural disasters. At the same time, women carry much of the burden of trying to implement rehabilitation measures after crisis events.

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Land & Food

Increasing water scarcity, desertification and crop failures due to extreme weather events are becoming more and more of a threat to global food production. While the world’s population continues to grow rapidly, food production is unable to keep pace. Due to the global food crisis in 2008, the number of hungry people reached the symbolic one billion threshold for the first time – corresponding to about 16 percent of world population. Food insecurity may be a consequence or cause of conflicts. Violent conflicts often lead to the destruction of agricultural infrastructure and means of production, as well as to the displacement of local communities.

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In the past, the discovery and tapping of valuable or strategic resources like valuable minerals, oil and natural gas, particularly in developing and emerging countries, has often led to large scale environmental contamination and negative development. The "resource curse" of some countries shows that the wealth from resource yields is frequently unfairly distributed; instead of serving development it advanced the formation of corrupt elites and in some cases even led to conflicts and civil wars. Measures in various sectors and at all levels are important in order to use the potential of these natural resources in a manner that is sustainable and prevents conflicts.

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Private Sector

The spread of violent conflict not only affects people but also companies located in such regions. Destruction of investments and infrastructure, collapse of markets and trade partnerships, flight and expulsion of employees are phenomena of conflicts and environment-induced crises that directly affect companies in unstable regions. Almost all branches of the economy thus have a clear interest in a stable and peaceful environment for their activities. Conversely, the business sector plays an important role in the interaction of economic growth, social development and a healthy environment, all of which can advance peace and sustainable development. 

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Security

Environmental issues have a significant security dimension. Access to, and overuse of, natural resources often play a key role in civil wars or other forms of internal domestic conflict. This is compounded by climate change and environmental degradation. Climate change is now widely recognised as a non-traditional, risk-multiplying threat that will have increasing security impacts. Key risks with possible implications for human and national security include water scarcity, food crises, natural disasters, and displacement. More preventive diplomacy and advocacy is needed to address the strategic implications of climate and environmental change.

Sustainable Transformation

Sustainable Transformation allows societies to profit from a growing, environmentally sustainable and socially inclusive economy – especially in emerging and developing countries. This requires a higher up-front investment, but the benefits of a sustainable transformation in the medium and long term are significant. For instance, energy cost savings and reducing the impact of price volatility offer major incentives for deploying renewable energies and promoting energy efficiency. Such benefits exist in all key sectors of the economy.

Technology & Innovation

Innovations and technologies are already readily available and affordable but their global diffusion and uptake remains a challenge. Innovation and technology are crucial to achieving ambitious climate change mitigation and adaptation targets. However, research and development often do not receive appropriate public support. Developing countries can leapfrog high-carbon industrialisation phases by adopting, deploying and improving existing innovations and technologies. For this, it is essential to minimise financial, administrative and political barriers.

Water

The availability of freshwater resources in sufficient quantity and quality is essential for the preservation of human health and sound ecosystems. The use of water resources is also vital, however, for economic development: whether for agriculture, industrial production or for electricity generation. The world's freshwater resources are distributed very unevenly in terms of geography and seasons. In addition, water shortage is becoming more prevalent in several regions due to population growth, economic development, urbanisation and increasing environmental pollution. Thus, water resources can hold potential for conflicts between parties who have different interests and needs.

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Regions

Asia

The environment in Asia is already under tremendous pressure as a result of the unsustainable use of land, forests, water and even air in many regions. Climate change will only exacerbate these challenges. Rising sea levels will likely endanger densely populated areas, changes in the monsoon patterns can strongly impact agriculture, melting glaciers will increase long-term water scarcity, and extreme weather events such as heavy rainfall and cyclones can pose further hazards.

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Central America & Caribbean

Natural disasters and water scarcity are key challenges for most of Central America and the Caribbean. These challenges will become even more pronounced as the climate changes. Weak resource and disaster risk management and land disputes pose additional security challenges for large parts of the region. Several countries of Central America and the Caribbean have limited adaptive capacities as they face political instability caused by high social inequality, crime, corruption, and intra-state conflicts.

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Europe

As one of the most developed and most densely populated regions in the world, Europe makes heavy use of its resources, resulting in difficult trade-offs and negative consequences for the environment and ecosystems. Land is used for settlements, agriculture and dense infrastructure, creating problems of soil degradation. Water resources are stressed due to unsustainable agricultural practices. Despite nature protection policies, Europe continues to lose biodiversity at an alarming pace. Some of these trends are exacerbated by climate change, which is expected, for instance, to lead to shifts in water availability.

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Global Issues

Resource scarcities, environmental pollution and climate change are not limited by national borders, but often have a transboundary or even global impact. These issues interact with political stability, governance structures and economic performance, and can trigger or worsen disputes and violent conflicts. Exacerbating some of these trends, climate change is likely to lead to the degradation of freshwater resources, declines in food production, increases in storm and flood disasters and environmentally induced migration. All these developments pose potential for conflict.

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Middle East & North Africa

The geopolitical position of the Middle East and North Africa (MENA), its fossil fuel resources, high population growth and the political changes spurred by the Arab Spring all make the region one of the most dynamic in the world. Nevertheless, it is also one of the most arid and environmentally stressed. Dwindling water resources, limited arable and grazing land, high pollution from household and industrial waste, remnants of conflicts and increasing desertification are key environmental challenges.

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North America

Climate change has various impacts on the three North American countries of Canada, Mexico and the US. Canada and the US have well-developed adaptive capacities and foster the strengthening of capacities in other regions as well. With high per capita emissions, these two countries also bear a greater responsibility for a changing climate. Mexico has a sound national strategy for climate change adaptation, yet fewer capacities than Canada and the US. The poorer and rural populations of Mexico are especially vulnerable to climate change, due to an increased sensitivity and a lower adaptive capacity.

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Oceania & Pacific

In Oceania, population growth and economic development trends put a strain on oceanic and island ecosystems. Freshwater scarcity, overexploitation of fisheries, loss of land biodiversity, forests and trees, invasive species, soil degradation, increasing levels of settlement, poor management of solid and hazardous waste and disproportionate use of coastal areas are some of the problems. Climate change exacerbates most of these trends, while also raising questions about the future sovereignty of some island states.

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South America

South America has diverse and unique ecosystems and is very rich in biodiversity. Weak natural resource management, land disputes and extreme weather events bring about significant challenges for the region. While South America accounts for relatively few CO2 emissions, the changing climate will alter its ecosystems and greater climate variability will lead to more hurricanes, landslides, and droughts.

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Sub-Saharan Africa

In many African states, environmental security issues rank high on the political agenda. Throughout the continent, countries suffer from water scarcity, food insecurity and energy poverty. These chronic and worsening resource scarcities have severe livelihood implications and are exacerbated by political conflicts over access to and control over these resources. Climate change may seriously threaten political and economic stability in Africa. It may also put a severe strain on the capacities of states and societies to co-ordinate activities, to communicate and to organize.

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