The U.S. is helping China build a novel, superior nuclear reactor

The Department of Energy is dusting off one of the old betamaxes of nuclear technology: The molten salt reactor. But with political will lacking at home, it will rise in China.

In 1973, the Nixon administration made a momentous decision that altered the course of civilian nuclear power: It fired the director of the renowned Oak Ridge National Laboratory, scuppering development of a reactor widely regarded as safer and superior to the complicated, inferior behemoths that define the global industry to this day.

Nixon banished a reactor that was virtually meltdown-proof, left comparatively little long-lived waste, made it more difficult to fashion a bomb from the waste, ran at friendlier atmospheric pressure instead of the potentially explosive pressurized environments of conventional reactors, and ran at much higher temperatures, making it more cost-effective as an electricity generator.

Under director Alvin Weinberg, Oak Ridge had built and run a small, experimental version of the so-called molten-salt reactor for five years. It wasn’t perfect but it was a good start, and inventor Weinberg was preparing to improve it. Then Nixon’s axe fell, leaving Oak Ridge all dressed up and nowhere to go as the keeper of a valuable, clean, safe nuclear energy technology—a technology that today could go a long way toward moving the world onto a much needed source of power that doesn’t emit carbon dioxide.

Decades later, the U.S. Department of Energy (which owns Oak Ridge) is slowly reawakening to Weinberg’s vision. But this time, rather than build a molten-salt reactor itself—the country currently lacks the political will and funding to do so—the U.S. is helping others.

Fortune has learned that DOE plans to sign a 10-year collaboration agreement with China to help that country build at least one molten-salt machine within the next decade. And in a smaller development, Oak Ridge publicly announced in January that it will advise Terrestrial Energy, a privately held Canadian start-up, on development of a molten-salt reactor that draws on Weinberg designs and on the reactor scheme that briefly hatched at Oak Ridge after Weinberg left.

The idea from the U.S. perspective—especially with the larger DOE collaboration with the Chinese Academy of Sciences—is to foster a reactor that could eventually gain hold in the U.S.

“The Chinese will be doing work and sharing information with us, and we’ll be applying our expertise and supporting them,” Oak Ridge nuclear engineer Jess Gehin tells Fortune. “They’re going to build a reactor there [in China]. Hopefully one will get built in the U.S., but there isn’t any concrete plan for that.”

In recent years, China has committed some $400 million to development of two molten-salt reactors at the Shanghai Institute of Applied Physics, which is part of the Academy. China first announced its plans in early 2011, and at one point was targeting this year for completion of a tiny pilot version of its first, on the way to a full blown demonstrator by 2024, rated at 100 megawatts—a size that fits the emerging trend for small reactors. Its target dates have shifted a few times; it could benefit from DOE’s help. A second molten-salt reactor based on a variation of the first is due within 10 to 20 years.

“The Chinese, being relatively new to it, need technical support,” says Gehin, who leads Oak Ridge’s efforts to integrate reactor technology research and development projects. “If they follow through and build a test reactor, there’s a lot of useful information that we could get from that.”

The 10-year cooperative research and development agreement, or CRADA, ratchets up a smaller “memorandum of understanding” that the Department of Energy and China signed in late 2011 to collaborate on the same technology. With the new installment, China is contributing “a significant amount of money,” Gehin says.

The collaboration will not initially focus on a replica of Weinberg’s experimental reactor. Weinberg used a liquid fuel, mixing uranium with molten salts that would flow through the reactor serving as both the fuel and the coolant. The U.S. Department of Energy is specifically helping China develop a machine that uses solid, pebble-shaped fuel, but that will use flowing molten salts as the reactor’s “coolant.” (In a nuclear power system, coolants absorb heat from fission reactions and transfer it to water, creating steam to drive a turbine. Conventional reactors typically use ordinary water to cool reactions, and are called Light Water Reactors, or LWRs.)

China plans to eventually build a liquid fuel molten-salt reactor as well. The DOE collaboration will help. To help increase their effectiveness, China plans to run the reactors not on uranium but on thorium, which enhances the reactor benefits.

Nuclear energy is a strong part of China’s plans to cut back its reliance on the coal-fired power plants that are choking its cities with deadly pollution and spewing environmentally hazardous carbon dioxide. The two molten-salt reactors are just one of several reactors under development in China based on unconventional designs; China is also building more conventional reactors than any country.

The new reactors have high level support in China, where Jiang Mianheng, the son of former Chinese president Jiang Zemin, oversees them. Last March, Beijing ordered the Shanghai Institute to accelerate development of them.

The younger Jiang has outlined plans to use alternative reactors not only for electricity, but also as sources of clean heat for high temperature industrial processes which today run on CO2-emitting fossil fuels, to help gasify coal, to help produce environmentally friendly methanol fuel, and for other purposes.

Meanwhile, Canada’s Terrestrial Energy is also eyeing the industrial heat market, as well as electricity generation—especially for off-grid locations—for its molten-salt reactor. Terrestrial’s development deal with Oak Ridge is a short term consulting arrangement which could help meet its goal of building such a reactor by the early 2020s.

Oak Ridge will advise Terrestrial on things like salts and heat exchangers, and how to combat corrosion. The Terrestrial reactor will initially run on liquid uranium fuel. It’s based on a designed called the “Denatured Molten Salt Reactor,” which Oak Ridge conceptualized but never built in the 1970s as a follow up to the earlier reactor. The DMSR uses low-enriched uranium, rather than the more highly enriched uranium that Oak Ridge used in the experimental MSR which was to have bred additional fuel. Weinberg wanted to ultimately use thorium.

“If the DMSR is the basis of your design, you’d obviously want to go back to the original lab that has all the data, that has all the know-how; Oak Ridge National Laboratory is that lab for the DMSR,” Terrestrial CEO Simon Irish says.

China probably wouldn’t dispute that.

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