By Dan Morgan and David B. Ottaway
Washington Post Staff Writers
Tuesday, October 21, 1997; Page A01
The Washington Post
U.S. atomic reactor manufacturers, who are lobbying hard to lift a long-standing ban on sales to China, appear poised to tap a potential $50 billion Chinese market that could help revitalize the industry until nuclear power makes a comeback in this country, according to U.S. government and industry officials.
Despite investing $870 million in a joint industry-government project to develop a new generation of cheap, safe reactors, the U.S. companies have yet to find a buyer in the United States. As a result, China, which wants the latest U.S. reactor technology, is widely seen as a potential savior if U.S. concerns about nuclear proliferation can be overcome.
Less than a week before the arrival here of Chinese President Jiang Zemin for a summit meeting, U.S. negotiators in Beijing yesterday were reported close to an agreement that would allow President Clinton to certify that the Beijing government has stopped helping Iran and other countries develop nuclear weapons. Under U.S. law, that certification would clear the way for the first sale of U.S. nuclear technology to China unless Congress intervened within a month.
To thwart an expected congressional effort to overturn Clinton's certification, U.S. reactor manufacturers led by Westinghouse Electric Corp. and Asea Brown Boveri (ABB) Inc. have teamed up with huge construction companies such as Bechtel Power Corp. and Stone & Webster Engineering in a lobbying and public relations campaign that stresses the domestic jobs resulting from sales to China.
Under a coalition known as the Nuclear Supplier Working Group, the industry also has mobilized hundreds of suppliers and vendors that have been encouraged to contact members of Congress regarding the local benefits of a China deal. For example, David Ropp, president of Crosby Valve and Gage Co. in Wrentham, Mass., which employs 250 people in the making of steam safety valves for nuclear plants, said he had urged legislators in a letter campaign to support sales to China. Crosby Valve could lose at least $100 million in potential sales if the U.S. ban remains in place, Ropp added in an interview.
The industry has also appealed directly to the Clinton administration. Robert E. Newman, a senior ABB executive and head of the Working Group, met late last month with Robert J. Einhorn, principal U.S. negotiator in the talks with the Chinese. Newman said in an interview that he also made the industry's case for reactor sales in China to Gary S. Samore, the National Security Council's top proliferation expert.
Einhorn and Samore are heading the U.S. delegation negotiating with the Chinese this week.
In late September, the Center for Strategic and International Studies (CSIS), an independent think tank that serves as a stable for many retired senior policymakers, issued a study strongly supporting nuclear sales to China. The report was partly financed by the Nuclear Energy Institute, a Washington-based trade association representing nuclear utilities and reactor manufacturers, according to NEI officials. Eight of the 12 members of the committee that drafted the study represented reactor designers, nuclear engineering firms and NEI.
Separately, Michael Jordan, chairman and chief executive of Westinghouse, headed a committee of the President's Export Council, which in June produced a report stressing the negative consequences of a continued ban on sales to China. The council, an official White House advisory body funded by the government, warned that "access to the $50 billion nuclear energy market of China is critical to the survival of the U.S. nuclear power supply industry." Continuation of nuclear sanctions would "result in the loss of tens of thousands of jobs across 28 states and the gradual elimination of the trained personnel base now supporting more than 100 U.S. nuclearpower plants and the nuclear Navy," the report said.
From the earliest days of the civilian nuclear energy industry after World War II, the federal government has nurtured it. The industry grew directly out of the military weapons programs and was regulated, supervised and heavily subsidized by federal agencies.
In the wake of the 1979 disaster at the Three Mile Island nuclear plant, government and industry together searched for ways to salvage the future of nuclear power. In 1986, the Energy Department initiated the Advanced Light Water Reactor program, aimed at coming up with safer and more efficient plants.
The program, which was criticized by anti-nuclear groups and by budget cutters opposed to "corporate welfare," was completed in September after an expenditure of $340 million by the federal government and $530 million by U.S. utilities and reactor makers.
The Nuclear Regulatory Commission has given its stamp of approval to the program by licensing the reactor designs of ABB and General Electric Co. It is expected to license Westinghouse's version next year, according to sources.
U.S. officials and expert scientific advisers have urged that the United States keep open the nuclear energy option for environmental and other reasons. "We shouldn't be too eager to abandon an option which does have the great attraction of not producing any carbon dioxide," said John P. Holdren, a Harvard University environmental expert who was in charge of a presidential advisory committee study on energy research and development priorities for the 21st century.
The partially released study calls for tripling the federal investment in nuclear fission research, as a hedge against a time when more nuclear plants might be needed to replace dwindling supplies of fossil fuels, such as natural gas, or to curb air pollution.
But the new designs have become available just as U.S. utilities have shelved plans for buying new nuclear power plants because they cannot compete against turbines run on cheap and plentiful natural gas. The last order for a new nuclear plant in the United States was placed in 1973, according to industry sources.
Moreover, while U.S. reactor companies still service 108 old plants in the United States, 21 reactors have closed for safety or cost reasons -- and numerous others could follow as electricity deregulation forces power companies to cut costs, according to industry and government officials.
By contrast, most developing countries in Asia are turning to nuclear power. South Korea plans seven additional nuclear plants among 30 new power plants to be built by 2000. Japan plans to increase nuclear power's share of its overall electricity output from 33 to 40 percent in the near future, according to a report of the private Electric Power Research Institute.
Penetrating these markets, industry and government sources say, fits the broader strategy of the export-oriented Clinton administration, which seeks an edge for U.S. companies over European, Canadian and Japanese competitors in Asia's booming energy sector.
Commerce Department documents released recently under the Freedom of Information Act detail U.S. government pressure on Taiwan in 1995 and 1996 to select an American firm to build its huge "Dragon Gate" nuclear plant. Top U.S. officials conveyed Clinton's "interest in this award" in a meeting with Taiwanese President Lee Teng-hui, according to a Commerce memo. U.S. companies were vying with a French company at the time. The award ultimately went to General Electric.
China's potential as a nuclear market dwarfs that of its Asian neighbors, however. Beijing plans a tenfold nuclear power expansion to generate 50,000 megawatts by 2020, equivalent to the energy demands of 25 million Americans. One congressional expert called China the nuclear industry's "mother lode." To meet its power goals, China has to order a new nuclear plant annually for the next 17 years, according to an industry study circulating on Capitol Hill.
But France, Canada and Russia have jumped ahead of U.S. companies there, with orders for six nuclear plants. Representatives of environmental, anti-nuclear and human rights groups contend that the nuclear industry has greatly exaggerated the importance of the Chinese sales.
Daniel Horner, policy analyst with the Nuclear Control Institute, said last week that nuclear power would not make a "big dent" in China's overall energy needs. He predicted that China would buy only enough technology to develop an independent capability to build and sell plants abroad.
Rep. John P. Murtha (D-Pa.), a senior House Democrat who is a staunch supporter of Westinghouse, headquartered in Pittsburgh, predicted that Clinton will overcome House opposition to certifying China as adhering to nuclear nonproliferation measures.
U.S. reactor makers have already begun competing for Chinese sales. ABB's Newman and Westinghouse's Jordan have held separate meetings with top Chinese leaders, including Jiang, to promote their own competing reactor designs.
The Newman meeting was arranged with the help of former senator J. Bennett Johnston (D-La.), who was hired by ABB this year to represent the company with the Chinese government, according to sources familiar with arrangement. As former chairman of the Senate Energy Committee, Johnston championed nuclear power and developed ties to Chinese leaders. His status in Beijing has been high since he was the sole member of Congress in 1995 to vote against a resolution supporting a U.S. visa for Taiwanese President Lee, China's arch-rival.
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