Nuclear energy, a touchstone of civic disharmony in the 1970s that has vanished from public debate in the past two decades, is about to make a stunning reappearance on center stage.
Suddenly transformed by time and forgiveness into a glowing modern alternative to oil and gas, the fossil-free fuel is being foisted on Congress and the utility industry as the best way to solve clean-energy mandates. If greenhouse gases and carbon emissions are the question, proponents say, then nuclear energy is the answer because, well, it produces exactly none of either.
The skeptics in us have to perk up anytime such sweeping claims are made because the nuclear industry has not exactly covered itself in glory over the past two dozen years. If this energy source is so perfect, it's fair to ask, why haven't profit-incented U.S. power executives already flocked to it, as they do with every other technology that saves or makes money?
The reality is that nuclear-powered plants are expensive to build and maintain, and their main competitor, natural gas, is cheap, plentiful and clean enough to be acceptable to all but the environmentalist extreme. Countries where nuclear energy has prospered, such as France, have nowhere near our natural-gas resources. You'd think that would be enough to end the argument.
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But there's no stopping the powerful impulse of President Barack Obama's campaign pledge to cut carbon emissions by 80% by 2050. And that means advocates will bend the science, environment and business case as they see fit to make nuclear look golden, even if it results in higher electric bills forever with little real difference in smog control.
Already there are around 100 nuclear plants in America, providing around 20% of our energy needs; look for those numbers to rise as high as 140 and 35% over the next two decades.
Hell on Earth at $2 trillion a year
The House passed the carbon cap-and-trade bill last month, and the Senate will pick up the debate in the fall. The first and most auspicious step was $18 billion in loan guarantees to the nuclear-power industry. So the clock has begun ticking for investors who believe, as I do, that anticipation tempered with patience is a speculator's most important weapon. It's time to determine how much impact the rules will have on nuclear-power companies' profits.I've got a few ideas along those lines, but bear with me for a moment while we go over the environmental issues real fast.
Federal atmospheric scientists appear solid in their defense of the notion that man-made climate change is accelerating in developed nations and could eclipse worst-case scenarios if left unchecked. They say heat waves and droughts will lengthen and grow more intense, harming livestock and crops. Combined with rising oceans, thinning fisheries, more insects and more wildfires, researchers paint a picture of hell on Earth that could cost up to $2 trillion a year in financial losses and infrastructure rebuilding by the next century.
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The bottom line on cap and tradeRoger Conrad, the editor of investment newsletter Utility Forecaster, discusses cap-and-trade legislation and how it could affect utilities.
The bill heading to the Senate would require companies to buy a permit for every ton of climate-altering gas, over a limit, they emitted each year. Most of the qualifying companies would be electric utilities or industrial manufacturers that generated their own power. The idea is to punish the profitability of extreme emitters to the extent that they would naturally turn to low-carbon technologies such as nuclear, wind and solar power. The money paid would be circulated back into the economy via government programs to subsidize low-income households as well as heavy manufacturers that would face unfair competition from rivals in countries that lacked carbon-cap restrictions. With electricity demands expected to double by 2,030, tens of billions of dollars probably would change hands.
Continued: Going nuclear -- as an investor
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not increase ways to manufacture it. Unfortunately, a whole lot more people will be dying from all sorts of industrial pollutants before we figure out a new way of living on this very small planet. Make a few bucks on speculation on the price of uranium if you want, like the man says (Markman), but don't argue that it's somehow morally acceptable.