Energy News Today

Is nuclear power ethical for investing?

John Berry is co-founder and chief executive of ethical fund manager and KiwiSaver provider Pathfinder Asset Management.

OPINION: A reliable energy supply is as essential for our global economy as a reliable air supply is for our body.

Energy generation needs to be affordable, safe and dependable or our modern world cannot function.

Germany relies on Russia for a third of its natural gas, which is problematic given Russia is reacting to Germany supporting Ukraine.

Russia is choking supply, and there’s discussion the taps may turn off during the next northern winter. That would be a social and economic disaster for Germany.

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In the United Kingdom renewable energy generates more power than fossil fuels, but solar isn’t so helpful at night nor wind generation on calm days.

New Zealand has a similar challenge with hydro generation when there’s drought and low lake levels.

For those wanting to align values with investing there’s little disagreement about avoiding nuclear weapons. Nuclear power is a much more complex and divided issue.

This was highlighted earlier this month when European Union lawmakers controversially voted to classify some future natural gas and nuclear generation as ‘green’ investments.

The Kernkraftwerk Isar nuclear power plant in Germany, which is still dependent on Russia for a large portion of its energy imports.
Lukas Barth/Getty Images

The Kernkraftwerk Isar nuclear power plant in Germany, which is still dependent on Russia for a large portion of its energy imports.

Safety is the first risk that springs to mind with nuclear. Disasters have been caused by a tsunami, human error and construction quality standards.

Recently South Korea was embroiled in scandal when thousands of counterfeit parts were found in its nuclear plants.

In terms of affordability, nuclear power plants are relatively cheap to operate. However, and it’s a big however, they take a very long time to construct and are immensely expensive. They also need careful and expensive decommissioning at the end of their life.

There are serious concerns about cyber weaknesses, terror attacks and the need to securely store waste pretty much forever.

On the positive side, nuclear has low carbon emissions, which is critical in a world concerned with climate change. Coal generates over a third of the world’s electricity but has massive emissions.

Burning coal for power generation is also responsible for millions of deaths globally. In terms deaths per unit of energy produced it vastly outstrips deaths caused by nuclear or renewables.

Nuclear has never quite delivered on its promise of cheap and totally safe power. More advanced technologies and processes have always been on the cusp of reality.

This is true at the moment as a new generation of small modular reactors (SMRs) are being developed by listed companies like Rolls Royce in the UK and NuScale in the United States.

While SMRs will produce only 20% of a conventional nuclear plant’s power, they are expected to be built relatively quickly and cheaply on a production line rather than constructed on-site. This should bring efficiencies like making toasters in a factory rather than building each one individually in everyone’s kitchen.

Technology needs to provide a solution for greener power generation, and quickly, says John Berry.
Ricky Wilson/Stuff

Technology needs to provide a solution for greener power generation, and quickly, says John Berry.

I struggle with nuclear as an energy source given safety and waste storage fears. Yet it is forming part of the mix given de-carbonising global energy is a priority over the decade ahead.

There’s little point converting the world’s cars to electric and then burning coal to power them.

We need our world to decarbonise to limit the impact of climate change, yet we also need global energy sources to be affordable, safe and dependable. More coal power generation is not the answer.

Technology needs to provide a solution, and quickly, either scaled up battery storage for wind and solar, or failing that a new generation of safe and low cost SMR nuclear plants. I know which option I’d prefer.

– This commentary is general information only – it’s always a good idea to seek professional financial advice for your personal circumstances.

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2022-07-20 17:33:00

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