America Reenters Competition for Global Nuclear Energy Markets

In the last year, this outlook appears to have reversed. The energy crisis and Russia’s invasion of Ukraine upended the macroeconomic and geopolitical environment. Strong domestic energy legislation and international support for nuclear to mitigate climate change has led to new market offerings. In the next decade, climate-focused foreign policy, domestic nuclear innovation, and nuclear trade coordinated with allies can reestablish the United States as the leader in global nuclear energy markets.

The Faltering of the Nuclear Renaissance

The mid-2000s were a promising time for nuclear energy. Emerging concerns about climate change and high energy prices were reviving interest in the technology. For the first time since the 1980s, the United States was on track to build many new reactors in a “nuclear renaissance.” American industry leader Westinghouse alone was planning to build dozens of its new AP1000 reactor design globally, starting in China where industrialization was driving rapid demand growth.

By the early 2010s the hoped-for renaissance evaporated. The global financial crisis crashed energy demand and price projections. In 2011, an earthquake and tsunami in Japan led to the major accident at Fukushima Daichi. Japan, the world’s second largest user of nuclear energy and the largest American nuclear trade partner, closed 10 percent of global reactors virtually overnight. Uranium prices fell more than half from their 2007 peak, along with a similar decline in U.S. nuclear exports.

Soon, Westinghouse was down to only 8 orders: 4 in China and 4 in Georgia and South Carolina. However, poor construction practices, bad management decisions, and the challenges inherent in any first-of-a-kind energy megaproject led to project delays and cost overruns for the domestic reactors. The price tag for each reactor, already in the billions, began rising rapidly. Westinghouse’s parent company, Japanese-owned Toshiba, wrote off $6 billion from the troubled construction projects. As it became apparent that the project costs were spiraling out of control, Westinghouse filed for bankruptcy in early 2017.

Geopolitical Ramifications of U.S. Absence in Nuclear Energy Markets

As the Westinghouse bankruptcy and loss of Japanese uranium services demand drove the U.S. nuclear industry from global markets, global competitors took notice. Russia, the long-time top competitor for nuclear energy markets, was now clearly leading nuclear energy markets. Russia’s close ally Kazakhstan produced more than 40 percent of the world’s raw uranium. Globally, Russia was the largest uranium service provider in uranium conversion (~1/3) and enrichment (43 percent). Despite import quotas meant to prevent overdependence, U.S. utilities source a fifth of their converted and enriched uranium demand from Russia.

Further, Russia embarked on an ambitious plan to build nuclear reactors abroad, in large part to capture geopolitical influence and export markets in the absence of U.S. competition. Leveraging the ability to offer state-owned loans, diplomatic guarantees, and complete build-own-operate financial packages, Russia signed deals for more than three dozen reactor exports, including in China, Turkey, Iran, India, Egypt, and Hungary.

China too noticed the absence of U.S. competition. To meet continued economic growth and its new climate commitments, China has plans to build more than 150 new reactors and is expected to surpass the United States in domestic capacity by 2030. In addition to new domestic designs, the country started up the first fourth-generation nuclear reactor in the world in early 2022. China is not yet a significant exporter of nuclear goods, services, or reactors. Nevertheless, it has grand ambitions. In 2013, the government announced a nuclear export strategy to build nuclear plants as part of the Belt and Road Initiative and is making moves to realize it.

Reestablishing American Market Competitiveness

In the last year, the primary macro factors creating headwinds for U.S. nuclear exports have shifted. Climate policy continues to grow in saliency, with nuclear energy emerging as a key emissions reduction technology both technically and politically. The world faces a global energy crisis due to underinvestment in both fossil fuel and clean energy infrastructure.

Russia’s dominance of energy markets broadly and nuclear energy specifically is a geopolitical flashpoint. Most viscerally, Russia’s reckless combat operations near the occupied Zaporizhzhia nuclear power plant, Europe’s largest, undermines Russian credibility on nuclear safety. Now requiring a constant presence by the IAEA to ensure safety in a warzone of Russia’s making, Zaporizhzhia stands as a symbol of the risk of the United States letting a revisionist Russia dictate nuclear energy norms.

Just as the international conditions have created an opening for renewed American competitiveness, favorable domestic policy has strengthened the sector. Higher energy prices have certainly helped existing nuclear plant economics, but so have a series of state and federal nuclear policies to prevent additional retirements. Several years ago, the DFC removed a prohibition on financing nuclear power projects abroad. Further work to create Western financing pathways…