Fusion energy, often referred to as the “Holy Grail” of energy, holds the promise of being a plentiful, cost-effective, and clean energy source for the next century. Its potential benefits, such as compatibility with existing power plant systems, small footprints for urban environments, and lower operation costs for both fuels and plants, paint an optimistic picture of the future. However, the global race is on. The US and our allies are in a competitive marathon with China to achieve three key objectives:
Fund research, workforce development, and construction
Extend US/Allied technology leadership
Build an allied supply chain
All of these objectives require unwavering focus, substantial funding, and seamless cooperation. As of the end of 2023, private fusion companies have made significant strides, with the FIA estimating that these companies have raised over $7.1B and over $1.8B in new Fusion energy funding, bringing the total up to $9B. Notable funding rounds in 2024 include:
Pacific Fusion - $900 million (Series A)
Zap Energy - $130 million (Series D)
Tokamak Energy - $125 million
Xcimer Energy - $100 million (Series A)
Marvel Fusion - €70.3 million (approximately $76.5 million, Series B)
The United States will allocate $1.4B for fusion energy in the 2024 Appropriations Bill, including $790 million to the Department of Energy’s Office of Fusion Energy Sciences and the National Ignition Facility, with another $690 million in a separate budget allocation through the National Nuclear Security Administration (NNSA).
China continues to outspend the US in both funding and facilities for fusion energy. The CCP is driving state-funded facilities, including a new $570 million fusion research park in eastern China under construction called CRAFT, which is expected to be completed next year. China's rapid advancements, such as setting world records with its EAST tokamak and filing more fusion-related patents than any other nation since 2011, indicate a closing gap. According to the Financial Times, Energy Singularity is actively leveraging developments from Commonwealth Fusion Systems and MIT.
According to the Fusion Energy Worldwide Demand Market Report by Ignition Research, fusion energy is poised to become a trillion-dollar market by 2050, driven by several key factors. The report forecasts a 79% growth in global electricity demand by 2050, with fusion energy projected to supply up to 23.9% of worldwide electricity generation. This significant market share is expected to emerge as fusion addresses the "electricity gap" created by underestimated demand from sectors such as EV charging and hyper-scale data centers, which could increase electricity needs by 19% by 2050.
Fusion energy's unique ability to provide directly dispatchable 24/7 power positions it as a crucial solution for meeting the growing energy demands of the future. As the only green electricity source that can seamlessly replace current water-heating power plants, fusion is set to play a pivotal role in the future energy landscape. This potential could lead to its trillion-dollar market valuation by 2050. Ignition research predicts that in 2050, fusion energy could produce up to 24% of global electricity and that ~1000 fusion-based power plants would be required at 1GW/machine.
This trillion-dollar market represents a significant strategic opportunity and risk for the US and our allies. It will represent energy independence, millions of skilled jobs, and a key lever of strategic leverage globally. Energy and a skilled workforce are the underlying foundation of our economy. Leading the trillion-dollar market is vital for our economic growth and national security.
According to the Wall Street Journal, AI, EVs, reshoring manufacturing, house growth, industrial expansion, and every other business and consumer require clean energy to drive our economies. The power has to come first and be available or these efforts will fail, and our economies will stall.
It is crucial to secure a reliable and sufficient power supply before new data centers or factories can be built and become operational. Data centers, for instance, require substantial amounts of electricity to support various functions such as running servers, cooling systems, and networking equipment. The power demand is so significant that it often constitutes these facilities' most considerable operating cost.
Typically, data centers rely on electricity from the local grid but also incorporate backup systems to ensure uninterrupted operation. Similarly, new manufacturing facilities increasingly demand heavy power due to the integration of power-intensive robotics and automation technologies. This trend is driven by the need to enhance productivity and address labor shortages. As a result, industrial developers must consider whether to invest in infrastructure capable of delivering substantial power capacities to meet these demands. Both sectors face grid capacity and transmission infrastructure challenges, which must be addressed before construction.
The race to lead the fusion energy market has significant geopolitical implications for the United States and China. China’s belt-and-road initiative is a prime example of how China leverages infrastructure and energy projects to drive policy and economic agendas. As fusion energy holds the potential to revolutionize the global energy landscape, the country that achieves commercial viability first will gain substantial financial and strategic advantages. China's aggressive investment in fusion research, including an estimated $1.5 billion annual government funding, surpasses U.S. efforts and threatens America's historical leadership. The U.S. still leads private sector investment and innovation, with 25 out of 45 global fusion companies and ~$9B in total funding. The country that successfully commercializes fusion energy could potentially control the nuclear energy sector, providing an almost limitless, clean, and affordable energy source. This first-mover advantage would bolster energy independence and offer significant leverage in international relations and climate negotiations. As energy has historically shaped global alliances and rivalries, the outcome of this technological race could significantly influence the balance of power between the U.S. and China in the 21st century.
The approaches to fusion energy development in the United States and China exhibit significant differences, reflecting their distinct political and economic systems. China adopts a centralized, government-driven strategy, investing heavily in fusion research, almost double the U.S. budget. This substantial funding supports rapid infrastructure development, including state-of-the-art facilities like the CRAFT research center and the ambitious China Fusion Engineering Test Reactor (CFETR) project. In contrast, the United States relies on a more decentralized approach, blending public funding with a robust private sector. This diversity fosters innovation but needs help with aging research infrastructure.
Regulatory frameworks also differ, with the U.S. Nuclear Regulatory Commission recently voting to regulate fusion separately from fission. At the same time, China has just released a draft of its amended Atomic Energy Law to guide nuclear power regulation, including fusion. China's coordinated effort is further exemplified by its national industrial consortium, China Fusion Energy, uniting state-owned enterprises, universities, and private firms. The U.S., meanwhile, is working to consolidate its efforts under a single program as outlined in the Department of Energy's 10-year plan. These contrasting approaches reflect broader differences in governance and economic models, with China's state-driven strategy aiming for an industrial prototype by 2035, while the U.S. relies more heavily on private-sector innovation to achieve similar goals. The race between these two powerhouses in fusion energy development highlights their technological capabilities and underscores the geopolitical implications of achieving this transformative energy source.
China: The Chinese government reportedly invests nearly $1.5 billion annually in fusion energy, almost double the U.S. fusion budget. China has a centralized, whole-government approach with a coherent national strategy towards nuclear power at both federal and provincial levels.
U.S.: In 2024, the U.S. government allocated about $790 million for fusion energy research. The U.S. approach is more decentralized, with a mix of public and private sector efforts.
U.S.: The United States leads private sector investment and innovation, with 25 of 45 global fusion companies and $5.5 billion in total private funding.
China: China's private fusion sector is growing but has yet to develop, with investments totaling over $500 million.
U.S.: In 2023, the U.S. Nuclear Regulatory Commission voted to regulate fusion separately from fission, with plans to finalize fusion-specific regulations by 2027.
China: In April 2024, China released a draft of its amended Atomic Energy Law to guide the regulation of nuclear power, including fusion research and development.
China: China is rapidly building new, state-of-the-art facilities, such as the $570 million CRAFT research facility and the CFETR (China Fusion Engineering Test Reactor).
US: Many U.S. tokamaks are aging, with some being decades old.
China: Aims to have an industrial prototype fusion machine by 2035 and plans to train 1,000 new fusion physicists. The CFETR aims to achieve a net power output of 100 to 200 megawatts by the 2040s.
U.S.: The U.S. National Academy of Sciences suggested starting to operate a large-scale fusion power generator around 2035 to 2040 to achieve net-zero emissions in the power sector by 2050.
China: The China National Nuclear Corporation recently established a national industrial consortium, China Fusion Energy, which brings together 25 state-owned enterprises, four universities, and key private firms.
U.S.: The Department of Energy set out a 10-year plan in 2022 to coordinate all fusion-related work under a single program.
Private Sector Leadership: The U.S. is home to 25 of 45 global fusion companies, which have received a combined $5.5 billion in funding.
Investment: The U.S. fusion industry has attracted about 80% of the $7 billion global private investment in fusion over the past 3-4 years.
Innovation: U.S. companies are pursuing diverse approaches, including Commonwealth Fusion Systems' SPARC prototype and Helion Energy's pulsed fusion approach.
Aging Infrastructure: Many U.S. tokamaks need to be updated, some are decades old.
Government Funding: The U.S. government allocates about $800 million annually to fusion research, significantly less than China's estimated investment.
Government Investment: China reportedly invests $1-1.5 billion annually in fusion energy, nearly double the U.S. government’s fusion budget.
Rapid Progress: China's EAST tokamak has achieved world plasma temperature and duration records.
Infrastructure Development: China is building state-of-the-art facilities like the $570 million CRAFT research facility.
Long-term Planning: China aims to have an industrial prototype fusion machine by 2035 and plans to train 1,000 new fusion physicists.
China is gaining momentum in the fusion race, particularly in government-backed research and infrastructure development. The Chinese government's substantial and consistent investment and rapid technological advancements have positioned China as a formidable competitor. However, the United States significantly leads private sector innovation and investment. The diversity of approaches being pursued by U.S. companies and the sheer volume of private capital invested provides a strong foundation for breakthroughs.
While China is making rapid strides and may lead in some aspects of government-backed research, the U.S. still holds an edge in private-sector innovation and investment. The race remains close, with both nations possessing unique strengths. The ultimate winner may be determined by which country can most effectively combine government support, private sector innovation, and successful commercialization of fusion technology.