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Nuclear Energy: Bringing Science Fiction to Life

14 April 2023

 

Breakthroughs in nuclear fusion are drawing attention to an overlooked element of the future zero-carbon energy mix

When the Lawrence Livermore National Laboratory’s scientists confirmed in December 2022 that they had achieved energy gain through a nuclear fusion reaction1, they made history. This breakthrough focused attention on a technology that has the potential to provide almost limitless zero-carbon power.

Once a nuclear fusion reactor is connected to the grid, which is still at least a decade away, it could transform the drive for decarbonization. But nearer term technological developments, too, are leading to a new era of safer, cheaper and more widely used nuclear power.

Coming at a time when the world is urgently seeking ways to decarbonize power generation, these developments are leading to a renaissance for the nuclear industry. Nuclear power is now seen as part of the net-zero solution, providing a base load of power to balance out renewables when the wind does not blow and the sun does not shine.

This sudden transformation of the nuclear industry’s prospects led us to develop a VanEck Uranium and Nuclear Technologies ETF earlier this year. While nuclear fusion is unlikely to affect the profitability of the uranium miners and companies developing nuclear technologies any time soon, evidently their prospects are looking brighter.

Part of the net-zero energy mix

Indeed, the EU decided in 2022 to include nuclear power in its taxonomy of sustainable activities, effectively giving it a green light as part of Europe’s energy mix. Against that backdrop, European countries such as France and the Netherlands have plans for new nuclear power stations. So, too, do the two biggest developing economies: China and India.

To see why, look at the tiny greenhouse gas footprint of a nuclear power plant. As the chart below shows, it’s similar to solar and wind, far less than that of coal, oil and gas plants.

1 Source: Financial Times. https://www.ft.com/content/65e8f125-5985-4aa8-a027-0c9769e764ad

Greenhouse gas footprint over lifecycle of the power plant

 

Source: World Nuclear Association.

Safer and more efficient

The industry is becoming safer, seeking to put the disasters of Chernobyl in 1986 and Fukushima in 2011 behind it, although many of the older plants remain in action so risk remains. The new liquid-metal cooled and gas-cooled reactors are safer than their water-cooled predecessors. What’s more, new methods for treating nuclear waste reduce the time that they are dangerously radioactive.

Nuclear power is also becoming more flexible and cheaper. For instance, small modular reactors can be built in a factory and then assembled on site. With a far lower cost of construction, nuclear energy is becoming more affordable.

Yet despite all of these developments, nuclear is part of the low-carbon energy future that’s often overlooked by investors in renewable energy. That’s likely to change as new power stations start to be built and further breakthroughs in the wonderful science of nuclear fusion attract attention to its possibilities. And those who want to gain diversified exposure to the sector can do so through our new Nuclear ETF. Keep in mind that investing in equities is risky.

This website originates from VanEck (Europe) GmbH and VanEck Asset Management B.V., a UCITS Management Company incorporated under Dutch law and registered with the Dutch Authority for the Financial Markets (AFM). VanEck (Europe) GmbH, with registered address at Kreuznacher Str. 30, 60486 Frankfurt, Germany, is a financial services provider regulated by the Federal Financial Supervisory Authority in Germany (BaFin). 

VanEck Uranium and Nuclear Technologies UCITS ETF (the "ETF"), a sub-fund of VanEck UCITS ETFs plc, is managed by VanEck Asset Management B.V., registered with the Central Bank of Ireland and tracks an equity index. The value of the ETF assets may fluctuate heavily as a result of the investment strategy. If the underlying index falls in value, the ETF will also lose value. Investors must read the sales prospectus and key information document before investing in a fund. These are available in English and the KIIDs/KIDs in certain other languages as applicable and can be obtained free of charge at www.vaneck.com, from the Management Company or from the local information agent details to be found on the website.

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