For quite some time, I’ve argued that, if nuclear power is to make any substantial contribution to reducing CO2 emissions, its growth will have to accelerate in China and to be based on the AP1000, the only Gen III+ design likely to be built in numbers significant enough to achieve any kind of scale economy.

It now appears highly unlikely that this will happen. Although China notionally restarted its nuclear program in 2012, a year after Fukushima, approvals have slowed to a crawl. This article, from Nuclear Engineering International, explains some of the reasons.

More significantly, China appears to have abandoned the idea of using a Western design, and is instead pushing two designs of its own, the CAP-1400 (an adaptation of the AP1000) and Hualong 1, Chinese design with French antecedents, variously rated as Gen II, Gen II+ and “comparable to a Generation III”.

It appears that the cost of imported inputs to the current projects is seen as prohibitive. The hope that the Hualong will generate an export market, and the British government has just agreed in principle to the construction of one such plant, conditional on approval of the design. In the absence of any operational plants, that looks problematic, to put it mildly. The announcement looks to be driven more by diplomatic considerations than by economics, which suggests that actual construction may be a long way off.

The announcement that the UK government is cancelling funding (budgeted at stg 1 billion) for its proposed competition for carbon capture and storage (CCS) marks the end of the last best hope that we can mitigate CO2 emissions while continuing to burn coal. If follows the abandonment of similar programs in Australia and the US.

Two thoughts on this.

First, it makes a nonsense of one of the justifications for supercritical coal-fired power stations, namely that they can be made “CCS-ready”.

Second, lots of projected paths to decarbonization involve substantial reliance on CCS. Those will need to be scrapped or changed substantially. The simplest change would be to replace coal+CCS with nuclear (the UK government now seems to be chasing the mirage of Small Modular Reactors) but that is only marginally less unrealistic than CCS (a new post on this shortly, I hope). The alternative is to rely on a combination of storage and smart grid pricing to adapt our current electricity system to one driven mostly by wind and solar PV, with hydro and limited amounts of gas as the dispatchable sources.

Over the last few weeks, there have been quite a few reports that the US, Japan, Australia and Korea are negotiating an agreement that would greatly reduce the availability of concessional funding for new coal projects. Recent reports, though, suggest that the US and Japan will make an agreement on their owmsn ter, leaving Australia (and perhaps also Korea) to go its own way. That has some pretty big implications for the Turnbull government and its position at the Paris Conference.

National and international development banks and export credit agencies, including Export-Import Banks in (South) Korea and the US, the Japanese Bank for International Cooperation[1] and the Export Finance Insurance Corporation in Australia have been a major source of finance for coal plants in developing countries like the Phillipines and Vietnam. With Chinese coal demand having peaked, and India shifting emphasis to renewables, the coal industry is counting on rapid demand growth in countries like these.

The reported US-Japan deal would eliminate funding for coal-plants that don’t use supercritical technology, and would require ultra-supercritical technology for all but the poorest countries.[2] Apparently, Korea has proposed weaker restrictions, and Australia weaker still. But rather than split the difference, Politico reports that the US and Japan will make a deal without Australia and Korea.

As far as I can tell, we are still in the stage of preliminary posturing. Some sort of compromise, or perhaps capitulation, may be reached. But if the US-Japan deal goes ahead without us, that will be a pretty clear signal that Turnbull is going to stick with Abbott’s anti-climate policies.

If such an outcome is possible in these talks, it’s also possible in Paris. Until now, I’ve assumed that the imperative for a global deal is such that even Australia’s weak proposals, and rejection of any credible policy, will be treated as acceptable. But now that Harper is gone in Canada, and Japan is working with the US, Australia is unlikely to find much backing for a recalcitrant position. While Korea might hold out on export financing, it is unlikely to want to be seen as sabotaging the entire agreement.

Hopefully, this is one of those situations where the export finance negotiations are still on a dynamic set under Abbott. Hopefully, Turnbull can see that the merits of being a global citizen in good standing, notably including continued friendly relations with Obama, outweigh any grumbles he might face from the LNP right.

Update An agreement has been reached. It looks pretty close to capitulation by Australia, though the government extracted enough concessions to call it a compromise. (Hat Tip: Cambo in comments).

fn1. I wasn’t clear about Australia’s involvement, since we don’t export or finance power plants, AFAICT. It appears that the agreement was formally made by the OECD, which requires unanimity. That makes the threat by the US and Japan to go it alone even more significant, I think.
fn2. Despite the impressive sounding name, ultra-supercritical plants still emit a lot of CO2, only about 10 per cent less than the subcritical plants they replace.

I have a piece in The Guardian, pointing out that the moral case for coal only works after you’ve ruled out, for amoral reasons of self-interest, the genuinely moral options for helping poor countries and saving the planet.