Add Bill Gates to the list of executives whose businesses have been ensnared by the Trump administration’s battle with China over technology and trade.
The tech tycoon and philanthropist said in an essay posted late last week that a nuclear-energy project in China by a company he co-founded called TerraPower LLC is now unlikely to proceed because of recent changes in U.S. policy toward China. That leaves TerraPower, which had been working on the China project for more than three years, scrambling for a new partner and uncertain where it might be able to run a pilot of the nuclear reactor it has been developing, according to company officials.
Mr. Gates, TerraPower’s chairman, helped start and fund the Bellevue, Wash., company, which incorporated in 2008, in a long-term bid to make nuclear reactors smaller, less expensive and safer than current nuclear energy sources. The company has been developing something called a traveling-wave reactor, which uses depleted uranium as fuel, something that TerraPower says can improve safety and reduce costs.
Regulatory restrictions and limited federal funding made building the facility in the U.S. difficult and led TerraPower to look for partners abroad, Chief Executive Chris Levesque said in an interview. TerraPower signed a deal in 2015 with state-owned China National Nuclear Corp. to develop the technology, and, in 2017, agreed to build a demonstration reactor to test the technology in Cangzhou, about 130 miles south of Beijing. The project was to be the first demonstration of TerraPower’s technology.
Maxym Marusenko/NurPhoto/Zuma Press The Energy Department, led by Rick Perry, announced rules in October that require a high degree of assurance that nuclear technology wouldn’t be used for military or other unauthorized purposes.
But the Energy Department announced new rules in October that, while not banning all nuclear deals with China, require a high degree of assurance that the technology wouldn’t be used for military or other unauthorized purposes. At the time, Energy Secretary Rick Perry cited national-security concerns about China obtaining nuclear energy “outside of established processes of U.S.-China civil nuclear cooperation.”
The policy change was part of an effort by the Trump administration to thwart China’s pursuit of critical U.S. technology, and came amid a broader trade battle between the two economic giants. The administration has placed tariffs on $250 billion of Chinese imports, from computer chips to seafood to bicycles, and has threatened to increase levies by March 1 unless it can strike a new trade deal with Beijing.
TerraPower, which has 180 employees, was counting on the China pilot to validate technology it has been working on for more than a decade. The company now is trying to figure out its options, Mr. Levesque said. “We’re regrouping,” he said. “Maybe we can find another partner.”
The Energy Department is also encouraging TerraPower to look beyond China. The agency “sees opportunities for global exports of this technology to nations who seek to develop their own civilian nuclear-power programs for peaceful purposes,” department spokeswoman Shaylyn Hynes said.
Finding another partner won’t be easy. The cost of developing a demonstration reactor is roughly $1 billion, Mr. Levesque said. That price tag limits potential partners to wealthy nations that are already funding nuclear energy. Those countries also need to have agreements with the U.S. government that permits the sort of partnership that TerraPower has with China.
The United Arab Emirates, Saudi Arabia and Turkey could be options down the road, said Randolph Bell, director of the Global Energy Center at the Atlantic Council, a nonpartisan think tank in Washington. But China’s national mission to develop nuclear energy as well as the massive size of its market make it difficult to replace, he said.
“The scale of China is much greater than anywhere else,” Mr. Bell said.
The threat of intellectual-property theft in China is real, Mr. Bell said. But the new U.S. policy—and the lack of a national consensus to develop domestic advanced nuclear-power sources—limits American companies’ avenues for developing nuclear-energy advances and risks leaving China to develop the next generation of such technology on its own, he said.
Mr. Gates, in a year-end essay posted on his personal website on Saturday, said TerraPower might be able to build its nuclear-reactor pilot project in the U.S., but only if there are changes to regulation. The Microsoft Corp. co-founder said he intends to advocate for those changes in 2019 because he sees nuclear power as “the only carbon-free, scalable energy source that’s available 24 hours a day.”
“The world needs to be working on lots of solutions to stop climate change,” he wrote. “Advanced nuclear is one, and I hope to persuade U.S. leaders to get into the game.”
Write to Jay Greene at Jay.Greene@wsj.com
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