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Electricity derived from nuclear energy is non-polluting and is the most cost-effective energy that provides security, with a capacity factor (efficiency rate) of over 90%. China invests the most in nuclear power plants, followed by the Russian Federation. Nuclear power production in Europe and the United States was on a downward trend prior to last year.
Chart 1 – Evolution of nuclear energy production over 2000 – 2023 (Source: ourworldindata.org)
In 2024, the nuclear industry is witnessing extraordinary investments, which are expected to grow. The list of top consumers are data storage centers, companies that develop and manage artificial intelligence, but also investments in everything related to advanced technology.
In the first half of 2024, investments in nuclear industry increased more than 10 times (3.9 billion USD) compared to 2023 (355 million USD). Whereas funding consists of investment funds with risk capital in the West, in China all investments are controlled by communist authorities.
The battle for supremacy in the nuclear sector is fought in terms of the transfer of standard technology, already available on the market, as well as in the area of new technologies, and by that I refer to small modular reactors (SMRs), a field where the United States (with several types at its disposal, the most advanced of which is NuScale), the Russian Federation and China shine.
Uranium – the fuel of the geopolitical struggle
The problem is that the nuclear industry relies on uranium, a resources available only in a few countries: Australia (28%), Kazakhstan (15%), Canada (9%), the Russian Federation (8%) or Namibia (7%).
Russia and China are the top players in nuclear fuel supply chains, together holding over 57% of the uranium processing market.
11 countries have imported Russian technology, including certain countries that are currently members of NATO, such as Bulgaria, the Czech Republic and Hungary. Obviously, China also uses Russian know-how, but it also imported technologies from the West and developed its own technology, a hybrid for the other technologies. Then, there are countries that have Russian nuclear power plants under construction, such as Egypt, Turkey or Argentina.
Of the 439 nuclear reactors currently in operation, 38 are in the Russian Federation, 42 outside Russia, exported with Russian technology and fuels, adding to which are another 15 plants under construction. This means all these reactors, which account for a large part of the market, depend on Russian spare parts and know-how. However, Russia's influence on the nuclear energy market extends beyond the export of technology. Russia owns almost half of the global uranium enrichment capacity, and 40% of the market for uranium refining. It should be noted that Russia and China have also developed processing facilities for American, Canadian or French technologies.
There are two items of information that help us look at the war in Ukraine in a different light: before 2022, Ukraine was planning to replace Rosatom for its own conversion and enrichment of uranium. In other words, the war started by the Russian Federation facilitates China's efforts to dominate the nuclear fuel market, delaying Ukraine’s plans to build a uranium enrichment plant. The second item of information was provided by Ukrainian officials, who say two-thirds of Ukraine's resources are located in territories occupied by the Russian Federation. The territories were assessed by SecDev, an independent organization that estimates that the annexed area contains coal (63%), oil (11%), natural gas deposits (20%), metal and rare earth deposits (42%), which include 6 iron ore deposits, 2 titanium ore sites, 2 zirconium ore sites, a strontium site, a lithium site, a uranium site and a gold deposit.
Uranium – part of hybrid warfare
There is an energy constituent to the hybrid war the Russian Federation has been skillfully waging against the European Union. Before the start of the war in Ukraine, Moscow created dependencies on its natural gas exports that flooded European markets. In February 2022, the EU's Russian gas import capacity stood at over 350 billion cubic meters (bcm), while in 2021, it imported 155 mmc. To this day, despite the introduction of economic sanctions, Europe has not been able to fully disconnect from Russian gas: in 2024, pipeline imports fell to around 15% compared to 2021, although LNG (liquefied natural gas) imports rose from 7.5 mmc in the first quarter of 2021, to 10.6 mmc in the first quarter of 2024. Prior to 2022, gas imports were used for (geo)political leverage, evidence of which is the West’s (the European Union in particular) response to the annexation of Crimea and parts of Donbas.
China employed a similar strategy in the case of critically important materials – metals and rare earths, holding monopoly positions on global markets, as discussed in a previous analysis. Such resources are widely used in green technologies for obtaining electricity. A significant wave of price hikes has occurred since the pandemic, when the supply chain of materials and end products for renewable energy production capacities was brought to a standstill.
The start of the war in 2022 prompted the European Union to gradually renounce Russian gas. Some of the pipelines were closed or damaged. Today, the EU is supplied with Russian gas only via Turk Stream and Ukrainian pipelines, its imports accounting for less than 20% of the total volume in 2021. However, this decrease in European imports of Russian gas has led to price hikes across the energy chain.
Natural gas is one of the resources subject to sanctions imposed by the West on the Russian Federation, along with oil and coal. Later, more goods were added to the list of sanctions, especially those containing dual-use technology and equipment, as well as rare metals. Thus, aluminum, copper or nickel from the Russian Federation are no longer traded on major stock markets. Uranium has not been subject to Western sanctions and was not designated a material of critical importance by the European Union. However, in the case of uranium. Moscow itself may consider imposing export restrictions, as Vladimir Putin told government officials: “Please, take a look at some of the types of goods we supply to world markets. Maybe we should think about imposing certain restrictions on uranium, titanium and nickel”, a statement that suggest this could be a response to Western sanctions.
If we look at nuclear fuel prices, we see that they have skyrocketed over the past two years in the wake of Russia's invasion of Ukraine, which has disrupted supply chains. Thus, the price of uranium hexafluoride, a product used in the production of enriched nuclear fuel, has quadrupled; the price of enriched uranium has tripled, while the price of raw uranium ore has doubled.
Russia and China threaten Europe’s energy security
2050 is the deadline set for the European Union to reach its zero emissions target. Decarbonization was heralded as goal of the Green Deal program, and was later accelerated by the “Fit for 55” package, which stipulates that by 2030 the EU will reduce its carbon-gas emissions by 55% compared to the level of 1990. Over January 1 - June 31, 2024, the EU reached its all-time low in terms of emissions: 50% of electricity was generated from renewable sources (hydropower, solar energy and wind power), which nuclear energy accounted for 24% of total production.
Problems that need to be addressed include the provision of thermal energy for industry and for household consumption during the cold season, which accounts for nearly a third of the primary energy consumption, and the provision of electricity for air conditioning in summer, which is increasing year by year.
In technical terms, thermal energy is produced in thermal power plants that are powered by gas, coal or electricity. Coal-powered plants have the highest CO2 emission rates, and they are expected to shut down by 2030. Gas-powered cogeneration plants (which produce both heat and electricity) currently represent the only technical solution (with low CO2 emissions) for providing thermal energy for large urban centers. In the future, experts say thermal energy will be provided by electricity, which means the provision of a greater generation capacity. The demand can be covered by energy produced from renewable and nuclear sources.
Renewable energy equipment is manufactured using metals and rare earths, and, as discussed earlier, China has a dominant role on these markets. Furthermore, renewable energy is intermittent and dependent on weather conditions, so the solution is to supplement it with nuclear power, which can be generated without interruptions. In other words, the European Union is considering increasing its nuclear power production capacities and increasing the capacity of its transmission and distribution networks, which today are unsuitable for accommodating the high consumption demands. Therefore, the demand for nuclear fuel is expected to rise in the medium and long term. This provides additional leverage to Russia and China, especially since they are expected to hold 64% of the global market for nuclear fuel in the future.
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