Can nuclear help with the energy transition?

Whitman Insights 2024 Nuclear

The nuclear age might not be behind us after all

The 2024 Academy Awards ceremony is next month, and the film Oppenheimer (2023) is the frontrunner with 13 nominations, including Best Picture. For readers unfamiliar with the plot, Oppenheimer tells the story of the enigmatic American physicist Rober Oppenheimer and his considerable contribution to the development of, and eventual successful detonation of the first nuclear weapon in July 1945.  The so-called Trinity Test is generally accepted as the opening act of the atomic age. Thankfully for humanity the science behind the atomic bomb has other more peaceful applications, specifically the generation of electrical power. The first nuclear power plants began to appear in the 1950s and whilst the production of power via this technology has not been without incident, critics will point to Chernobyl and more recently Fukushima Daiichi as examples of this, nuclear power has had relatively good safety record. We all forget that the byproducts of burning coal and oil, whilst not necessarily catastrophic in the near term, are far from healthy over the medium to long term. 

Greener than we think 

For various reasons the nuclear industry in the developed world has had a PR problem for several years. In fact, Germany phased out their nuclear fleet whilst at the same time committing to a carbon free future. A strange decision given that nuclear is a low-carbon baseload supplier of electricity.  BCA Research published a paper* on nuclear energy last month which has grabbed our attention, the gist of which has been corroborated by other things we have read and listened to over the last eighteen months. Two important developments bode well for a renaissance in the nuclear power industry. First, renewable energy such as wind and solar cannot provide baseload power and whilst gas is preferable to coal, or indeed oil, both produce carbon dioxide as a byproduct. Nuclear energy does not. Second, the invasion of Ukraine reminded policymakers in Western Europe that energy security matters. The radioactive feedstock and technical know-how required for a nuclear power industry are largely available internally, or at the very least from an ally. 

COP28 was a watershed moment for the nuclear industry

At United Nations COP28 in December last year twenty countries signed a commitment to triple nuclear energy capacity by 2050. The sums involved are significant and will require extending the life of existing reactors and also building new ones. We intend to do further work on the global nuclear ecosystem and identify investment opportunities. Doing so fits within our existing thematic investment philosophy which includes a megatrend that encourages us to focus on the requirement for alternative energy sources globally.

*BCA Special Reports: A Primer on Nuclear Energy (January 2024)

Disclaimer: This communication is issued and approved by Whitman Asset Management Limited (“Whitman”) which is Authorised and Regulated by the Financial Conduct Authority. The value of investments may fall as well as rise and your capital is at risk. The information does not constitute financial advice or recommendation and should not be considered as such. Conduct your own research and seek independent financial advice when required.

Although Whitman uses all reasonable skill and care in compiling this report, no warranty is given as to its accuracy or completeness. The opinions expressed accurately reflect the views of Whitman at the date of this document based on our views at such time regarding market conditions and other factors, may depend upon assumptions or projections that may not prove to be correct, and are subject to change. The opinions stated are honestly held, they are not guarantees and should not be relied upon. 

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