Viewpoint

We are frequently asked by investors what our policy is towards nuclear power, and whether we would invest in it, given that it is relatively low in carbon dioxide production? […]

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By Clare Brook co-founder WHEB Asset Management

We are frequently asked by investors what our policy is towards nuclear power, and whether we would invest in it, given that it is relatively low in carbon dioxide production? Our stance on nuclear energy has always been that it is not a sustainable investment for the following reasons;

Investors must weigh up potential risks in the light of potential returns. With nuclear power, while the likelihood of a catastrophe is low, when a catastrophe does occur, the consequences are so far reaching as to be inestimable. Such risks are off-putting to investors, voters and anyone being asked to consider having a nuclear plant built near where they live.

The costs of construction and subsequent decommissioning are running ever higher. There remains the unsolved problem of waste. According to the Environmental Protection Agency, nuclear waste remains active for at least 10,000 years.

Uranium is a finite resource; estimates suggest supplies will last between 30 and 60 years. It is also very carbon intensive to extract. Finally the time frame from planning to construction can be as long as 20 to 30 years.

Now, in the wake of Japan’s worst civilian nuclear disaster and the second worst worldwide since Chernobyl, our stance is strengthened, particularly as nuclear power is losing the support of many governments. The German Chancellor, Angela Merkel, a physicist by training, said last week, ‘The catastrophe from Fukushima, which we still do not know the full effects of, has changed my personal opinion of nuclear power and its risks’ and her government has pledged to halt all new nuclear power projects.

Other governments are following the German lead, and even countries with ambitious nuclear build-out plans have checked their course, China has suspended approvals for new plants and India is reviewing its new reactors.

So what of the alternatives? Clearly a return to coal plants is not feasible in the context of climate change. Gas fired plants may plug a temporary gap. But the longer term future must lie with renewables. Already, with wind and solar, the cost curve is dropping so that grid parity will be reached in the near future.

Critics of renewables say that they are reliant on government subsidies (unsurprising with a new industry), yet nuclear power has never been able to stand on its own without government subsidies.

New EU renewable energy legislation due to be reviewed later this year will include new features such as extra tariffs for sources such as biogas, which can provide flexible power, support for energy storage and other incentives to combine different types of renewables to enable 24/7 power provision.

A transition to renewable energy generation must be accompanied by a change in national and international energy policies. Instead of a focus on a few sources of power generation broadcasting to the populace, every building must move to being its own power source with solar panels on each roof and a smart grid to form the connection.

Above all, we should dare to dream.