TY - JOUR AU1 - Drupady, Ira, Martina AB - Abstract The article focuses on the rise of state-supported nuclear reactor vendors in Russia, China, and to a lesser extent, South Korea, in the nuclear export market and its implication for developing country newcomers. It tackles the phenomenon in three parts. First, the article provides a historical overview, highlighting key milestones that have contributed towards the rise of these ‘emerging’ nuclear reactor vendors and the burgeoning interest of newcomer developing countries. Next, the article identifies the main reasons newcomers appear to be drawn to emerging vendors instead of their more familiar Western counterparts. The article ends by highlighting several strategic considerations for newcomers as concerns emerging vendors in the key areas of nuclear energy governance, nuclear technology development, industrial capacity and national security. 1. INTRODUCTION The landscape of the nuclear power industry is changing considerably. Over the past three decades, new build projects have notably become more concentrated in developing countries, rather than in developed countries.1 Notably, the end of the Cold War saw Russia carving out an entire captive market for its reactor technologies among former Warsaw Pact countries2—many of which are still considered ‘developing economies’ or ‘economies in transition’. Whereas China and India began ramping up their new build construction since the turn of the Millennium. Another dimension as concerns developing countries is that a sizeable number of them are newcomers seeking to take meaningful steps to acquire nuclear technology.3 Included in this group are countries in the Middle East, Southeast Asia and Africa, representing a spectrum of political systems and levels of economic development. In parallel to these two developments is the changing dynamics among nuclear vendor countries themselves. State-supported vendors in Russia, China, and to a lesser extent, South Korea—countries that have already built significant nuclear power infrastructure—have ambitious expansion plans and appear poised to grab the lion’s share of the nascent newcomer export market. Such is the void left by Western vendors like Westinghouse, GE Energy and Framatome (previously Areva)—heavyweights that dominated the nuclear industry landscape in the 1960s and 1970s. Are these ‘emerging vendors’ truly on the rise?4 If so, what are the implications for newcomers? The article answers these questions in three parts. First, it provides a historical overview of developments in the nuclear power industry landscape, highlighting key milestones that have contributed towards the rise of emerging nuclear reactor vendors and the burgeoning interest of newcomer developing countries. In the next section, the article identifies the main reasons newcomers appear to demonstrate a preference for what is on offer from emerging vendors. What comparative advantages do they have over their Western counterparts? In this regard, emerging vendor and newcomer countries alike appear to see the value of using a nuclear power plant (NPP) project to enter into a strategic partnership that may serve broader political, economic or military objectives. Specifically for developing country newcomers, choosing vendors with strong political and financial support from their home states allows them access to a one-stop shop solution of resources that could go a long way to bridge any glaring operational and financing gaps in their nuclear power development plans. This bilateral approach is worthy of mention as it marks a departure from the norm whereby a newcomer would be required to have the human and technical infrastructure and competency necessary to indigenously operate an NPP at the onset. The article ends by highlighting several strategic considerations for newcomers as concerns emerging vendors in the key areas of nuclear energy governance, nuclear technology development, industrial capacity and national security. 2. BACKGROUND This section provides a background on key developments in the nuclear power industry landscape from its genesis in World War II military necessity, its rise and decline over the decades, to the present day. Key milestones are highlighted to plot the rise of state-supported nuclear reactor vendors following the trajectory of burgeoning interest in newcomer developing countries. A period of rapid expansion Nuclear power and the state military–industrial complex that propelled it emerged as an unintended consequence of the military arms race between the Allied and Axis Powers during World War II. Even before President Dwight D. Eisenhower’s historic 1953 ‘Atoms for Peace’ speech,5 the USA, the Soviet Union, the UK, France and Canada were already busy developing prototype nuclear power reactors using technology derived from their nuclear weapons programmes. It was the post-war economic boom, however, that created the energy demand needed for countries to justify casting their lot with an industry based on the peaceful applications of what was otherwise war technology. In this second phase of reactor technology development, companies with competence in boiler making and electrical engine building like Westinghouse Electric Co. in the USA; General Electric Company (GEC) in the UK;6 Atomic Energy of Canada Ltd. in Canada; Kraftwerk Union in Western Germany and Toshiba Corp in Japan had the competitive edge.7 With state support, they became the first movers to engineer and manufacture nuclear steam supply systems for the first wave of Generation II reactors, ushering the industry’s rapid expansion in the 1960s and 1970s. In the USA alone, the number of operable reactors roughly quadrupled from 13 to 57 between 1965 and 1975.8 The 1973 oil embargo further cemented the reliance on nuclear power among a wide range of countries across the political and economic spectrums—from Italy, Spain, the Netherlands and Switzerland in Western Europe; Czechoslovakia and Bulgaria in the Soviet Bloc; Argentina in Latin America; to Japan and even North Korea in Asia. By 1989, 420 reactors were in operation worldwide providing 312 GWe of installed capacity.9 Two-thirds of these reactors were located in North America or Western Europe, signifying the dominance of Western nuclear reactor vendors. Imminent decline or gradual comeback? Ironically, the beginning of the 1970s also brought into play several factors that eventually led to the gradual decline of nuclear power over the subsequent three decades. In the USA, turnkey projects from the late 1960s and 1970s had started losing money. Moreover, a tougher regulatory regime under the newly established Environmental Protection Agency coinciding with the birth of a global environmental movement, brought safety and environmental concerns to the fore, making new reactors too expensive to build. In Western Europe, huge quantities of natural gas were discovered in the North Sea, offering a cheap and attractive alternative. Yet another blow to the nuclear industry was the deregulation of key energy markets in Western countries in the 1980s and 1990s. With increased competition and lower fossil fuel prices, the capital-intensive nuclear industry was at a severe disadvantage, forcing major restructurings. By the time the Three Miles Island accident occurred in 1979, enthusiasm for nuclear power in the West had dampened considerably. The 1986 Chernobyl accident expedited the decline and further consolidation of the industry across international borders (Figure 1). Over the next two decades, Western nuclear reactor vendors stayed afloat on the back of maintaining, backfitting and upgrading their existing reactor fleet, as well as licensing reactor designs to other companies and countries, rather than soliciting for new build projects. Figure 1. View largeDownload slide Global reactor vendor consolidation over the decades. Source: World Nuclear Association, 2016. Figure 1. View largeDownload slide Global reactor vendor consolidation over the decades. Source: World Nuclear Association, 2016. By the turn of the century, however, nuclear power seemed poised for a major comeback after two decades in the doldrums. Parts of the USA had experienced massive blackouts in the summer of 2001, which drew attention to the country’s ageing energy infrastructure, including its numerous Generation II nuclear reactors from the 1970s. A growing concern regarding climate change was also driving the quest for low carbon energy sources among Annex 1 signatories of the 1997 Kyoto Protocol.10 Nevertheless, few of these concerns materialized into actual new build projects, as Western vendors continued to be constrained by the fierce competition in deregulated electricity markets. Elsewhere, the emerging economic powerhouses of Brazil, Russia, India and China were challenging the monopoly of developed countries in the West over energy resources as fossil fuel prices began rising again.11 Large fleets of standardized reactors began being built in regulated or partially regulated electricity markets in East Asia, India and Eastern Europe (Table 1). It was the ambitious nuclear expansion plans of Asian countries, in particular, that led many experts to share the view that the industry was at the cusp of a ‘nuclear renaissance’. Between 2001 and 2010, China (including Taiwan), India, Japan and South Korea connected 80 per cent or 25 out of the 32 new reactors that came online—with China alone contributing 10 reactors.12 At the eve of the Fukushima Daiichi accident in 2010 (2011 figures in Table 1), the International Atomic Energy Agency (IAEA) listed 65 reactors under construction, up almost 50 per cent from 2007 (2008 figures in Table 1).13 Table 1. Reactors under construction, 2004–2017 (select years) Country Number of reactors 2004 2005 2007 2008 2011 2012 2016 2017 Argentina 1 1 1 1 1 1 1 1 Bangladesh 1 Belarus 2 2 Brazil 1 1 1 1 Bulgaria 2 2 2 2 China 2 3 5 11 26 29 21 18 Finland 1 1 1 1 1 1 1 France 1 1 1 1 1 1 India 9 8 6 6 7 7 5 7 Iran 1 1 1 1 Japan 3 1 1 2 2 2 2 2 South Korea 1 3 5 5 4 3 4 Pakistan 1 1 1 2 2 3 2 Romania 1 1 Russia 4 4 6 8 10 11 7 7 Slovakia 2 2 2 2 UAE 1 4 4 Ukraine 2 2 2 2 2 2 2 2 USA 1 1 1 1 4 2 Total 26 27 33 44 65 67 61 59 Country Number of reactors 2004 2005 2007 2008 2011 2012 2016 2017 Argentina 1 1 1 1 1 1 1 1 Bangladesh 1 Belarus 2 2 Brazil 1 1 1 1 Bulgaria 2 2 2 2 China 2 3 5 11 26 29 21 18 Finland 1 1 1 1 1 1 1 France 1 1 1 1 1 1 India 9 8 6 6 7 7 5 7 Iran 1 1 1 1 Japan 3 1 1 2 2 2 2 2 South Korea 1 3 5 5 4 3 4 Pakistan 1 1 1 2 2 3 2 Romania 1 1 Russia 4 4 6 8 10 11 7 7 Slovakia 2 2 2 2 UAE 1 4 4 Ukraine 2 2 2 2 2 2 2 2 USA 1 1 1 1 4 2 Total 26 27 33 44 65 67 61 59 Source: IAEA, 2005–2018. Table 1. Reactors under construction, 2004–2017 (select years) Country Number of reactors 2004 2005 2007 2008 2011 2012 2016 2017 Argentina 1 1 1 1 1 1 1 1 Bangladesh 1 Belarus 2 2 Brazil 1 1 1 1 Bulgaria 2 2 2 2 China 2 3 5 11 26 29 21 18 Finland 1 1 1 1 1 1 1 France 1 1 1 1 1 1 India 9 8 6 6 7 7 5 7 Iran 1 1 1 1 Japan 3 1 1 2 2 2 2 2 South Korea 1 3 5 5 4 3 4 Pakistan 1 1 1 2 2 3 2 Romania 1 1 Russia 4 4 6 8 10 11 7 7 Slovakia 2 2 2 2 UAE 1 4 4 Ukraine 2 2 2 2 2 2 2 2 USA 1 1 1 1 4 2 Total 26 27 33 44 65 67 61 59 Country Number of reactors 2004 2005 2007 2008 2011 2012 2016 2017 Argentina 1 1 1 1 1 1 1 1 Bangladesh 1 Belarus 2 2 Brazil 1 1 1 1 Bulgaria 2 2 2 2 China 2 3 5 11 26 29 21 18 Finland 1 1 1 1 1 1 1 France 1 1 1 1 1 1 India 9 8 6 6 7 7 5 7 Iran 1 1 1 1 Japan 3 1 1 2 2 2 2 2 South Korea 1 3 5 5 4 3 4 Pakistan 1 1 1 2 2 3 2 Romania 1 1 Russia 4 4 6 8 10 11 7 7 Slovakia 2 2 2 2 UAE 1 4 4 Ukraine 2 2 2 2 2 2 2 2 USA 1 1 1 1 4 2 Total 26 27 33 44 65 67 61 59 Source: IAEA, 2005–2018. Notably, many newcomers, including those in Asia, were also indicating a strong interest in nuclear power as part of their energy development plans. In the same year, 65 newcomers had been identified, an increase of over 50 per cent from 2008 figures; out of which, 34 were in various stages of active preparation, an increase of 25 per cent from 2008 (Table 2).14 Table 2. Newcomer countries, 2008–2018 Description Number of countries 2008 2010 2012 2013 2014 2015 2016 2017 2018 New NPP under construction 1 1 0 2 2 2 2 3 4 New NPP ordered 2 3 1 1 2 3 2 1 Invitation to bid to supply a NPP prepared 1 n/a n/a n/a n/a n/a n/a n/a n/a Decided to introduce nuclear power and started preparing the appropriate infrastructure 4 10 6 6 7 6 4 5 5 Active preparation for a possible nuclear power programme with no final decision 7 7 6 5 5 6 7 6 6 Considering a nuclear programme to meet identified energy needs with a strong indication of intention to proceed 14 14 14 19 18 11 12 12 13 Subtotal 27 34 29 33 33 27 28 28 29 Not planning to introduce NPPs, but interested in considering the issues associated with a nuclear power programmea 16 31 n/a 12 10 17 21 21 21 Total 43 65 n/a 45 43 44 49 49 50 Description Number of countries 2008 2010 2012 2013 2014 2015 2016 2017 2018 New NPP under construction 1 1 0 2 2 2 2 3 4 New NPP ordered 2 3 1 1 2 3 2 1 Invitation to bid to supply a NPP prepared 1 n/a n/a n/a n/a n/a n/a n/a n/a Decided to introduce nuclear power and started preparing the appropriate infrastructure 4 10 6 6 7 6 4 5 5 Active preparation for a possible nuclear power programme with no final decision 7 7 6 5 5 6 7 6 6 Considering a nuclear programme to meet identified energy needs with a strong indication of intention to proceed 14 14 14 19 18 11 12 12 13 Subtotal 27 34 29 33 33 27 28 28 29 Not planning to introduce NPPs, but interested in considering the issues associated with a nuclear power programmea 16 31 n/a 12 10 17 21 21 21 Total 43 65 n/a 45 43 44 49 49 50 a Defined by the IAEA as countries that have previously indicated an interest in considering nuclear power but have made no formal request for technical cooperation assistance. Taken from International Atomic Energy Agency, International Status and Prospects for Nuclear Power 2017 (IAEA 2017), Source: IAEA, 2008–2018. Table 2. Newcomer countries, 2008–2018 Description Number of countries 2008 2010 2012 2013 2014 2015 2016 2017 2018 New NPP under construction 1 1 0 2 2 2 2 3 4 New NPP ordered 2 3 1 1 2 3 2 1 Invitation to bid to supply a NPP prepared 1 n/a n/a n/a n/a n/a n/a n/a n/a Decided to introduce nuclear power and started preparing the appropriate infrastructure 4 10 6 6 7 6 4 5 5 Active preparation for a possible nuclear power programme with no final decision 7 7 6 5 5 6 7 6 6 Considering a nuclear programme to meet identified energy needs with a strong indication of intention to proceed 14 14 14 19 18 11 12 12 13 Subtotal 27 34 29 33 33 27 28 28 29 Not planning to introduce NPPs, but interested in considering the issues associated with a nuclear power programmea 16 31 n/a 12 10 17 21 21 21 Total 43 65 n/a 45 43 44 49 49 50 Description Number of countries 2008 2010 2012 2013 2014 2015 2016 2017 2018 New NPP under construction 1 1 0 2 2 2 2 3 4 New NPP ordered 2 3 1 1 2 3 2 1 Invitation to bid to supply a NPP prepared 1 n/a n/a n/a n/a n/a n/a n/a n/a Decided to introduce nuclear power and started preparing the appropriate infrastructure 4 10 6 6 7 6 4 5 5 Active preparation for a possible nuclear power programme with no final decision 7 7 6 5 5 6 7 6 6 Considering a nuclear programme to meet identified energy needs with a strong indication of intention to proceed 14 14 14 19 18 11 12 12 13 Subtotal 27 34 29 33 33 27 28 28 29 Not planning to introduce NPPs, but interested in considering the issues associated with a nuclear power programmea 16 31 n/a 12 10 17 21 21 21 Total 43 65 n/a 45 43 44 49 49 50 a Defined by the IAEA as countries that have previously indicated an interest in considering nuclear power but have made no formal request for technical cooperation assistance. Taken from International Atomic Energy Agency, International Status and Prospects for Nuclear Power 2017 (IAEA 2017), Source: IAEA, 2008–2018. Post-Fukushima Daiichi: changing landscapes The 2011 Fukushima Daiichi nuclear disaster certainly played a major role in weakening new build momentum, especially in Western countries where it never really picked up to begin with. Rapidly falling prices of coal, gas and renewables provided a stark contrast against the risk of large upfront capital costs and serious cost overruns, to say nothing of the heightened safety concerns in the aftermath of the accident. Germany, most notably, immediately closed down its ageing nuclear reactors and accelerated plans to phase out remaining ones by 2022. Italy walked back on plans to revive its dormant nuclear power programme. Other countries, such as, Taiwan, Spain and Switzerland have since banned the construction of new reactors; whereas South Korea and France have committed to reducing their reliance on nuclear power. Until this day, Japan is still struggling to restart the bulk of its nuclear fleet of 42 reactors against overwhelmingly negative public opinion. In the midst of all these developments, leading nuclear reactor vendors, Westinghouse and Areva, were driven into bankruptcy15 and dissolution,16 respectively. In a sobered-up Post-Fukushima Daiichi world, experts no longer talk about a ‘nuclear renaissance’. Yet, a number of reputable international organizations (including the IAEA), private companies as well as government-linked institutions continue to project a steady growth for the industry. According to the World Nuclear Association (WNA), nuclear power already generates worldwide revenues for utilities worth around USD 300 billion a year.17 As a comparison, in 2018, Italy-based Enel generated USD 86.7 billion in sales revenue and was ranked the world’s largest utility that year.18 Moreover, the total global operable capacity of nuclear power has continued to grow every year since the start of commercial nuclear power generation in 1954.19 Although total global electricity generation from nuclear power is at a decline compared to its 17.6 per cent peak in 1996, it has remained a stable 10–11 per cent post-Fukushima Daiichi.20 Under WNA’s Reference Scenario, these revenues are expected to grow 2.8 per cent annually over the course of the next two decades to reach some USD 500 billion a year.21 Moreover, approximately 60 per cent of the growth is expected to come from developing rather than developed nuclear countries.22 China, which is forecasted to surpass the USA as global leader in nuclear power generation sometime before 2030, is of particular interest. WNA’s Reference Scenario also estimates the value of new build investment to 2035 of the order of USD 1.5 trillion, with international trade in nuclear components possibly yielding an additional USD 30 billion a year (up from USD 6 to 10 billion a year currently).23 In 2016, 61 plants were under construction in 15 countries worldwide, a level of construction not seen since the early 1990s.24 In this regard, deregulated electricity markets like the USA and France have remained in the back seat. At the top of the list that year were China, Russia and India, with 33 out of 61 or more than half of the new reactors under construction between them (Table 1).25 As regards the 49 newcomers listed by the IAEA in 2016, since only 8 of them were considered high-income countries,26 some experts are of the view that actual commitment or progress on the ground will not match ambition (Table 2). Yet, the prospect of a newcomer export market appears to be enticing enough for nuclear reactor vendors. To date, close to 100 intergovernmental agreements on nuclear cooperation between different vendor and newcomer countries have been identified, out of which, more than half have translated into specific vendor agreements (Table 3).27 Table 3. Intergovernmental agreements on nuclear cooperation between vendor and newcomer countries Vendor countries Number of newcomer countries Intergovernmental agreements Agreements involving supplier companies Other agreements involving nuclear cooperation Canada 7 9 1 China 13 11 2 France 11 1 2 Japan 10 4 2 South Korea 8 4 5 Russia 30 21 7 USA 16 5 6 Total 95 55 25 Vendor countries Number of newcomer countries Intergovernmental agreements Agreements involving supplier companies Other agreements involving nuclear cooperation Canada 7 9 1 China 13 11 2 France 11 1 2 Japan 10 4 2 South Korea 8 4 5 Russia 30 21 7 USA 16 5 6 Total 95 55 25 Source: ESI-CIL Nuclear Governance Project Research, 2018. Table 3. Intergovernmental agreements on nuclear cooperation between vendor and newcomer countries Vendor countries Number of newcomer countries Intergovernmental agreements Agreements involving supplier companies Other agreements involving nuclear cooperation Canada 7 9 1 China 13 11 2 France 11 1 2 Japan 10 4 2 South Korea 8 4 5 Russia 30 21 7 USA 16 5 6 Total 95 55 25 Vendor countries Number of newcomer countries Intergovernmental agreements Agreements involving supplier companies Other agreements involving nuclear cooperation Canada 7 9 1 China 13 11 2 France 11 1 2 Japan 10 4 2 South Korea 8 4 5 Russia 30 21 7 USA 16 5 6 Total 95 55 25 Source: ESI-CIL Nuclear Governance Project Research, 2018. Considering that only a handful of these agreements have actually materialized into new build projects, the real question is whether all 11 remaining nuclear reactor vendors in the market today are equally well placed to compete for this potential market share. More than simply possessing the technical expertise, any plans for nuclear reactor vendors to extend themselves into a market that includes a sizeable number of developing countries in a range of income brackets would require deep pockets and a high-risk appetite. Although the industry consolidation of previous decades allowed Western vendors to remain competitive by diversifying their corporate make-up and supply chain internationally, they have by and large remained weighted towards the domestic market and therefore less visible in the export market, much less among newcomers. The Laguna Verde NPP in Mexico, which entered service in 1989, was the last new build in a newcomer country supplied directly by a Western vendor—namely, GE Energy. In this regard, Western vendors have been heavily reliant on other countries and local vendors to build reactors abroad based on their technology. These types of licensing arrangements allowed them to dabble in the export market without being fully exposed to it. In 2007, for example, Westinghouse concluded a deal with the Chinese government for a long-term license and gradual transfer of technology to Chinese companies.28 Under this agreement, China National Nuclear Corporation (CNNC) is constructing two reactor units in China and another in Pakistan.29 Similar deals were established in the 1980s between Combustion Engineering (C-E) and Doosan Heavy Industries.30 Since then, Doosan and its partners have gone on to complete a number of new build projects in South Korea. They are currently in the process of delivering four APR-1400 reactors for the Shin Kori NPP.31 Also in 2007, the Areva Group (now under Framatome) signed contracts with China to supply two European pressurized reactors (EPRs) together with the fuel and services required to operate them.32 GE Energy, the dominant vendor for boiled water reactors (BWRs), had previously licensed its technology to both Toshiba and Hitachi, allowing for advanced BWRs to be offered in Japan as well as a handful of other markets.33 Yet, although emerging vendors have had even less experience in the export market thus far, their collective performance over the past two decades as concerns new build more broadly, inspires more confidence compared to their Western counterparts. With their governments politically and financially supporting them in their home countries, Rosatom (Russia), CGN (China) and Doosan-KEPCO (South Korea) have a combined 52 per cent of the market share of reactor units constructed, currently constructed or contracted in or after 2000; whereas Western vendors together represent less than 30 per cent of the market share (Table 4). Table 4. Current market share of nuclear reactor vendors (in different consortia) No. Name of vendor Number of reactor units completed, under construction or contracted in or after 2000 Market share (%) 1. Rosatom (including AtomStroyExport) 41 26.3 2. China Nuclear Power Design Co. Ltd (CGN Group) 25 16 3. Doosan-KEPCO 16 10.3 4. Toshiba/Westinghouse 14 9 5. Nuclear Power Corp. of India Ltd. (NPCIL) 13 8.3 6. China National Nuclear Corporation (CNNC) 12 7.7 7. AREVA NP (including Siemens) 11 7.1 8. GE/Hitachi 6 3.8 9. CNNC-CGN 5 3.2 10. AREVA-Mitsubishi 4 2.6 11. Skoda 4 2.6 12. Candu Energy (formerly AECL) 4 2.6 13. Mitsubishi Heavy Industries (MHI) 1 0.5 Total 156 100 No. Name of vendor Number of reactor units completed, under construction or contracted in or after 2000 Market share (%) 1. Rosatom (including AtomStroyExport) 41 26.3 2. China Nuclear Power Design Co. Ltd (CGN Group) 25 16 3. Doosan-KEPCO 16 10.3 4. Toshiba/Westinghouse 14 9 5. Nuclear Power Corp. of India Ltd. (NPCIL) 13 8.3 6. China National Nuclear Corporation (CNNC) 12 7.7 7. AREVA NP (including Siemens) 11 7.1 8. GE/Hitachi 6 3.8 9. CNNC-CGN 5 3.2 10. AREVA-Mitsubishi 4 2.6 11. Skoda 4 2.6 12. Candu Energy (formerly AECL) 4 2.6 13. Mitsubishi Heavy Industries (MHI) 1 0.5 Total 156 100 Source: World Nuclear Association, 2016. Table 4. Current market share of nuclear reactor vendors (in different consortia) No. Name of vendor Number of reactor units completed, under construction or contracted in or after 2000 Market share (%) 1. Rosatom (including AtomStroyExport) 41 26.3 2. China Nuclear Power Design Co. Ltd (CGN Group) 25 16 3. Doosan-KEPCO 16 10.3 4. Toshiba/Westinghouse 14 9 5. Nuclear Power Corp. of India Ltd. (NPCIL) 13 8.3 6. China National Nuclear Corporation (CNNC) 12 7.7 7. AREVA NP (including Siemens) 11 7.1 8. GE/Hitachi 6 3.8 9. CNNC-CGN 5 3.2 10. AREVA-Mitsubishi 4 2.6 11. Skoda 4 2.6 12. Candu Energy (formerly AECL) 4 2.6 13. Mitsubishi Heavy Industries (MHI) 1 0.5 Total 156 100 No. Name of vendor Number of reactor units completed, under construction or contracted in or after 2000 Market share (%) 1. Rosatom (including AtomStroyExport) 41 26.3 2. China Nuclear Power Design Co. Ltd (CGN Group) 25 16 3. Doosan-KEPCO 16 10.3 4. Toshiba/Westinghouse 14 9 5. Nuclear Power Corp. of India Ltd. (NPCIL) 13 8.3 6. China National Nuclear Corporation (CNNC) 12 7.7 7. AREVA NP (including Siemens) 11 7.1 8. GE/Hitachi 6 3.8 9. CNNC-CGN 5 3.2 10. AREVA-Mitsubishi 4 2.6 11. Skoda 4 2.6 12. Candu Energy (formerly AECL) 4 2.6 13. Mitsubishi Heavy Industries (MHI) 1 0.5 Total 156 100 Source: World Nuclear Association, 2016. Notwithstanding the above, evidence of their appeal to newcomers can be gleaned from the number intergovernmental agreements newcomers have entered into with the home government of these vendors. In fact, roughly half of the known intergovernmental agreements on nuclear power cooperation have been signed with either Russia, China or South Korea (Table 3). In 2012, a consortium led by South Korea’s Korea Electric Power Corporation (KEPCO) began construction of the United Arab Emirates (UAE)’s Barakah NPP. With that, the UAE became the first newcomer to begin construction of a first NPP in 27 years.34 Russia, following on the heels of South Korea, began the construction of Bangladesh’s Roopur NPP in late 2017 and Turkey’s Akkuyu NPP in early 2018.35 What makes these countries and their state-supported vendors so appealing to newcomers? What are their competitive advantages? 3. CHARACTERISTICS OF EMERGING VENDORS: WHAT MAKE THEM APPEALING TO NEWCOMERS? To summarize, the landscape of the nuclear power industry is experiencing change on three fronts. First, new build projects are nowadays more concentrated in developing countries—often those that are regulated or partially regulated electricity markets—rather than in Western countries that have completely liberalized. China, Russia and India, countries that have already built significant nuclear power infrastructure, have ambitious expansion plans and will continue to dominate the construction of new build in the near future. Another dimension as concerns developing countries is that a sizeable number of them are newcomers seeking to take meaningful steps to acquire nuclear technology. Included in this group are countries in the Middle East, Southeast Asia and Africa, representing a spectrum of political systems and levels of economic development. In parallel to these two developments is the changing dynamics among nuclear vendor countries themselves. Vendors in Russia, China and South Korea that have hitherto been focused on domestic capacity-building are now emerging to challenge leading Western vendors for a slice of the newcomer export market. While only a handful of these agreements have materialized into actual new build projects, the potential attractiveness of the approach for newcomers may make the dominance of emerging vendors a real possibility going forward. Strong state support behind ambitious expansion plans As state-supported companies, emerging vendors typically benefit from close or even direct relationships with their respective governments. Their rise is part of the larger phenomenon of ‘state capitalism’, a new class of global companies owned, financed by or at least closely aligned with their respective governments.36 Although this ‘system in which the state dominates markets primarily for political gain’ is not exclusively the domain of energy companies, yet, the relationships between ‘state-owned energy giants’37 and their client states are considered typical examples.38 At Rosatom, the Director General reports directly to the Russian President and Security Council, which consists of the Ministry of Atomic Power, the Ministry of Natural Resources, the Ministry of Defence, the Ministry of Industry and Trade and the Ministry of Energy. Rosatom’s Supervisory Board is correspondingly populated by senior government officials, including the Minister of Energy and two Presidential Advisers. In China, the most critical decisions in the nuclear industry have been made by the leadership of the Chinese State and the Communist Party of China. As Chinese vendors are state-owned enterprises, the Chinese Communist Party must approve appointments of all senior executives, who in turn are officials of the Communist Party. Both Russia and China, as nuclear weapons states, maintain strong links between their civilian and military nuclear industries. In the case of South Korea, although Korea Electric Power Corporation (KEPCO) is a publicly listed company, the government directly and indirectly controls the company through owning 51.1 per cent of the shares.39 Because of the strategic position of emerging vendors for their governments, their commercial objectives are often subsumed under broader national policy goals. Their general approach is to cultivate strong political relationships to ensure economic partnerships follow. These type of synergies are appreciated by newcomers who seek not only to acquire nuclear technology but also to strengthen government-to-government relationships. In this regard, often the choice of vendor and technology depends on the strength of the strategic partnership between the two countries rather than pure financial considerations. Herein lies the competitive advantage of emerging vendors as compared to their Western counterparts. Rosatom, for example, oversees Russia’s nuclear energy complex, nuclear weaponry complex, applied and basic sciences, nuclear and radiation security and atomic icebreaker fleet. In 2005, President Vladimir Putin declared Russia would become a world leader in energy supply, expanding to the Asia-Pacific region, in particular.40 Following that, Sergey Kiriyenko, Director of Rosatom, stated in January 2006 that the entire industry complex of the Soviet Union’s former Ministry of Medium Machine Building must be reunited in order to provide domestic production and participate in export markets.41 Russia’s expansionist agenda aims to recycle its oil and gas revenues into valuable long-term assets, to provide the government with a secure revenue stream for decades to come.42 It especially pursues projects in countries seeking to develop new capacity where it can also establish or sustain broader ties, such as, in Turkey and Egypt.43 In this regard, the agreement between Russia and Turkey to build Akkuyu NPP is based on long-standing common energy policy objectives, although militarily the two countries may sometimes be at odds.44 When South Korea won a USD 20.4 billion bid to build and operate four APR-1400 units in the UAE in 2009, China made it quite clear that it had every intention to also compete in the global nuclear export market. China’s nuclear export policy was first proposed in 2013, as part of President Xi Jinping’s ‘One Belt, One Road’ (OBOR), at a time when China’s economy grew at its slowest rate in 25 years and was facing severe overcapacity problems.45 The OBOR strategy aims to promote infrastructure construction deals and goods and services trade along the ancient Silk Road and maritime trade routes that connects China to Southeast Asia, the Middle East, Africa and Europe. The export of nuclear reactors was envisaged as one of the key pillars for this strategy.46 The Chinese media pushed this notion further after a September 2016 address by Liu Baohua, the Nuclear Energy Director of the China Atomic Energy Authority. They summarized that nuclear power ‘is an important cornerstone of strategic power, a vehicle for civilian-military integration, and a ‘China card’ to play in the country’s international diplomacy’.47 Like Rosatom, all three Chinese vendors are actively pursuing deals in developing countries that do not have their own construction capabilities, as part of a broader strategy to develop key allies in different regions. For the Chinese government, the strategic gain of spreading China’s sphere of influence in the foreign energy and technology policies of other countries may make it worthwhile to underwrite the expense and uncertainty of these ventures. Although the scale is not yet comparable with other OBOR infrastructure projects, China has signed numerous agreements on nuclear cooperation with OBOR countries in the Middle East, South Africa and Turkey, as well as those further afield. It is the UK, however, which currently appears to be the key target market. Some experts are of the opinion that the decision for China General Nuclear Power Group (CGN) to acquire a 33.5 per cent stake in the French-led Hinkley Point C NPP in the UK was a strategic one, intended to serve as a ‘springboard’ for other nuclear deals in OBOR countries.48 Further, CGN has submitted its own Generation III HPR1000 (Hualong One) reactor design for a four-stage Generic Design Assessment by the British Office for Nuclear Regulation.49 The Hualong One has been proposed for the new Bradwell NPP. A successful reactor sale to the UK would certainly boost the credibility of China’s reactor designs, possibly catalyzing sales in other Western countries as well as newcomers. In 2010, South Korea’s Ministry of Knowledge Economic shared plans to export 80 reactors by 2030.50 More modestly, in 2015, KEPCO projected six contracts until 2020.51 Despite the intention of newly elected President Moon Jae-in to phase out nuclear power domestically, his administration continues to support the policy of promoting South Korean nuclear technology abroad. For the foreseeable future, it appears South Korea wishes to use its successful venture in the UAE to further tap into the Middle East market. They already secured a contract with Jordan to supply the Kingdom’s first research reactor. They have also set their eyes on Saudi Arabia that has received bids from five countries for their nuclear power programme and plans to select a winner by the end of 2018. A one-stop shop for services and resources Although the Fukushima Daiichi nuclear disaster did impact global public opinion negatively, many newcomers were actually able to resume their nuclear power plans in subsequent years without much domestic or international opposition, as more developing countries also decided to jump on the bandwagon. Securing the energy supply needed to fuel ambitious economic development plans appears to be a key driver. This is certainly the case for the UAE, Belarus, Bangladesh and Turkey, the first four newcomers to construct nuclear reactors in almost three decades. The overall newcomer figures have not fully returned to the levels they were at the eve of the accident. However, the number of countries that have merely indicated an interest in a nuclear power programme has been stable in recent years; whereas the number of those that have taken concrete steps towards one is on a gradual upward trend (Table 2). However, while sidestepping public opinion is one thing, it is quite another for newcomers, representing a spectrum of political systems and levels of economic development, to commit to a highly sophisticated and complex, capital intensive and long lifespan energy technology like nuclear. Herein lies another competitive advantage for emerging vendors. Being state-supported enterprises, emerging vendors and their suppliers are able to act in concert as vertically integrated entities to offer newcomers a one-stop shop of operational and financing options that commercial vendors, bound by anti-monopoly and export credit rules, cannot. Rather than engaging multiple suppliers through a competitive bidding process and dealing with multi-package or split package contracts, a newcomer country would be able to enter into a strategic partnership with a vendor country, usually in the form of an intergovernmental agreement. Each arrangement differs in the details but they are essentially long-term sole vendor or single large supplier contracts offering to address the specific operational and financing gaps of the newcomer country. On the one hand, these are services to construct, operate and maintain an NPP; provide fuel; manage spent fuel; build human resources capacity; and develop key infrastructure and resources. On the other, they are a platform to establish broader links and relationships among high-level government representatives, strategic institutions and agencies. What is notable is that these packages are a departure from the traditional nuclear power programme model requiring a new build country to have the human and technical infrastructure and competency necessary to indigenously operate the plant at the onset. In the past, France was often seen as a country capable of providing these type of one-stop shop services, as was Japan. However, following Areva’s restructuring along with problems besetting its current new build projects; and the Fukushima Daiichi nuclear disaster, respectively, these countries have been forced to pull back considerably from their export market expansion plans. In this regard, significant financial input from a vendor or vendor country is usually expected and is often the single most determining factor for a newcomer, especially those that are cash-strapped and/or electricity-poor. Emerging vendors are often in a better position to provide this assurance through a range of financing options strongly backed by the state.52 Some experts argue that such arrangements limit the choice of vendor and therefore choice of technology for the newcomer. However, the other side is that it is an opportunity for a newcomer to consider a range of new and advanced reactor technologies not on offer from Western vendors, such as, some of the small modular reactors (SMRs) designs, including transportable nuclear power plants (TNPPs); and fast breeder reactor technologies. Of particular interest to newcomers is the idea of investing in SMR technology as a pathway to transition towards large-scale reactors in the long run, once their competence and the electricity market is more developed.53 Rosatom claims to be already implementing the construction of 33 reactors abroad,54 including the first build-own-operate (BOO) project in Turkey, and have some 30 intergovernmental agreements in the pipeline.55 They appear to provide the most generous terms, with financing options offered through state banks, backed by the Ministry of Finance, and Russia’s sovereign wealth fund.56 Although Chinese vendors are being more circumspect than Rosatom in the export market, there is a perception they could meet standards of established vendors at a lower cost than their competitors could. China’s mature domestic market gives its vendors economies of scale, a large skilled workforce and industrial policy support that is difficult to rival. Chinese vendors also have access to huge capital reserves through their state-owned banks, which would also allow for a range of financing options. China’s considerable construction experience in recent times also allows for the supply of cheap, good-quality equipment. 4. STRATEGIC CONSIDERATIONS FOR NEWCOMERS Understanding the strength of each vendor country’s domestic nuclear industry, the number of reactors under construction globally, and the number and nature of intergovernmental and supplier agreements between vendor and new build countries all serve to provide a better overview regarding the future direction of the nuclear industry. Indicators seem to point to a firm shift in the locus of nuclear construction activity from developed to developing countries. However, this article focuses specifically on developments among emerging vendor countries and their potential newcomer customers. Are emerging vendors truly on the rise? It is certainly true that emerging vendors are dominating the new build landscape, at least within their respective countries. With strong political and financial backing from their respective governments, they are also well placed to fill the vacuum in the export market left by ailing Western vendors. In this regard, the decline of new build among existing nuclear power countries means that newcomers are clearly a potential bloodline for the industry. Yet, despite the numerous intergovernmental agreements that have been signed along with the attractive strategic partnerships and the operational and financing options on offer, in reality, very few newcomers have made the formal national decision to embark on a nuclear power programme, let alone to construct their first NPP. While the UAE is being held up as the model for newcomers,57 it remains unclear, whether Belarus, Bangladesh and Turkey will offer similar success stories. From the outset, Belarus’s Ostrovets NPP project has been the subject of international opposition and criticism. In 2014, for example, the Parties of the Espoo Convention found Belarus to be in non-compliance with some of its obligations concerning the construction of the plant.58 In Bangladesh, there has been growing concern over the impact of the Roopur NPP on water use, as well as the lack of preparedness for emergency planning and possible terrorist acts against the plant. The Akkuyu NPP project is also generating controversy as it is strengthening military cooperation between Russia and Turkey. Such prospects are troubling for Turkey’s North Atlantic Treaty Organization (NATO) allies. Notwithstanding the above, more newcomers may very well decide to move ahead with their nuclear power programmes in partnership with emerging vendors in the not so distant future. Thus, it is timely to contemplate the broad and strategic implications of having these vendors playing a more prominent role in the nuclear industry landscape. In some instances, one of these vendor countries may end up assuming the leadership mantle in key areas in nuclear energy governance, nuclear technology development and industrial capacity. What would the implications be for newcomers? Are there areas of particular concern? Will global nuclear governance suffer? As things stand, the global nuclear governance system has been described as being ‘more episodic and reactive rather than strategic’.59 It may eventually become less suited to ensure the safe and secure operation of a global fleet consisting not only of traditional light water reactors (LWR), but also new and untested advanced technologies offered by emerging vendors. As the nuclear industry landscape continues to evolve, it is crucial to avoid what experts describe as a ‘race to the bottom’, whereby nuclear governance standards are undermined to make way for short-term commercial gain. Efforts to continue strengthening the global nuclear governance system has a direct impact on nuclear operations and is essential for the nuclear industry to maintain its position, role and relevance in the global energy system. Leading nuclear vendor countries in the West have played a major role in establishing the existing global regimes on nuclear safety, security and safeguards. However, as emerging vendors continue to increase their nuclear power footprint, their respective governments will naturally demand a greater say in shaping the way forward. It would be the difference between participating as a regular club member and as a steering committee member. Yet, countries like Russia and China do not have a deep record of championing major improvements for the global nuclear governance system. More broadly, China under President Xi and Russia under President Putin have become increasingly centralized, opaque and unpredictable in their foreign policy dealings in recent years. If Chinese and/or Russian companies do become the dominant vendors in the nuclear export market, it is unclear whether they will uphold global governance standards in newcomer countries. This is especially worrisome when considering those newcomers are often situated in increasingly volatile or contentious regions in the Middle East, Southeast Asia and Africa, and are countries that ‘exhibit weaker rule of law, less regulatory independence, and less nuclear technical and training depth’.60 The crowding out of healthy competition Despite the rise of emerging vendors and the woes afflicting leading Western vendors, there still exists a competitive global market for the construction and procurement of nuclear reactors, with enough existing suppliers available to fabricate key components, whilst providing opportunities for new vendors and suppliers. Some vendor countries, such as, France, Japan, South Korea and China integrated their domestic nuclear supply chains and utilities in the 1970s, 1980s and 2000s, respectively.61 It is this move, along with the standardization of reactor designs, and the multi-siting of reactors, that had managed to keep costs low for their vendors in the past and the domestic industry competitive.62 Other vendors or vendor countries established comparative advantage by specializing in a segment of the international supply chain, for example, the forgings for reactor pressure vessels, primary circuit pressure vessels and steam generators. With a growing interest for new, advanced and safer technologies post-Fukushima Daiichi, remaining nuclear vendors have also continued to develop their reactor designs, giving potential customers, including newcomers, real choices. While a number of vendors have regulatory approval to offer reactor designs across several jurisdictions, no vendor has global reach yet. Thus, a number of transnational strategic partnerships exist among nuclear vendors, formed along the lines of reactor designs being offered. However, Western vendors have continued to struggle with low wholesale power prices, a shrinking client base, declining power consumption, high debt loads, increasing production costs at ageing facilities, and stiff competition, especially from renewables. The lull of new build projects in their home countries means that it has become increasingly difficult to maintain the required technical expertise and economies of scale to profitably build individual reactors and plants. This is happening against the backdrop of improved reactor designs continuing to emerge in the market, generating different regulatory requirements among new build countries. Moreover, the preference of newcomers seem to be to pursue government-to-government arrangements. Vendors that cannot offer the full range of fuel cycle services or lower prices may be at a disadvantage going forward, despite being able to offer the superior reactor design or being highly specialized in a certain segment of the supply chain. The WNA foresees that the restructuring and specialization of vendors are still underway, to potentially leave a remaining core of only four to six vendors in the market by 2030.63 Even countries like China may push forward with plans to further consolidate its domestic nuclear industry. While President Xi Jinping supports state control of strategic economic sectors, he also advocates the type of market reforms in the electricity sector that have hurt Western vendors in the past. In such a fiercely competitive environment, ailing Western vendors may be pushed out of the market or relegated to the role of sub-contractors. With fewer vendors in the market, there may be less choice as there will be less incentive for emerging vendors to continue developing their reactor designs, apart from adhering to regulatory requirements. The priority of such vendors would be to achieve economies of scale through existing designs as newcomers would typically be looking to construct one or two reactors rather than a large fleet. Such vendors may also be willing to sell reactors to countries lacking strong credentials, leading to declining safety and security standards and the increasing threat of nuclear incidents and accidents. The potential relationship asymmetry between a vendor and client country As emerging vendors continue to aggressively pursue the market, including offering new and advanced technologies, there is a need for newcomers to carefully balance safety, security, cost and political objectives when considering its nuclear power programme. Choosing a vendor and technology based on the availability of favourable financing terms or political relationships becomes problematic, especially if there is a high degree of asymmetry between the countries in terms of political power, economic development and/or technological prowess. While such government-to-government arrangements provide the basis for a fruitful long-term engagement between the two countries, it also increases the risk of future political dependency. The risk for newcomers is to be locked in to a complex, expensive and potentially unsafe and unsecure reactor technology¸ with limited preparations, expertise and resources. Specific contract arrangements offered by a vendor country may also place the newcomer country at a disadvantage with respect to the effective governance or regulation of nuclear safety and security. Moreover, it is unclear whether emerging vendors will have the capacity or will to impose global nuclear safety and security standards as a condition of supply to developing country newcomers. For example, some claim that corruption in the Russian nuclear industry is responsible for up to 40 per cent of domestic NPP costs, endemic safety problems and non-compliance within an already weak regulatory regime.64 One notable corruption case that had profound implications for the safety of Russian nuclear industry exports occurred in 2012, involving ZiO-Podolsk, a manufacturer of steam generators and heat exchangers. Investigations revealed that 2.5 million euros of ‘pipe sheets, reactor bottoms and reservoirs’ supplied, including steel for high-pressure heaters for Bulgaria’s Kozloduy NPP, were in fact low-grade steel, passed off as certified higher-grade steel.65 The scandal strengthened complaints made by China regarding low-quality materials supplied by ZiO-Podolsk and other suppliers to Tianwan NPP. It may also have repercussions for other NPPs currently under construction in China, India and Iran.66 In this regard, neither Russia, China nor South Korea rank highly on Transparency International’s Corruption Perceptions Index. In 2017, they ranked 155, 77 and 51, respectively out of 180 countries surveyed.67 These rankings are even more significant considering the close relationships between emerging vendors and their respective governments. As a comparison, Western vendors are based in countries that are ranked much higher on the Index. In 2017, the USA ranked 16; Canada, 8; France, 23 and Japan, 20. Commitment of emerging vendors to the export market is uncertain Rosatom appears to be the most successful vendor in the export market currently, judging at least by the number intergovernmental agreements signed and concrete orders from newcomer countries. In 2015, Rosatom’s 10-year order book of exports exceeded USD 110 billion, with export revenues for the year totalling USD 6.4 billion, up 23 per cent from USD 5.2 billion in 2014.68 As of 2017, Rosatom is constructing 7 reactors domestically and 33 abroad.69 However, some experts have raised doubts it could in fact afford to finance more than a few projects at a time. Russia is currently undergoing a difficult economic situation due to the collapse of the Rouble and international trade sanctions following its annexation of Crimea in 2014. South Korea’s KEPCO has long earned a reputation for building NPPs on time and on budget. When the KEPCO-led consortium won its first nuclear contract with the UAE in 2009, it marked South Korea’s emergence as a nuclear exporter and potential strategic partner for newcomer countries. However, the export strategy beyond this project is unclear, not least because of the uncertainty around South Korea’s domestic nuclear energy programme. President Moon Jae-in was elected in 2017 on a platform to phase out nuclear power domestically and seems determined to deliver. Notably, in 2018, Korea Hydro and Nuclear Power (KHNP) cancelled plans to build four new nuclear reactors in the country.70 Although the Moon administration appears to be committed to South Korea’s nuclear export expansion plans, without new build projects at home, South Korean vendors will suffer in terms of credibility, capability and opportunity over time, calling its existing intergovernmental agreements with newcomers into question. In the case of China, significant human resources will be needed to support the implementation of China’s aggressive nuclear power expansion policy. According to the National Defence Science and Technology Bureau, by 2020, China would need an additional 12,000–13,000 graduates with nuclear engineering and science degrees.71 However, there is already a shortage of well-trained qualified engineers, scientists and technicians for the construction, operation and management of NPPs domestically. There is currently a need for 13,500 people to operate plants and another 4500 for those under construction.72 The shortage of a qualified labour force is also a major problem for the regulator. The National Nuclear Safety Administration (NNSA) faces a workload unprecedented anywhere in the world and it is overwhelmed.73 In August 2016, it was overseeing the operation of 35 reactors, the construction of 20 reactors, the commissioning of the first units of two new designs (EPR and AP1000), and the review of five first-of-a-kind new reactor designs.74 Some experts question whether China has the capacity to straddle the domestic and export markets simultaneously. On the other hand, the anticipated slow-down in domestic demand may offer an opportunity for China to educate and train the qualified professionals it needs. A national security concern From a broader national security perspective, relationships with countries like Russia and China could be problematic for newcomers, but such concerns are seldom articulated due to the political sensitivities involved. As mentioned, Russia’s BOO contracts, for example, are raising red flags in national security circles in Western countries. Agreements that put Russian workers and valuable Russian assets on foreign soils may create defensible grounds for a physical Russian troop presence, reminiscent of rhetoric deployed during the Russo-Georgian war in 2008 and Russia’s annexation of Crimea in 2014. Apparently, it is part of the reason why Vietnam postponed its nuclear power programme in 2016.75 For Turkey’s NATO allies, the prospect of such a scenario with the Akkuyu NPP is troubling. Already the project is bringing Russia and Turkey closer together militarily. China’s venture into the nuclear electricity markets in the UK and France has been similarly viewed with suspicion because of the nuclear military capabilities these countries possess. In 2016, at the eleventh hour, the UK government unexpectedly announced the review of Hinkley Point C’s final investment decision, at the initiative of newly elected Prime Minister Theresa May.76 There was a particular concern that if CNNC is involved in the consortium, it will have access to some of the UK's technologies with military applications.77 The financial collapse of Areva, also technically gave China, through CNNC’s minority stake in Orano, access to France’s civil and military nuclear technologies. 5. CONCLUSIONS With an increasing number of developing countries joining the ranks of newcomers, emerging vendors in Russia, China, and to a lesser extent, South Korea, seem poised to wrestle this potentially lucrative new market from ailing Western vendors. Strong state support has already ensured they are dominating the new build market, at least in their respective home countries. Collectively, emerging vendors have also managed to secure the most number of intergovernmental agreements with newcomers. Although very few of these agreements have actually translated into new build projects on the ground, there is reason to suggest that newcomers are receptive to what is on offer from these emerging vendors. Emerging vendor and newcomer countries alike see the value of using an NPP project to enter into a strategic partnership that may serve broader political, economic or military objectives. Specifically for newcomers, vendors with strong political and financial support from their home states are in a position to offer a one-stop shop solution to address any glaring operational and financing gaps in their nuclear power development plans. Such an approach is worthy of mention as it is a departure from the traditional nuclear power programme model, which requires a new build country to have the human and technical infrastructure and competency necessary to indigenously operate the plant at the onset. Notwithstanding the above, should countries like Russia or China begin to dominate, and perhaps on some aspects, assume the mantle of leadership in the nuclear industry landscape, there are broad and strategic considerations newcomers should contemplate. First, that there may be serious implications for further developments and improvements on global nuclear governance. The possibility of emerging vendors pushing out their Western counterparts out of the market, or relegating them to the role of sub-contractors, may also result in less choice for customers in the long run. In a less competitive environment, the priority of emerging vendors would be to achieve economies of scale through existing reactor designs as newcomers would typically be looking to construct one or two reactors rather than a large fleet. It may also result in certain vendors willing to sell reactors to countries lacking strong credentials, leading to declining safety and security standards and the increasing threat of nuclear incidents and accidents. The potential relationship asymmetry between a vendor and newcomer country entering into a strategic partnership is also a cause of concern. Looking at recent developments among emerging vendors, their commitment to the export market remains unclear, despite strong support from the home state. Lastly, partnering with an emerging vendor on a nuclear power programme may bear serious national security risks outweighing the benefits of the packages on offer. Acknowledgement This material is based on research supported by the Singapore National Research Foundation under NPRP Award No. NRF2014NPR-NPR001-005. Footnotes 1 For the purposes of the article, ‘developing countries’ broadly refers to countries not categorized as ‘developed economies’ by the United Nations in their annual World Economic Situation and Prospects publication. In 2018, ‘developed economies’ include the USA, Canada, Japan, Australia, New Zealand, European Union countries, Iceland, Norway and Switzerland. For more information, see accessed 17 July 2018. 2 In this regard, former Warsaw Pact countries include countries that were formerly part of the Soviet Union as well as seven Soviet satellite states. 3 Newcomers are defined by IAEA as countries that are considering, planning or starting nuclear power programmes but have not yet connected a first NPP to the grid. They are also countries that have expressed an interest in nuclear power, participated in some nuclear infrastructure-related Agency activities and are involved in Agency-supported technical cooperation projects on energy planning. 4 This article describes these vendors as ‘emerging vendors’ in the context of the nascent newcomer export market they are targeting. Specifically in the case of Russia, it has been exporting nuclear energy technology for decades and is thus technically an ‘established vendor’. However, Russia has only set its sights beyond former Warsaw Pact countries in the last decade or so. 5 In 1953, President Dwight D. Eisenhower of the USA addressed the United Nations in his ‘Atoms for Peace’ speech, calling for international cooperation in the development of nuclear technology for peaceful purposes. 6 Not to be confused with General Electric, a US company. 7 The development of nuclear reactor technology has undergone two phases. The first phase explored Generation I reactor technology. The second phase saw the rapid scale-up of Generation II reactors in North America and Western Europe, and later on, in East Asia. The industry is currently experiencing two phases simultaneously: the third phase being the development and construction of evolutionary Generation III/III+ reactors; and the fourth, the development of innovative Generation IV reactors, which have been driven by the need for safer and more affordable nuclear reactors post-Fukushima. Taken from V Nian, ‘Technology Perspectives from 1950 to 2100 and Policy Implications for the Global Nuclear Power Industry’ Progress in Nuclear Energy (2018) 83–98, accessed 17 July 2018.  8 International Atomic Energy Agency, Nuclear Power Reactors in the World (IAEA 2017).  9 M Schneider and A Frogatt, The World Nuclear Industry Status Report 2017 (Mycle Schneider Consulting Project, 2017), accessed 17 July 2018. 10 The Kyoto Protocol is an international agreement linked to the United Nations Framework Convention on Climate Change (UNFCCC), which commits its Parties to internationally binding carbon emission reduction targets. The Agreement was adopted on 11 December 1997 and entered into force on 16 February 2005. 11 BRIC is an acronym for an economic bloc consisting of Brazil, Russia, India and China, which came to symbolize the shift of global economic power away from the more established G7 economies. The term was first coined by Jim O’Neill, a British economist, a former British cabinet minister and a former Chairman of Goldman Sachs Asset Management. 12 IAEA (n 8). 13 International Atomic Energy Agency, Nuclear Power Reactors in the World (IAEA 2009); International Atomic Energy Agency, Nuclear Power Reactors in the World (IAEA 2012). 14 International Atomic Energy Agency, Nuclear Power Reactors in the World (IAEA 2008); International Atomic Energy Agency, International Status and Prospects of Nuclear Power 2010 (IAEA 2010), accessed 17 July 2018. 15 On 29 March 2017, Westinghouse Electric Co. filed for voluntary petitions under ch 11 of the US Bankruptcy Code, declaring it is seeking to undertake ‘a strategic restructuring as a result of certain financial and construction challenges in its US AP1000 power plant projects’. A year later, on 27 March 2018, the US Bankruptcy Court for the Southern District of New York approved Westinghouse’s plan of reorganization, which involves its sale to Brookfield Business Partners LP at USD 4.6 billion. This deal is said to have cleared the company’s path out of bankruptcy. 16 Following record losses of 4.83 billion euros in 2014, Areva split up its five operational business units and rebranded them. As of 4 January 2018, Framatome (previously New NP) took over all assets related to the design and manufacturing of nuclear reactors and equipment, fuel design and supply, and services to existing reactors. As of 23 January 2018, Orano (previously NewCo) took over operations related to the nuclear fuel cycle. The French government injected around 4–5 billion euros into the new entities as part of the restructuring process. 17 World Nuclear Association, The World Nuclear Supply Chain: Outlook 2035 (World Nuclear Association 2016). 18 See accessed 17 July 2018. 19 World Nuclear Association (n 17); IAEA (n 8). 20 IAEA, ibid; Schneider and Frogatt (n 9). 21 World Nuclear Association (n 17). 22 ibid. 23 ibid. 24 IAEA (n 8). 25 ibid. 26 According to the World Bank, countries with a GNI per capita of USD 12,476 or more. For more information, see accessed 17 July 2018. 27 ESI-CIL Nuclear Governance Project data, 2018. 28 ‘China Signs Deal to Build New Nuclear Reactor in Pakistan: WNN’ Reuters (Paris, 24 November 2017) accessed 17 July 2018. 29 ibid. 30 M Holt, U.S. and South Korean Cooperation in the World Nuclear Energy Market: Major Policy Considerations (Congressional Research Service 2010) https://www.asiafoundation.org/resources/pdfs/HoltUSROKNuclear100121.pdf> accessed 17 July 2018; PE Davis and S Hecker, ‘South Korea's Model Nuclear Energy Program’ Bulletin of the Atomic Scientists (Chicago, IL, 19 February 2014) accessed 17 July 2018. 31 The APR-1400 is a Generation III advanced pressurized LWR designed by KEPCO. It was developed from an earlier OPR-1000 design and also incorporates features from the CE System 80+ design; two reactors have been completed, one is under construction and another is being planned. 32 World Nuclear News. ‘Fuel Loading under way at Chinese EPR’ (World Nuclear News, 11 April 2018) accessed 17 July 2018. 33 Hitachi, Development of Next-generation Boiling Water Reactor for Era of Large-scale Plant Construction (2010) accessed 17 July 2018. 34 Before the UAE, China was the last newcomer that started the construction of its first NPP in 1985. 35 Russia also began construction of Ostrovets NPP in Belarus in 2013. Although Belarus is a newcomer country, it is also a former Warsaw Pact country. As such, this article does not consider it as part of the export market Russia is competing for with other nuclear vendors. 36 I Bremmer, ‘The End of the Free Market: Who Wins the War Between States and Corporations?’ (2010) 9 European View 249. doi: 10.1007/s12290-010-0129-z; S Tromans, ‘State Support for Nuclear New Build’, XXII Nuclear Inter Jura Congress (Nuclear Law Association India 2016) 1–17 accessed 17 July 2018. 37 For example, China National Petroleum Corporation, Petro China, Sinopec, Petrobras, Pemex, Rosneft and Gazprom. 38 Bremmer (n 36); Tromans (n 36). 39 See accessed 17 July 2018. 40 A Breus and A MacLachlan, ‘Russia Aims to Restore Nuclear Industry Complex of Former USSR’ Platts Nucleonics Week (Kiev/Paris, 2 February 2006). 41 ibid. 42 Tromans (n 36). 43 ibid. 44 DW, ‘Putin, Erdogan Launch Turkey's First Nuclear Power Plant’ (DW, 3 April 2018) accessed 17 July 2018. 45 The gradual slowing down of China’s economy is characterized by diminishing returns on capital goods investments and translating into rising debt and overcapacity. Taken from M Hibbs, The Future of Nuclear Power in China (Carnegie Endowment for International Peace 2018). 46 Tromans (n 36); M Cottee, ‘China's Nuclear Export Ambitions Run into Friction’ Financial Times (London, 3 August 2017) accessed 17 July 2018; E Ng, ‘China's Nuclear Plant Makers Seek New Markets along the Ancient Silk Road into Asia, Europe, Africa and the Middle East’ South China Morning Post (Hong Kong, 4 April 2016) accessed 17 July 2018. 47 Hibbs (n 45). 48 Global Nexus Initiative, Evoloving Nuclear Governance for a New Era (Global Nexus Initiative 2017) accessed 17 July 2018; Z Yun and others, ‘Is China Ready for Its Nuclear Expansion’ (2011) 39 Energy Policy 771. 49 China Daily. ‘China Confident to Get New UK Nuclear Power Plant Approval after Hinkley’ China Daily (Beijing, 26 August 2017) accessed 17 July 2018. 50 VP Nguyen, ‘Lights Out for South Korea's Nuclear Export Ambition’ The Diplomat (Tokyo, 12 August 2017) accessed 17 July 2018. 51 ibid. 52 As an illustration, when the US Congress briefly contemplated not to renew authorization for the Export-Import (Ex-Im) Bank in 2015, the US nuclear industry suddenly found itself unable to compete with vendors from Russia, South Korea, Japan and France who receive multiple forms of support including trade finance from their respective governments. 53 Nian (n 7). 54 See accessed 17 July 2018. 55 ESI-CIL Nuclear Governance Research Project data, 2018. 56 Tromans (n 36). 57 It is also considered the ‘gold standard’ as concerns the UAE government’s commitment to forego enrichment and reprocessing. 58 United Nations Economic Commission for Europe, Parties to UNECE Treaties Adopt Declaration on Applying Environmental Assessment Procedures to Nuclear Energy Issues. United Nations Economic Commission for Europe (13 June 2014) accessed 17 July 2018. 59 Global Nexus Initiative (n 48). 60 ibid. 61 World Nuclear Association (n 17). 62 J Lovering, A Yip and T Norhaus, ‘Historical Construction Costs of Global Nuclear Power Reactors’ (2016) 91 Energy Policy 371. 63 World Nuclear Association (n 17). 64 R Tanter, ‘After Fukushima: A Survey of Corruption in the Global Nuclear Power Industry’ (2013) 37 Asian Perspective 475. 65 ibid. 66 ibid. 67 See accessed 17 July 2018. 68 J Perera, ‘Rosatom Pursues Exports and Restructures’ Nuclear Engineering International (February 2016) 8 accessed 17 July 2018. 69 See n 54. 70 T Charlton, ‘South Korea's KHNP Scraps Plans to Build Four New Nuclear Reactors’ Asian Power (20 June 2018) accessed 17 July 2018. 71 YC Xu, ‘The Struggle for Safe Nuclear Expansion in China’ (2014) 73 Energy Policy 21. 72 Global Nexus Initiative (n 48). 73 Xu (n 71); T Patel and B Haas, ‘China Regulators ‘Overwhelmed’ as Reactors Built at Pace’ (Bloomberg, 20 June 2014) ; First Post, “Made in China” Nuclear Reactors a Tough Sell in Global Market’ First Post (Hong Kong/Beijing, 6 March 2015) accessed 17 July 2018. 74 S Thomas, ‘China's Nuclear Export Drive: Trojan Horse or Marshall Plan’ (2017) 101 Energy Policy 683. 75 N Gallucci and M Shellenberger, ‘Will the West Let Russia Dominate the Nuclear Market? What the Westinghouse Bankruptcy Means for the Future’ Foreign Affairs (New York City, 3 August 2017) accessed 17 July 2018. 76 Thomas (n 74). 77 ibid; S O'Neill, D Haynes and R Pagnamenta, ‘Nuclear Deal with China Is Threat to UK Security’ The Sunday Times (London, 16 October 2015) accessed 17 July 2018; N Timothy, ‘The Government is Selling Our National Security to China’ Conservative Home (London, 20 October 2015) accessed 17 July 2018. © The Author(s) 2019. Published by Oxford University Press on behalf of the AIPN. All rights reserved. This article is published and distributed under the terms of the Oxford University Press, Standard Journals Publication Model (https://academic.oup.com/journals/pages/open_access/funder_policies/chorus/standard_publication_model) TI - Emerging nuclear vendors in the newcomer export market: strategic considerations JF - Journal of World Energy Law and Business DO - 10.1093/jwelb/jwy033 DA - 2019-03-01 UR - https://www.deepdyve.com/lp/oxford-university-press/emerging-nuclear-vendors-in-the-newcomer-export-market-strategic-IARVBal2v7 SP - 4 VL - 12 IS - 1 DP - DeepDyve ER -