Tuesday, August 23, 2011

Indian and Chinese Developmemt, Nonproliferation and Thorium

This is the first of a series of posts which I plan to offer that will argue that current nuclear nonproliferation schemes are at best transitory, and are likely to undergo significant changes before the middle of the 21th century.

Numerous studies projecting future global economic growth have suggested that by and in most cases well before 2050, the Chinese economy will be the largest single national economy. Some studies, however, suggest that Indian economic growth will exceed China over the next 40 years, and by 2050 the Indian economy will be the largest in the world. Views that the Indian economy will rank second or third in the global economy are generally seen as more common.

A recent Citigroup Global Markets study finds
China should overtake the US to become the largest economy in the world by 2020, then be overtaken by India by 2050.
The Chinese political-social system as well as current demographic trends are expected begin to act as a drag on its economic growth, while Indian democracy and the greater openness of Indian society is expected to lead to higher levels of competitiveness.

By 2050 Citi researchers expect both the Chinese and the Indian economies to be twice the size of the American economy. These developments have significant implications for global affairs. Globally Citi anticipates that the 10 largest economies in 2050 will be India, China, The United States, Indonesia, Brazil, Nigeria, Russia, Mexico, Japan and Egypt. Key resources, including Water and electricity play a major tole in economic development, and in the long run will potentially be sources of economic problems. The Citi researchers suggest,
Many rapidly growing economies, including China and India continue to charge prices for key resources, including water, electricity and other sources of power that are far below long-run social marginal cost and even far below long-run marginal private cost (excluding environmental externalities) (see OECD (2009) and Easter and Liu (2005), World Bank (2010)). In the case of prices charged to households, there is a second-best argument that, if cash grants to address poverty are not administratively feasible, the subsidization of certain key goods and services consumed by the poor is (constrained) efficient. This argument also supports the use of subsidies on the staple foods consumed by the poor as a poverty relief measure. There is no equity or efficiency-based case, however, to subsidise (charge a price below long-run marginal social cost) the use of water, power and other resources by the industrial and agricultural sectors – by far the largest consumers of power and water.23 The over-use of both power and water this has encouraged is creating a major potential environmental problem in both India and China. Unless this issue is addressed as a matter of urgency, scarcity of clean, fresh water alone could become a binding constraint on growth in both India and China – and many other countries with large arid regions. Long-run social marginal cost prices of all key resources (or equivalent physical rationing schemes which would, however, be much less efficient in practice) is the only way to prevent further destruction of environmental capital.
Thus sources of low cost sustainable energy will play an important role in economic development, especially approaching 2050 or after. Both India and China are planning very ambitious programs of nuclear power development. Both countries are planning rapid deployment of significant numbers of traditional Light Water and Heavy Water power reactors. while projecting for further development both Fast Liquid Metal Reactors and Thorium cycle breeder reactors.

Indian nuclear plans include the construction of a large number of fast reactors that will be used to both produce electricity and breed thorium. In addition India plans currently include a large number of Thorium Fuel cycle heavy water reactors that operate at or close to one to one conversion ratios. The Chinese Academy of Science has initiated a program of Thorium cycle Molten Salt Reactor (LFTR) research and development.

Nuclear Green has argued on the basis of studies conducted at Oak Ridge National Laboratory, that LFTR type reactors will offer safe, sustainable and efficient nuclear power at a potentially low cost. (See for example, ORNL-TM-1851 (SUMMARY OF THE OBJECTIVES, THE DESIGN, AND A PROGRAM OF DEVELOPMENT OF MOLTEN-SALT BREEDER REACTORS) ). In contrast to the relatively simple and low cost chemical processes that would allow low cost Fluoride salt based nuclear fuel reprocessing being investigated by the Chinese, the Indian thorium cycle scheme would involve far more expensive chemical fuel reprocessing systems, and most likely more expensive reactors. All in all, the Indian thorium based energy scheme appears to be more complex and more expensive.

Several motives will undoubtedly drive India and China to develop nuclear power systems that are capable of producing sustainable energy, while at the same time facilitate rapid and mast deployment while providing low cost energy. These motives include concerns about the climate implications of burning fossil fuels, increasing scarcity of and rising prices for fossil fuels, the health and agricultural consequences of burning fossil fuels, and the ready availability of large, easily recovered thorium deposites.


By the middle of the 21st century the combined economic power of India and China will be so great that they can impose an international order that is consistent with their interests on the global political-economic system. Where future Indian and Chinese interest converge, the United States can expect to make little headway against them. Both India and China appear committed to developing a thorium nuclear fuel cycle, and it would appear to be rational that they both do so. It is possible that the combined interest of India and China might diverge from those of the United States, and it would appear unlikely that under such circumstances, the interest of the United States would prevail. These conclusions have significant implications for future American nonproliferation policy.

In the next post, I will review the implications of current American nonproliferation policies for the deployment of thorium based nuclear technologies.


DW said...

A very good essay, Charles. It should engender a lot of discussion (I hope). Now you ought to take this to outside blogs to really get going: ask to post it on Huffington Post, The Oil Drum, Daily Kos (I can do that for you if you want). It needs to be done.

Now, to content, interesting stuff about subsidies. Citi plays an interesting role here. On the one hand they justify, correctly, subsidies to residential consumer of water and power and questions the same subsidies to industry and agriculture. I can see that.

However, "the other side of citi" like all of finance capital, routinely via the IMF, demand the wholesale privatization of these resources and rollbacks of these very same subsidies.

Every commercial bank demands that such subsidies to the poor be eliminated as a condition for the loans generally to nations.

On some other specifics, at least in terms of what they do question in this report you cite, I think they oppose subsidies to industries because quite frankly it works. One aspect of their notation that these country's economies are going to grow is that most do so specifically because the are not into "free trade" and subsidize home grown industries tremendously.


Charles Barton said...

David, thanks. It has been posted on the energy collective. If you want to post it on Daily Kos, it is ok with me. I may submit the whole essay to the oil drum when I finish it.

gallopingcamel said...

Thanks for a very interesting forecast that is a little indigestible for folks who remember the 20th century (the American century).

The British controlled 25% of world trade until they were overtaken by the USA and now it will be China or India vying for supremacy.

I can't help feeling that this will be a good thing especially as neither of these rapidly developing economies will try to remove nuclear power or fossil fuels from their toolkits.

Anon said...

Once their economy stabilises and energy demand growth levels off I'd expect China and India to eventually start to reduce fossil fuel use by replacing with nuclear.


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