By Eric Vandenbroeck and co-workers

The US is Falling Behind China and Russia on Energy Innovation

The world is witnessing a new kind of global race—not for authority in space but for control over the global nuclear energy market. Nuclear power had long been considered risky owing to major accidents and budget overruns, hampering its large-scale adoption. But within the past decade, nuclear energy has been making a comeback thanks to the development of small modular reactors. China and Russia are seizing the lead, expanding their domestic capacities as well as exporting nuclear technology and constructing nuclear power plants across a variety of emerging economies.

Russia now leads the world in nuclear power plant construction. Its state-owned nuclear energy corporation, Rosatom, is constructing six new domestic reactors and is helping build 19 reactors in six foreign countries. Over the past ten years, meanwhile, China has inked contracts to help construct nine reactors in four countries while maintaining an unparalleled rate of expansion in its domestic nuclear industry. Both countries have been particularly quick to grasp the potential of small modular reactors, which typically can generate up to a third of the power produced by conventional nuclear plants. Compared with traditional large reactors, SMRs can be deployed quickly to areas that lack resilient electric-grid capacity, and their modular designs make them more affordable.

The need for affordable new power sources is growing as the world rapidly electrifies. Global electricity demand is projected to grow at an annual rate of around four percent over the next several years, and developing countries will account for an estimated 85 percent of that new demand. Among the major powers, China and Russia have been by far the most proactive in recognizing this need and responding to it with nuclear power exports. Both nations are actively targeting developing countries.

That effort, in turn, may well transform the global energy landscape and shift the balance of geopolitical power. The United States once dominated nuclear technology development. But since around the 1970s, it has ceded this leadership because of public opposition, rising costs, and regulatory challenges. Now it is paying the price. The surging need for electricity to power AI, coupled with developing countries’ desire for energy access, means that countries capable of exporting SMRs quickly and affordably will become increasingly influential partners to other nations. China and Russia are already leveraging their nuclear energy investments abroad to deepen their economic and political influence over the countries buying their technology.

To prevent authoritarian regimes from commanding the future nuclear energy market, the United States must continue updating its regulatory framework that governs reactor licensing and redirect federal investment toward its own SMR industry. It will also need to coordinate with democratic allies in Europe and Asia to diversify the advanced nuclear energy market. Only a collaborative effort—ideally, in the form of a multilateral nuclear energy organization—can offer emerging economies competitive funding packages that rival those proffered by China and Russia. If Western countries do not urgently rethink their international nuclear energy strategies, autocratic regimes may well use nuclear power to steer the trajectory of the world’s economy and politics before democracies realize it is too late to catch up.

The Tianwan nuclear power plant in Lianyungang, China, June 2024

 

A New Atomic Age

China’s and Russia’s appetites for exporting nuclear energy are growing fast. In July of last year, the Democratic Republic of the Congo signed a memorandum of understanding with Russia to explore peaceful uses of nuclear energy, and Uganda is considering partnering with Russia to build its first nuclear power plant. This month, Rosatom began the preparatory site work to construct a nuclear power plant in Uzbekistan, which will be the first nuclear reactor in Central Asia and Russia’s first SMR export. The nuclear agency is also at work on a nuclear project in Bangladesh. China, for its part, has in the past 15 years signed nuclear energy agreements with Argentina, Hungary, Nigeria, and Pakistan. And each country is specifically investing in SMRs: Russia deployed the world’s first commercial SMR in 2020. China’s high-temperature gas-cooled modular pebble-bed reactor, which began operating in 2023, is the first of its kind.

Other countries are attempting to get into the game. But unlike the private companies now working on nuclear power, Beijing’s China National Nuclear Corporation and Moscow’s Rosatom are both state-owned and benefit from a supply chain that integrates manufacturing, construction, and fueling, as well as more streamlined decision-making and operations. These efficiencies allow China and Russia to build reactors fast and at relatively low costs. China’s nuclear industry is powered by thousands of highly skilled staff members operating with remarkable speed. These efficiencies are not simply a byproduct of authoritarian control: they are the result of deliberate choices by Beijing and Moscow to elevate nuclear energy to a national priority. Both nations have made licensing processes to construct reactors more efficient without compromising safety.

China and Russia have also elected to provide abundant and strategic state financing for nuclear energy. To accomplish Beijing’s nuclear goals, the Energy Research Institute at China’s National Development and Reform Commission has estimated that China must—and can—make over $1.3 trillion worth of investments by 2050. Typically, most Chinese projects are backed by state loans at interest rates as low as 1.4 percent, significantly lower than global averages. Russia has committed more than $26 billion to domestic nuclear projects and offers multibillion-dollar export financing packages. Other countries also have state-backed nuclear institutions, but none are yet attempting to match the scale of China’s and Russia’s export drives.

Both China National Nuclear Corporation and Rosatom often cover as much as 85 percent of an overseas project’s costs in the form of loans with favorable interest rates. And both offer “build-own-operate” contracts, or agreements that allow them to own the reactors they construct abroad for a set period, thereby reducing burdens—such as managing spent nuclear fuel—for buyer nations. CNNC also provides foreign buyers with comprehensive services including the design, construction, and operation of its nuclear plants. By working closely with engineers and scientists in buyer countries, Beijing invests in developing peer-to-peer relationships that cement its bilateral ties.

 

Small Change

Emerging economies are thus turning to China and Russia for their power needs, especially for assistance in deploying SMRs. SMR technology was initially developed in the 1950s, primarily for military applications. For decades, SMRs were viewed as niche technologies. But advances in design and more supportive government policies—coupled with the ballooning need for electricity around the world—has elevated their profile. Unlike conventional large reactors, SMRs’ diverse sizes and forms offer greater flexibility, allowing them to meet smaller energy demands and more specialized applications in a wider variety of geographical locations.

SMRs’ streamlined manufacturing processes and shorter construction timelines could also allow buyer nations to bypass many of the daunting financial and logistical challenges inherent in building conventional nuclear power plants. Experts have estimated that SMR projects could take three to six years compared with the ten or more years it takes to deploy conventional reactors. If the SMR projects already underway in China and Russia succeed at expanding nuclear energy access at a lower cost, that may increase SMRs’ appeal to emerging economies aiming to break into energy-intensive sectors such as manufacturing and data centers.

Additionally, SMRs can do things that conventional nuclear plants cannot. Certain advanced designs can achieve higher operating temperatures, enabling them to generate process heat for industrial applications such as steelmaking and producing ammonia for fertilizer. These uses are critical: in 2022, the industrial sector accounted for approximately 37 percent of global energy consumption.

Some analysts remain skeptical of SMRs’ novelty and point to the history of expensive, over-budget conventional nuclear projects. But China and Russia believe they will transform the energy market: with huge investments, by 2030, China hopes to export 30 reactors to its Belt and Road Initiative partner countries, and Russia aims to capture 20 percent of the global SMR market. As the world’s electricity demand rises, so will the strategic value of nuclear energy, which offers far greater power density than other sources: just one uranium fuel pellet produces as much energy as a ton of coal, 149 gallons of oil, or 17,000 cubic feet of natural gas.

 

Nuclear Fallout

The comprehensive financing packages and efficient production that Beijing and Moscow are offering make nuclear power much more accessible for developing nations. But these agreements also risk creating long-term dependence, ensuring that buyer countries remain indebted to China and Russia and reliant on their operational expertise for decades. Despite this threat of dependence, emerging economies—as well as developed countries that want to generate more nuclear power—have few compelling alternatives to Chinese and Russian nuclear energy. The American company NuScale Power has signed agreements to deploy SMRs in Ghana and Romania, but the projects remain in the planning phases. Another American company, Westinghouse, is helping Poland build its first nuclear power plant. But these efforts lag far behind those made by Beijing and Moscow.

Although some unique efficiencies help centralized, statist governments fast-track nuclear energy projects, there is no inherent reason why the United States and its allies cannot support the development, production, and export of reactors at a rate that competes with their authoritarian counterparts. From the 1960s through the 1990s, the United States supplied much of the world’s nuclear manufacturing, reactor designs, and supply chain expertise. China’s and Russia’s ambitious, state-backed funding models, however, have edged out U.S. companies. U.S. government policy bears some responsibility: export laws have erected onerous barriers to countries interested in purchasing U.S. reactors. Before the United States transfers nuclear technologies and materials to another country, it demands that the partner country sign a peaceful nuclear energy cooperation agreement, referred to as a 123 agreement. Such agreements adhere to strict nonproliferation safeguards, but Washington often seeks additional commitments—such as requiring partners to forgo enriching their own uranium or reprocessing spent fuel that can make U.S. technology less attractive to potential buyers.

Furthermore, U.S. regulatory inefficiencies act as a bottleneck to progress. For instance, the U.S. Nuclear Regulatory Commission often takes five years or more to approve a reactor project and imposes burdensome fee structures on applicants. Kairos Power’s Hermes reactor is the only licensed SMR actively under construction in the United States; this slow pursuit of SMRs reflects long-standing institutional challenges at the NRC, including an internal culture that has struggled to align with innovation.

The race to provide advanced nuclear power is not simply a symbolic technological competition. It is a geopolitical struggle for influence and economic competitiveness in a rapidly electrifying world. Beijing and Moscow will steadily gain more soft power as the countries with which they have nuclear energy deals are incentivized to align with their economic ambitions and political ideals. This is happening already: for instance, Rosatom is expanding Hungary’s nuclear power capacity; nuclear energy now generates about 44 percent of the country’s electricity. After Russia invaded Ukraine in 2022, Hungarian Prime Minister Viktor Orban vehemently opposed including Russian nuclear power in the EU’s sanctions on Russian nuclear energy, achieving an exemption.

In the future, countries could even use their leverage over the reactors they build to coerce or punish buyer nations by turning them off or seizing them. Such a threat is hardly without precedent. In 2014, Russia shut off its gas supplies to Ukraine for months after annexing the Crimean Peninsula, causing economic and social disruption. Unlike c fuels, electricity cannot be stockpiled, making the shutdown of a nuclear power plant devastating for a nation’s power grid and economic stability.

The United States is not the only country falling behind. Other major powers with advanced nuclear industries have not done enough to offer the accessible financing and turnkey project models that developing countries need. The Organization for Economic Cooperation and Development requires its member states to impose higher interest rates and longer repayment durations for nuclear projects than China and Russia do. And most multilateral development finance institutions, such as the World Bank, refuse to help fund the construction of nuclear plants. All these barriers force developing nations to turn to Chinese and Russian nuclear export programs.

 

Power Up

Maintaining geopolitical balance in the nuclear energy market requires the United States and its allies to adopt more competitive strategies, particularly when it comes to SMRs. In July 2024, the U.S. Congress passed the ADVANCE Act, which aims to modernize nuclear regulation, accelerate licensing, and support advanced reactor deployment. It requires the NRC to update its regulatory framework and authorizes funding for these goals. The act is a good start, and Congress should use its provisions to maximize efforts directed toward SMR development. It should also consider adopting greater flexibility in how it negotiates enrichment and reprocessing terms: rather than insisting partners fully renounce these capabilities, Washington could allow them under strict oversight, balancing nonproliferation objectives with the need to compete in the nuclear export market.

These steps, however, will not be enough. The main problem for Western countries is how to equal or better the efficient construction and funding that China and Russia now offer. Last year, the energy analyst and former U.S. deputy assistant secretary of state Todd Moss proposed that the World Bank hire experts who can evaluate nuclear energy within recipient countries’ energy mix, but the idea will likely still face opposition from the bank’s antinuclear shareholders. A separate proposed initiative to make nuclear energy financing more accessible and competitive, the International Bank for Nuclear Infrastructure, began too broadly by asking 50 countries to create an entirely new financial institution and has now stalled.

It would be more promising to establish a global nuclear energy cooperative that, to start, coordinates policies between a small and politically aligned group of pro-nuclear nations committed to accelerating strategic nuclear power exports. Existing partnerships such as the Sapporo 5—composed of Canada, France, Japan, the United Kingdom, and the United States—have already begun to strengthen and diversify the world’s nuclear fuel supply chain. A similar kind of collaboration is urgently needed for power plant construction. This cooperation could be coordinated by a new agency or a dedicated arm of an established institution such as the International Atomic Energy Agency; it should leverage each country’s strengths, such as Canada’s preeminence in uranium mining and the United States’ extensive reactor design portfolio. A cooperative could also boost each member country’s domestic nuclear industry—including its ability to develop SMRs—by encouraging the sharing of expertise and infrastructure. And it would afford its members leverage to reform development finance frameworks that exclude nuclear power projects from consideration.

 

Technology export standards that maintain nuclear safety without deterring buyers.

Developing nations may still decide to source nuclear energy technologies from China and Russia. But they need to be able to make a real choice to counterbalance China’s and Russia’s expanding influence over the nuclear energy sector. The decisions that Washington and its allies make now, in the early days of a new nuclear age, will dictate the direction of energy security, the global economy, and the shape of power for decades to come.

 

 

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