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Where does nuclear fit in Australia's zero-carbon future?



There has been intense recent debate in Australia over the time it takes to build nuclear power plants. The minister for Climate Change and Energy Chris Bowen said the average build time is 19 years while the Shadow Minister for Climate Change and Energy Ted O'Brien claimed about half that time is more accurate.

It is hard to take either side very seriously. The more relevant question is perhaps: ‘Why are they engaging in such arguments?’ The reason may be that there is a growing realisation that the zero carbon push is failing due to the impracticality of shifting entirely to renewable energy. Oil, natural gas and coal provide 84 per cent of the world's energy, down just 2 per cent from 20 years ago. The politics is consequently shifting to nuclear energy as a possible way out. 

The concern is likely to intensify. Big changes are occurring in the financial sector that suggest the climate change agenda is starting to lose crucial support with the world’s largest fund managers. 

Nuclear energy produces almost no carbon emissions so has obvious advantages from a climate change perspective. But in terms of financial viability, there are risks that are almost impossible to price: decades, or even centuries, of dangerous waste disposal should there be a serious accident. 

The Australia Institute claims that a nuclear power plant would be uninsurable. Richie Merzian, Climate & Energy Program director says: ‘Insurance policies by Australia’s major insurers contain specific language excluding coverage of nuclear disasters; none will insure against nuclear incidents.’ He reasons that if nuclear power operators were made to adequately insure against the risk of accidents, the insurance premiums would make the project ‘completely uneconomic.’

This applies to large reactors, but there are other options. One is small modular reactors (SMRs) which can be built in three to five years. Proponents claim they are far less likely to overheat because of their smaller cores. The designs of SMR technology can also reduce other engineering risks, such as coolant pumps failing. Merzian believes their lack of scale makes them uneconomic, however.

Another possibility is thorium reactors, which do not produce dangerous waste. According to financial analyst Tom Luongo thorium possesses big financial advantages when assessed by looking at energy return over energy invested. He says with oil and gas the ratio is 75-80 to 1. With first generation uranium reactors the ratio is ‘about the same’. But with thorium molten salt, he says, the ratio is 2000 to 1.


'This change in sentiment is yet to filter into the Australian markets, but it will have a huge impact on the way energy is financed in Western economies. When the big money turns, then governments and corporations will be forced to follow.' 


Despite these notional advantages it is unlikely that thorium will be pursued, although the Chinese in 2021 announced the completion of its first experimental thorium-based nuclear reactor. Thorium-based reactors are still not considered economically viable because, unlike uranium reactors, there has not been the requisite research and development – a legacy of the need for a dual application of energy and weaponry in the Cold War. The US in 1973 rejected the thorium option because it could not be converted into a bomb.

For several years, the zero carbon push has been presented as au fait accompli in Australia; the assumption is that it is just a matter of managing the transition. But that is far from the case. Much of the impetus for zero carbon came from the financial sector’s support of what is called Environment Social Governance (ESG), a metric used to put pressure on the world’s largest corporations to fall into line on climate change. ESG ratings are applied to most stocks on the Australian Securities Exchange; it is a constant theme in local broker reports.

That support is fading. BlackRock, JPMorgan Chase, and State Street recently exited from Climate Action 100+, a coalition of the world’s largest fund managers that pledges to ‘ensure the world’s largest corporate greenhouse gas emitters take necessary action on climate change.’ Vanguard, the world’s second largest fund, exited over a year ago. 

The combined assets under management of those four fund management companies is about $US25 trillion, approximately a quarter of the entire funds under management in the world.

They are changing course for two reasons. One is that the bargain with ESG: that companies would not only be saving the environment, they would also get stronger share prices, has proven to be false. Better returns have come from investing against ESG-compliant companies. 

Even more threatening, 16 conservative state attorneys general in the US have demanded answers from BlackRock’s directors regarding the Climate Action and ESG initiatives. Nothing concentrates the mind of fund managers more than the prospect of clients withdrawing their funds. Unsurprisingly, Larry Fink, chief executive of BlackRock, is now saying he does not like the term ESG. In his 2022 letter he was issuing veiled threats to companies not complying with ESG. In 2024 he omitted the term entirely. 

This change in sentiment is yet to filter into the Australian markets, but it will have a huge impact on the way energy is financed in Western economies. When the big money turns, then governments and corporations will be forced to follow. It will have an impact long before Australia does anything about nuclear or thorium-based energy.




David James is the managing editor of personalsuperinvestor.com.au. He has a PhD in English literature and is author of the musical comedy The Bard Bites Back, which is about Shakespeare's ghost.

Main image: (Getty images)

Topic tags: David James, Economics, Economy, Nuclear, Energy



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Existing comments

Thanks Dr James, but with due respect it should be pointed out that a 100% renewable (wind and solar) grid is feasible for Australia.

Australia has thousands of times the wind energy and sunshine that it consumes through all energy consumption (power, industry, transport, agriculture); it's just that the sun doesn't always shine and the wind doesn't always blow, meaning there's a need for excess power generation when said sun is shining and said wind is blowing.

Luckily, in our future we will be owning tens of millions of batteries on wheels otherwise known as battery electric vehicles.

Australia's annual power generation is presently roughly 300 terawatt-hours per annum ie 822,000 megawatt-hours per day.

Australia also has roughly 22 million motor vehicles, the vasty majority of which are powered with imported petroleum. When these are all replaced with electric vehicles (EV's) , for which the average battery capacity is 40 kilowatt-hours, Australia will have 880,000 megawatt-hours of storage capacity in its transport fleet.

All we need is a vehicle-to-grid standard for bidirectional charging so plugged-in EV's when can either recharge from excess power in the grid of feed power to the grid, saving a fortune on petroleum imports.

David Arthur | 04 April 2024  

Wind farms and solar arrays are great initiatives.
Coal fired turbines days are numbered due to the CO2 emissions of 40-45%.
Qld has vast high quality coal reserves in the Surat region and more in the Bowen Basin. Billions of tons. Much of it 6.5 calorific.
The switch from coal fired to the DFC (direct fuel cell) has not been seriously considered. The tech has been developed at Qld University.
Provided a plant is built, the DFC can convert any grade of coal to energy with no combustion involved- and on any scale resulting in a 2% CO2 emission - which can be sequestered underground in salt caverns.

NSW is cashing in on the coal export boom. Qld needs a rail line from Surat to Abbot point and we could do the same. What happens overseas does not affect our emissions targets.

There is enough coal in Qld to power the world for 2000 years, so the mad scramble to eliminate coal is literally throwing the baby out with the bath water.

Francis Armstrong | 10 April 2024