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Investment advice? Some big worries against investing in nuclear power

IW Long Reads: Is Nuclear Energy On The Road To Ruin Or A Sustainability Silver Bullet?  How the world can reach net zero target without resorting to nuclear power, Investment Week,   Anna Fedorova-22Mar 21, Anyone who has seen the TV series Chernobyl knows that when things go wrong with nuclear power the consequences are dire. And while it may seem that matters have evolved since the days of the Soviet Union, the nuclear disaster in Fukushima that happened just ten years ago suggests otherwise.
……….[Elizabeth Stuart, analyst, sustainability research at Morningstar Europe], says  with every other aspect of sustainability, “there is no silver bullet and nuclear is so very far from a perfect solution”. 

For example, even when nuclear reactors are running properly, they use “tremendous amounts of water to cool the reactors”, while mining and refining the Earth’s finite resources of uranium ore also requires a large amount of energy.

And of course, there is the question of waste management over many generations, given that uranium rods remain dangerously radioactive for 10,000 years.

“There are also second order effects to investment in nuclear energy such as the certainty that this research can be used to create nuclear weapons and that plants are a high value targets should a war break out,” Stuart adds.

“Disruption in a nuclear plant invariably won’t remain within country borders so there is also the issue of diplomacy to consider. In short, nuclear is a textbook example of a controversial stock and any investor would be wise to question its place in an ESG portfolio.” ……………….

the balance is expected to shift towards renewables, which is expected to lead to a decentralisation of the power grids, posing further challenges for nuclear.

Jonathan Cohen, partner at Howard Kennedy, says: “Currently, nuclear power projects are being developed at very high costs and it is difficult to finance new projects without large state expenditure.

……………wide scale support from the private sector just is not there, with investors increasingly choosing to stay on the safe side and invest in renewables instead.

Robeco, for example, excludes electricity utilities that generate more than 30% of their power from nuclear sources from all of its sustainable strategies, and does not invest in nuclear power at all in its RobecoSAM Smart Energy Equities strategy.

This decision is driven by a combination of “unique risks”, negative environmental impacts, relatively high costs of nuclear and the “impressive technological and cost developments in both renewables and storage technologies”.

Mark Campanale, founder of the Carbon Tracker Initiative, says: “Our view is that given so many cheaper renewable energy resources available, why would anyone want to go to the expense of what is an uncompetitive technology on price, one which takes hundreds of years to clear up its waste?”

According to Eduardo Monteiro, co-CIO at Victory Hill Capital Advisors, even if nuclear is to play a “robust role” in a country’s energy supply, it has too many shortcomings as a sustainable investment alternative, and should therefore be avoided.

“The waste generated will be a legacy for future generations to deal with and as such investors need to think about the very real negative impact these holdings will have in both the broader sense but also to financial returns,” he says.

“Such managers may naturally prefer to invest in renewables to support their interpretation of ESG investing and the transition to ‘clean’ energy more widely,” he says.

March 23, 2021 - Posted by | 2 WORLD, business and costs

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