India’s Answer to Trump on Climate Is Nuclear Power

This isn’t India’s first nuclear push. “Targets have been set, and they’ve always been missed,” says M.V. Ramana, professor at the Liu Institute for Global Issues at the University of British Columbia. “They’ve essentially built almost nothing.”One obstacle is a 2010 law that holds companies liable in the event of a nuclear accident. General Electric Co. Chief Executive Officer Jeffrey Immelt has said it makes investing in India too risky; Toshiba Corp., owner of reactor maker Westinghouse Electric Co., said in February it needs liability reform before proceeding on six Indian plants. (Westinghouse filed for bankruptcy protection in March.) A €7 billion ($7.9 billion) project involving Areva SA of France has been on hold for almost seven years. India’s focus on nuclear power is misguided, regardless of whether the reactors are imported or local, says Tim Buckley, an Asia expert at the Cleveland-based Institute for Energy Economics and FinancialAnalysis. “It’s absolutely bizarre that they would bother,” he says, arguing that n uclear power can’t compete against lower-cost renewable alternatives such as wind and solar, which now account for close to 16 percent of India’s power capacity.

by Bruce Einhorn, Rajesh Kumar Singh, Stephen Stapczynski, and Iain Marlow

Business has been slow at a Larsen & Toubro Ltd. factory in western India that makes parts for nuclear power plants. The Mumbai-based construction company opened the plant in 2012, hoping to profit from government plans to build more reactors in a country where more than 200 million people lack access to electricity. But most of the projects have gone nowhere, and L&T’s facility in Hazira is running at one-fifth of capacity. “That’s not the best use of resources,” says Senior Vice President Y.S. Trivedi.

L&T’s factory could soon be humming. On June 1, Indian Prime Minister Narendra Modi and Russian President Vladimir Putin agreed that the two countries would work together to expand India’s largest nuclear power station. In mid-May, Modi’s cabinet approved a plan to add 10 Indian-made reactors with a combined output of 7,000 megawatts, roughly double the country’s current nuclear capacity.

The world’s third-biggest producer of carbon emissions, India sees nuclear power as a way to reduce dependence on coal-burning power plants, which supply almost 60 percent of its electricity. (Nuclear accounts for less than 2 percent at present.) Modi wants to position himself as a leader in the fight against climate change at a time when the global effort is under attack from President Trump. In his June 1 announcement that the U.S. will withdraw from the Paris agreement, Trump said the deal favored India and China. A few days later, during a state visit to France, Modi trumpeted India’s commitment to the 2015 accord, saying “we will work and walk together with others to leave a gift for future generations.”

Like Trump, Modi came into office promising to boost local manufacturing, and he wants to use nuclear power to further his “Make in India” campaign. India has 22 reactors, almost all designed by state-owned Nuclear Power Corp. of India Ltd. (NPCIL) and built by companies such as L&T. “Our domestically designed reactors are the core of our nuclear strategy,” says Atomic Energy Secretary Sekhar Basu. “The foreign reactors are add-ons.”

Government boosterism aside, India is actually a laggard in nuclear technology. World powers banned the country from importing nuclear fuel and technology for civilian purposes for more than three decades as punishment for testing a nuclear weapon in 1974. Although the U.S. lifted the prohibition in 2006, NPCIL is still playing catch-up. Its reactors have 30 percent less capacity than designs from foreign companies and use older, simpler technology.

This isn’t India’s first nuclear push. “Targets have been set, and they’ve always been missed,” says M.V. Ramana, professor at the Liu Institute for Global Issues at the University of British Columbia. “They’ve essentially built almost nothing.”

One obstacle is a 2010 law that holds companies liable in the event of a nuclear accident. General Electric Co. Chief Executive Officer Jeffrey Immelt has said it makes investing in India too risky; Toshiba Corp., owner of reactor maker Westinghouse Electric Co., said in February it needs liability reform before proceeding on six Indian plants. (Westinghouse filed for bankruptcy protection in March.) A €7 billion ($7.9 billion) project involving Areva SA of France has been on hold for almost seven years.

To improve India’s nuclear know-how, Modi could turn to China for help. But that’s an unlikely prospect, says Ramana; the two countries fought a war in the early 1960s and still have unresolved border disputes. That leaves Russia’s Rosatom Corp., which designed the reactors for Kudankulam Nuclear Power Plant, India’s largest. Because it’s state-owned, Rosatom is less likely to be spooked by India’s liability law, passed after work on Kudankulam began in 2002. “There may be no other option besides Russian vendors at this point,” says Vipin Narang, an associate professor of political science at MIT.

India’s focus on nuclear power is misguided, regardless of whether the reactors are imported or local, says Tim Buckley, an Asia expert at the Cleveland-based Institute for Energy Economics and Financial Analysis. “It’s absolutely bizarre that they would bother,” he says, arguing that nuclear power can’t compete against lower-cost renewable alternatives such as wind and solar, which now account for close to 16 percent of India’s power capacity.

L&T expects annual production at its Hazira plant to reach about 40 percent of capacity this year and sees further increases as Modi’s plan gains momentum. “We have demonstrated that our technology is robust and safe,” says Trivedi, “and gives more value for money.”

The bottom line: Modi wants to bolster his green credentials by doubling India’s nuclear power capacity.