(Disclosure: The following represents my opinions only. I am not receiving any compensation for writing this article, nor does Hydra Capital have any business relationship with companies mentioned in this post. I have no position in any of the companies mentioned in this article.)
Uranium Has a Pulse
The uranium supply deal signed between the Department of Atomic Energy of India and Cameco last week is a good reminder of the pending growth of the nuclear power industry globally. Despite the market’s hyper-focus on the timing of Japanese reactor restarts, supply deals like this show that other countries are indeed moving ahead with their nuclear expansion plans. A quick review of the World Nuclear Association data shows that reactors currently under construction are equivalent to two-thirds of the entire U.S. fleet with nearly three times that in the planned category on a megawatt basis. In total, that is equivalent to a two-thirds increase in the entire global nuclear fleet. That means that the 147 million pounds of uranium needed to supply reactors in 2015 would balloon to around 245 million pounds annually in the “under construction plus planned” demand case. And, as an aside, the next time someone tries to dismiss uranium by saying something like “Yeah, but Germany is phasing out nuclear altogether”, let me just tell you that Germany’s electricity from nuclear power generation in 2013 was the equivalent of only about 4% of the current global total. Check out the numbers here:
Remember the War Against Carbon?
Once you cut to the heart of things, nuclear is really the only viable carbon-free energy source capable of making a meaningful dent in the world’s thirst for coal. For those of you who aren’t aware, coal remains far and away the world’s largest source of energy for electricity generation (~40%) and in a world desperate to cut carbon dioxide emissions, that’s simply not sustainable. Don’t get me wrong; I’m a big fan of renewables and energy conservation, but the realist in me knows that the numbers don’t lie. In the absence of drastic changes in technology, there is nothing other than nuclear that can supply the required quantity of uninterruptible power if the world is serious about cutting carbon emissions, period. That’s not to say we shouldn’t keep going down the renewable path, but unless the world is ready to make some huge changes on the energy consumption side of the equation there just isn’t another realistic replacement for coal. Nuclear is it.
Now, nuclear isn’t without issues; proliferation and waste are commonly cited and valid concerns, but global leaders and regulatory agencies are highly aware of these and I’m not about to solve them here. However, one thing that I just can’t give any credence to is the position of those who appear to have concerns regarding the operational safety of the technology itself. Those who worry about the safety of nuclear power plants in general would be better off never leaving their houses. Automobile accidents kill well over 3,000 people globally daily. Three thousand. Daily. Think about that. Well over a million people die every year on the road. If those who poo-poo nuclear were really concerned about global public safety, they’d be better off focusing their energy on keeping people out of the lowly automobile. Having said that, I think that everyone knows that fears of nuclear safety are not rational. There have only been two real reactor accidents in the history of the industry; one at Chernobyl that was self-inflicted and one at Fukushima which involved a 40-year old reactor on its last legs getting hit by a once in 100-year earthquake followed by a once in 300-year tsunami. Trying to condemn nuclear energy on the basis of these two incidents is a bit like trying to condemn the modern global aircraft fleet because a 1940’s era DC-3 crashed on a dark night in a CAT5 hurricane with 10 souls lost.
I know it’s an emotional issue and I don’t mean to be callous about it, but how can the world make civilization-scale decisions without some respect for statistics? Are we to ignore one of the most significant scientific discoveries of the 20th century on the basis of fear? I would hope not. Modern reactor designs are vastly improved with respect to their predecessors. Should we decommission old reactors with known sub-optimal design characteristics? You bet. Should maintenance, security, and safety protocols be highly scrutinized? Of course they should. My point is that the alternative is to keep relying on carbon-loaded coal. How can the world drag its heels on carbon-free nuclear energy while it knows that climate change under the status quo will result in millions upon millions of deaths and dislocations? Fortunately, the World Nuclear Association reactor-build numbers suggest that the world is indeed turning to nuclear as a carbon-free energy source. These new reactors will need more fuel, a lot more, and I think the Cameco-India deal is just the tip of the carbon-free energy iceberg. Time will tell.