During the 2010s, the United States was on the verge of permanently losing competitiveness in global nuclear energy markets. This weakness threatened American geopolitical goals, with Russia further extending its nuclear market dominance and China eyeing reactor exports across the Belt and Road.

In the last year, this outlook appears to have reversed. The energy crisis and Russia’s invasion of Ukraine upended the macroeconomic and geopolitical environment. Strong domestic energy legislation and international support for nuclear to mitigate climate change has led to new market offerings. In the next decade, climate-focused foreign policy, domestic nuclear innovation, and nuclear trade coordinated with allies can reestablish the United States as the leader in global nuclear energy markets.

The Faltering of the Nuclear Renaissance

The mid-2000s were a promising time for nuclear energy. Emerging concerns about climate change and high energy prices were reviving interest in the technology. For the first time since the 1980s, the United States was on track to build many new reactors in a “nuclear renaissance.” American industry leader Westinghouse alone was planning to build dozens of its new AP1000 reactor design globally, starting in China where industrialization was driving rapid demand growth.

By the early 2010s the hoped-for renaissance evaporated. The global financial crisis crashed energy demand and price projections. In 2011, an earthquake and tsunami in Japan led to the major accident at Fukushima Daichi. Japan, the world’s second largest user of nuclear energy and the largest American nuclear trade partner, closed 10 percent of global reactors virtually overnight. Uranium prices fell more than half from their 2007 peak, along with a similar decline in U.S. nuclear exports.

Soon, Westinghouse was down to only 8 orders: 4 in China and 4 in Georgia and South Carolina. However, poor construction practices, bad management decisions, and the challenges inherent in any first-of-a-kind energy megaproject led to project delays and cost overruns for the domestic reactors. The price tag for each reactor, already in the billions, began rising rapidly. Westinghouse’s parent company, Japanese-owned Toshiba, wrote off $6 billion from the troubled construction projects. As it became apparent that the project costs were spiraling out of control, Westinghouse filed for bankruptcy in early 2017.

Geopolitical Ramifications of U.S. Absence in Nuclear Energy Markets

As the Westinghouse bankruptcy and loss of Japanese uranium services demand drove the U.S. nuclear industry from global markets, global competitors took notice. Russia, the long-time top competitor for nuclear energy markets, was now clearly leading nuclear energy markets. Russia’s close ally Kazakhstan produced more than 40 percent of the world’s raw uranium. Globally, Russia was the largest uranium service provider in uranium conversion (~1/3) and enrichment (43 percent). Despite import quotas meant to prevent overdependence, U.S. utilities source a fifth of their converted and enriched uranium demand from Russia.

Further, Russia embarked on an ambitious plan to build nuclear reactors abroad, in large part to capture geopolitical influence and export markets in the absence of U.S. competition. Leveraging the ability to offer state-owned loans, diplomatic guarantees, and complete build-own-operate financial packages, Russia signed deals for more than three dozen reactor exports, including in China, Turkey, Iran, India, Egypt, and Hungary.

China too noticed the absence of U.S. competition. To meet continued economic growth and its new climate commitments, China has plans to build more than 150 new reactors and is expected to surpass the United States in domestic capacity by 2030. In addition to new domestic designs, the country started up the first fourth-generation nuclear reactor in the world in early 2022. China is not yet a significant exporter of nuclear goods, services, or reactors. Nevertheless, it has grand ambitions. In 2013, the government announced a nuclear export strategy to build nuclear plants as part of the Belt and Road Initiative and is making moves to realize it.

Reestablishing American Market Competitiveness

In the last year, the primary macro factors creating headwinds for U.S. nuclear exports have shifted. Climate policy continues to grow in saliency, with nuclear energy emerging as a key emissions reduction technology both technically and politically. The world faces a global energy crisis due to underinvestment in both fossil fuel and clean energy infrastructure.

Russia’s dominance of energy markets broadly and nuclear energy specifically is a geopolitical flashpoint. Most viscerally, Russia’s reckless combat operations near the occupied Zaporizhzhia nuclear power plant, Europe’s largest, undermines Russian credibility on nuclear safety. Now requiring a constant presence by the IAEA to ensure safety in a warzone of Russia’s making, Zaporizhzhia stands as a symbol of the risk of the United States letting a revisionist Russia dictate nuclear energy norms.

Just as the international conditions have created an opening for renewed American competitiveness, favorable domestic policy has strengthened the sector. Higher energy prices have certainly helped existing nuclear plant economics, but so have a series of state and federal nuclear policies to prevent additional retirements. Several years ago, the DFC removed a prohibition on financing nuclear power projects abroad. Further work to create Western financing pathways for new reactor projects can accelerate export growth.

Two bipartisan nuclear innovation bills in 2018 and 2019 jumpstarted innovation infrastructure and regulatory modernization. More recently, a trifecta of major energy bills in the 117^th  Congress featured tech-inclusive policies that boost existing and new reactors alike. Three major fourth generation reactor projects have been selected for public-private partnerships in Idaho, Wyoming, and Washington. The largest competitive ecosystem of reactor startups in American history has emerged.

The revival of American nuclear industry is no more apparent than in the resurrection of its long-time leader, Westinghouse. Following its bankruptcy, Toshiba sold Westinghouse to the Canadian firm Brookfield Business Partners, which specializes in turning companies around. Refocusing away from its troubled construction business line, Westinghouse emerged from bankruptcy to reestablish its design competencies and core nuclear fuel trade. This October, with the turnaround complete, Brookfield sold Westinghouse for $8 billion to one of its long-term investment branches and Canadian-based Cameco, the largest private uranium miner in the world.

Renewed Geopolitical Influence

A strengthened Westinghouse is already paying significant dividends for U.S. foreign policy interests. When Russia initially invaded Ukraine in 2014, Ukraine faced the fact that it relied on 15 Russian-designed VVER reactors for more than half of its electricity supply and required imports from Russia of compatible fuel rods and assemblies. A revived U.S. government program worked with Westinghouse to qualify alternative fuel assemblies. By early 2022, more than half of Ukraine’s VVERs ran on Westinghouse-provided assemblies manufactured in Sweden. Ukraine now has a deal with Westinghouse to provide assemblies for all of their VVERs, completely ending dependence on Russian nuclear services. Further, the Westinghouse qualified VVER fuel assemblies now provide other countries in Eastern Europe with a western fuel fabrication option.

An American export revival is occurring for reactors too. This October, Poland announced a major decision to source at least three AP1000s from the United States along with four reactors from South Korea. Not only does this cement the commercial basis for the Westinghouse revival, it also solidifies a U.S.-Polish relationship that has strengthened greatly due to joint support for Ukraine. Startup nuclear company NuScale Power is close to obtaining an order for their first foreign reactor in Romania. In November, Vice President Kamala Harris visited the Philippines and announced a deal to enter negotiations with the country to enter a treaty for nuclear trade. A nuclear cooperation deal, called a 123 Agreement, is a prerequisite to nuclear energy trade and the deal reflects U.S. attempts to economically counter Chinese influence in the Pacific.

However, the United States must remain mindful of how to balance geopolitical competition with China with our foreign policy goals. Kazakhstan, dependent on Russia to provide its uranium to global markets, is reorienting towards China as it seeks an alternative route for export. In a surprise move in September, and yet another sign of the potential geopolitical value of nuclear exports, China announced orders for two more AP1000s from Westinghouse.

Although restoration of nuclear trade between the United States and China during broader decoupling is challenging, the U.S. should nonetheless recognize its joint interests with China in the areas of nuclear safety, security, and non-proliferation. China remains on track to become the largest nuclear energy producer and is as interested as Western companies in displacing Russia in global nuclear markets. Collaboration in international forums like IAEA, regulatory support for nuclear newcomer countries, and even limited trade in non-sensitive nuclear commodities are all viable paths forward that the United States should seriously consider.

Regardless, Washington should not forget the foreign policy consequences of Westinghouse’s initial bankruptcy. While its operations and technology are primarily U.S. based, Westinghouse is a multi-national corporation and the federal government does not control its fate. The Polish deal is promising but a geostrategic nuclear deal is not sealed until atoms fission and electrons flow. The competitiveness of market economies depends on robust industries with many companies, so that the failure of one does not undermine global competitiveness in a strategic industry.