Coal is dirty – it releases carbon when burned. So that’s not the answer. But we still depend on it for about 20% of our electricity, according to the US Energy Information Administration (EIA).
Natural gas is cleaner and produces about 40% of our juice. But even this fuel is “a massive source of carbon emissions” – about half that of coal (as long as methane is not released during gas extraction).
Renewable energies – solar and wind – are even better and also generate around 20% of our juice. But they are years away from being ubiquitous, and even then they may continue to have limitations. Wind, after all, doesn’t blow 24 hours a day, and the sun doesn’t shine all the time.
If only there was something that ticked all of those boxes: something without carbon, something that generates electricity around the clock, something that doesn’t need the sun to shine or the wind to blow.
There is, but a lot of Americans don’t want it: nuclear power. Is their opposition justified or wrong?
Nuclear power is one of those NIMBYs – not in my backyard – things that scare a lot of people. We’ve only had one major problem with nuclear power in this country: a partial reactor meltdown at the Three Mile Island power plant in Pennsylvania in 1979.
It was scary enough to turn public sentiment against nuclear power, and even today, more than four decades later, Americans remain ambivalent about it. For example, a 2019 Gallup poll was also split, with 49% of Americans in favor of maintaining the use of nuclear power and 49% against. But support is clearly correlated with education: 60% of college graduates support nuclear power, while 37% of those with a high school diploma or less do. And for what it’s worth, there’s a clear ideological divide: 65% of Republicans are in favor of nuclear while 42% of Democrats do.
Public perception has also been influenced by other accidents, including Chernobyl in the Soviet Union in 1986 and more recently the Fukushima Daiichi disaster in 2011 in Japan, when an underwater earthquake in the Pacific caused a tsunami. which submerged the facility, resulting in three nuclear fusions, three hydrogen explosions and the release of radioactive material.
These are legitimate fears. But their reaction caused new problems. After Fukushima, for example, Germany – where earthquakes are relatively rare and usually minor – decided to shut down all of its nuclear power plants by 2022. But these plants once generated almost 30% of Germany’s electricity, and this capacity has not been fully exploited. replaced, despite increased production of wind, solar, hydroelectricity and natural gas.
The result? Rising natural gas prices and growing dependence on Vladimir Putin. This week again, the Russian dictator vowed to come to the aid of European countries which may feel the lack of energy this winter. The energy problems of Germany – and Europe – are a great gift for Putin, who has long dreamed of greater Kremlin influence over Western Europe and of separating it from the United States. The long-standing political disagreement between Washington and Berlin over the Nord Stream pipelines, which will soon carry gas from Russia to Germany, is the best-known example. Putin has some very good cards to play and he is playing them.
Perhaps the United States has overreacted to nuclear warnings as well. Last December, notes the EIA, only one nuclear reactor has been commissioned since 1996, when there were “23 commercial nuclear reactors closed at 19 sites at various stages of decommissioning.”
Among the states that are phasing out nuclear power is California. Despite power outages and growing demand to cope with the extreme heat due to the climate, it is moving forward with plans to shut down the state’s last two operating reactors – at the Diablo Canyon plant in halfway between Los Angeles and San Francisco – by 2024 and 2025, respectively.
Diablo is found near several fault lines – cracks in the earth’s crust that are potential locations for earthquakes. That seems like a good reason to shut it down. Yet this practical question remains: The power plant’s two reactors generate tons of electricity, or about 9% of California’s electricity, and it’s unclear how Diablo owner Pacific Gas and Electric Co. (PGE) , will replace this ability. The San Francisco-based company is currently bankrupt after being fined $ 2.1 billion for starting a series of deadly wildfires.
Fears of a nuclear accident are justified, although technology and safety procedures may be much better today. Nuclear reactors can now be built – proponents argue – with technical advancements to avoid the repetition of past accidents. A savvy technologist, Microsoft MSFT,
co-founder Bill Gates, founded TerraPower in 2008 on this belief. The federal government’s Advanced Reactor Demonstration Program (ARDP) recently selected TerraPower to prove it can build a better reactor; the private company responded by promising to build a “fully functional advanced nuclear reactor within seven years.”
How is nuclear power out of favor? Even with its current downdraft, the S&P 500 SPX,
is still up around 16% year-to-date and 57% over the past three years. In contrast, the few bullets in the nuclear space (most companies are private) show how unloved the industry is. An ETF, for example, is the VanEck Uranium + Nuclear Energy NLR,
which is up 13% year-to-date and 6.7% over the past three years – huge performance gaps compared to the overall market. Its holdings consist largely of electric utilities.
An individual stock to consider is BWX Technologies Inc. BWXT,
a Virginia-based supplier of ânuclear components and productsâ. It is down 2% this year and stable for the past three years.
From an investment perspective, these are the reasons I am intrigued. A disadvantaged industry that manufactures a product whose demand is increasing. If you’re a nonconformist, this carbon-free way of generating electricity that doesn’t depend on the wind or the sun might be worth a look.