Swati asked: What role does China play in the EU energy security, keeping in view their current involvement in the UK nuclear energy sector?

Nandakumar Janardhanan replies: China has the highest number of upcoming nuclear reactors (including planned and proposed) in the world, and a flourishing nuclear industry which is set to be the largest nuclear energy equipment and service provider to the ‘existing and emerging’ nuclear power countries. While UK’s permission to China General Nuclear Power Group (CGN) to enter into its market has raised concerns among the China watchers, the technological advantage and the relatively low cost of the Chinese reactor/equipment/services will help it penetrate into the European Union (EU) market further. With 130 reactors, the EU generates roughly 30 per cent of its total electricity from nuclear facilities. If the ‘Paris Goals’ and the clean energy target push demand for non-fossil fuel-based electricity generation in the region, nuclear energy will emerge as a potential option once again in many countries.

As the demand for clean energy rises in Europe, where fossil fuels constitute roughly 70 per cent of the primary energy sources, the nuclear energy sector will assume greater importance. More mergers and alliances among Chinese and European nuclear industry players could mean more energy development contracts for China. While Beijing may contribute to strengthening the European energy security by facilitating cheaper/easier access to newer/advanced technologies, there can be an adverse impact on EU’s domestic clean energy industries and nuclear sector in the long run.

In 2016, the EU and China also signed an MoU highlighting the significance of energy cooperation in the comprehensive strategic partnership between the two. However, China’s interests in the global energy sector presents both opportunities and challenges for Europe’s energy security. There have been several interactions between the two on energy front that deserves greater understanding.

Role of Belt and Road Initiative (BRI): Countries and regions that are part of China's BRI have witnessed a significant increase in Chinese investments in renewable energy. Though EU has been critical of China’s BRI, Italy showing interest in joining the same could mean that China may have more partners in the region in future.

Fossil fuel: The energy aspirations of China have come into conflict with Europe's energy security in the past. Many observe that the surge in oil demand in China in the last decade was one of the factors that pushed the oil prices up, leading to a higher energy import bill of EU countries. Further, the development of eastern Siberian oil and gas reserves and the subsequent development of energy transportation pipelines to China were seen as a threat to EU consumers.

Geopolitics of clean energy: China already has a leading market presence in the global solar panel production, which has emerged as a threat to the European players. European Union’s decision to end the trade controls on Chinese solar panels has raised concerns among the European solar producers. Many Chinese companies are now major players in Europe, sidelining the local industry.

Dr. Nandakumar Janardhanan is Assistant Professor in the Energy Studies Programme, School of International Studies, Jawaharlal Nehru University, New Delhi. He was earlier a researcher at IDSA.

Posted on May 17, 2019