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I.
Case Background |
I. CASE BACKGROUND
The Chinese environment and the health of Chinese people is in danger due to the nation's dependence on coal as a primary energy source. Nuclear power is one alternative energy use being explored by the Chinese government. However, US nuclear power plants are being denied access to this emerging market due to de facto sanctions against China. China is now relying on Russian and French power plants to build their nuclear power base, despite the fact that there is uncertainty about the safety and reliability of these companies. US plants are internationally recognized as being able to provide the cheapest, cleanest, and safest energy in the world, but due to trade barriers, China is being denied the ability to use US resources in building their energy baseload. The reason trade barriers exist between the two nations in the market of nuclear power is that the US fears increased weapon proliferation will result from such high-technology transfers.
As the most populated country in the world, China's rapidly growing economy has sharply increased the nation's demand for energy. Ten percent of people living in China, about 120 million, have no electricity. Currently, the sector of China that does have electricity is heavily dependent on coal, a highly pollutive method of producing energy. A 1998 report by the World Health Organization noted that seven of the ten most polluted cities in the world are in China. Soot caused by coal combustion is a major cause of this pollution. Nuclear power is one plausible alternative to coal, since it produces practically no carbon dioxide, sulfur dioxide, or nitrogen oxide emissions.
Currently, coal makes up almost 62% of China's primary energy consumption, making China the largest producer and consumer of coal in the world. The coal mines are state-owned, and are experiencing severe oversupply problems due to unused inventories and artificially high prices. By 2020, China's coal consumption in expected to more than double, causing severely negative implications for both the environment and overall health standards in China. The Chinese government is looking to transform its coal-dependent energy sector into a more efficient and profitable economic sector. Nuclear power is one alternative. It is estimated that most of the world market for new nuclear power plants in the next 10-15 years will be in China.
Nuclear power plants already provide about 17% of the world's total supply of electricity. By 2020, it is projected that China will be responsible for 16.1% of the world's energy consumption, and have the largest demand for nuclear power. Due to the failure of the US Congress to fully pass the US-China Agreement for Peaceful Nuclear Cooperation, US nuclear power suppliers are being denied access to the Chinese markets. In turn, the Chinese people are being denied access to the most reliable and safest nuclear power in the world. China hopes to expand its nuclear power generating capacity to 5% by 2020, from its current level of 1%. US energy companies would be the prime choice to provide this development of the energy sector, but this choice is not being offered due to trade barriers.
Continent: Asia
East Asia
China
The main legal issue pertaining to the China/US nuclear energy issue is the US-China Agreement for Peaceful Nuclear Cooperation. This agreement is a bilateral treaty that acts as a prerequisite for any US trade or investment of nuclear energy with a foreign country. In 1985, President Reagan signed and Congress approved a joint resolution to openly trade nuclear technology with China. However, Congress attached a nonproliferation clause to the treaty which denied implementation of the treaty until China could prove that it was not assisting other nations in the acquirement of nuclear weapons. The refusal to completely pass this treaty has remained despite the fact that civilian nuclear plants do not necessarily transfer the technology needed to produce nuclear weapons. Additionally, China is internationally recognized as a legitimate nuclear weapons state.
After 1989, additional conditions were attached to the treaty, including a requirement that the President of the United States assure Congress that China is progressing in its political reforms before nuclear energy trade can exist. To satisfy this requirement, the President must issue four certifications, write a report to Congress, and issue a statement on China's progress on political reforms or issue a National Interest Waiver. The Chinese did sign a nonproliferation treaty in 1992, but have also supplied Iran and Pakistan with nuclear technology. Despite this, it must be understood that having US companies provide a nuclear power energy base for China does not necessarily have proliferation implications.
II. Environment Aspects
Access to electricity is an essential aspect of sustainable development in the third world. One�s access to running water, telephones, refrigeration, and light directly affects how people are included in the global economy and how they are able to benefit from globalization. China is the second largest energy consumer in the world, after the United States, but only 20% of the population is hooked up to the electrical grid. This section of the population that does not have access to electricity live mostly in rural areas away from urban centers. Seventy-five percent of the energy produced in the urban centers is generated using coal. Coal is a highly inefficient and environmentally toxic method of producing energy. In expanding China's energy sector to reach rural areas, coal is the least sustainable way to provide energy needs to the rural population. As it has done in urban areas, the spread of coal usage will increase pollution, inefficiency, and health problems in rural areas.
One answer to alleviating this development problem is increased trade. China has been a net importer of energy since 1995, and is seen by the global economy as one of the biggest potential markets for energy in the world. Importing nuclear energy into China is a potential non-coal method of expanding the energy grid to rural sectors. Nuclear energy has far lower environmentally harmful emissions than coal, and is globally recognized as a safer, cleaner method of producing energy. China has recognized this and has begun attracting foreign direct investment from several foreign nuclear power companies. Fear of nuclear spills and explosions from reactors is a genuine fear when building a nuclear power energy base. It is therefore important that when expanding China's nuclear capacities the safest, cleanest, best managed plants are put in place. Nuclear plants from the US are recognized as the cleanest and safest in the world. However, a de facto sanction against China from the US denies US companies access to the Chinese nuclear market.
It is clear that the growing dependence on coal will have severe environment and health problems on both rural and urban populations in China. This growth seen on coal dependence is in part the expansion of coal-produced energy into the rural areas. Coal energy will bring with it all the negative effects we have seen in Chinese cities. By lifting the nuclear trade ban against China, the US could assist in providing a safer way to include rural China in the energy grid. Currently, the losers in this case study are the rural Chinese. This is the sector of the population most in need of economic development. In order to attain a sustainable level of economic development, access to electricity and the global economy is necessary. The spread of electricity into rural China will occur within the next few decades. With the continued economic development China has seen, there will be a high demand for the energy. It is up to us to determine where the supply will come from. By keeping trade sanctions against China, we can contribute to the spread of dangerous coal based energy into rural China. Additionally, by keeping US companies out of the markets, the nuclear power plants that are built will not be of the highest standard and will bring with them risks of nuclear spills and accidents. The other option is to drop the sanctions against the Chinese energy sector, and give the Chinese people the choice to purchase the safest, cleanest energy possible.
III. Conflict Aspects
In order to appease Congress in its quest for confirmation that China will not spread nuclear weapons across the globe, several actions have been taken, particularly by the Clinton administration. In addition to the 1992 signing of the Nuclear Nonproliferation Treaty, China signed a comprehensive nuclear test ban in 1996. President Clinton's decision to attempt to certify the 1985 US-China Agreement on Peaceful Nuclear Cooperation resulted in an agreement between the US and China for improving trade relations in the area of nuclear energy. Top players in China's State Planning Commission signed an agreement called Intent Concerning Peaceful Uses of Nuclear Technology during the 1997 US-China Summit between President Bill Clinton and President Jiang Zemin. This agreement was a first step towards cooperation on safety initiatives in the areas of fuel handling and storage, the production of isotopes, and decontamination. These barriers established by Congress have but up bureaucratic red tape for nuclear energy trade between China and the US for almost 17 years. As a result, several nuclear energy companies from other countries are investing massive amounts of capital into China's nuclear energy sector. This defies Congress's want to keep nuclear technology out of China, while simultaneously harming China's ability to produce safe clean nuclear power, as concerns are arising over the safety of French and Russian plants. The legality of US investing in China's nuclear energy sector is obviously a huge issue in resolving this case study, and will continue to prevent free, fair trade between the two nations.
IV. Environment and Conflict Overlap
V. Related Information and Sources
Economic Causalities by Solveig Singleton and Daniel T. Griswold
Ongoing DOC Initiatives in China's Energy Sector by Department of Commerce, Energy Division
China Country Analysis Brief by Energy Information Administration. Available from www.eia.doe.gov
China: Environmental Issues by Energy Information Administration. Available from www.eia.doe.gov
Energy, Nuclear Power, and the Global Environment by International Atomic Energy Agency. Available from www.worldatom.com
Flags and picture of presidents from www.china-embassy.org