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Is nuclear becoming a more attractive investment opportunity?

Nuclear power station
Photo by Ajay Pal Singh Atwal on Unsplash

Energy investors on the continent have been lending their support to the recent decision by the European Union to classify nuclear energy as a green investment.

The move follows the bloc’s controversial decision to give the ‘green’ label to investments within gas and nuclear, a move that was given backing by the European Parliament in July. The moves had seen opposition by two parliamentary committees which struck down in June attempts to include gas and nuclear in its list of sustainable energy sources. As was widely reported, the Economic and Monetary Affairs Committee and the Environment, Public Health and Food Safety Committee rejected the proposal, with 76 MEPs voting to object and 62 voting in favour.

Now, the European Business Review is reporting multiple investors saying that facilitating investing in these projects will not only increase energy security and help reach emissions targets, but will also bring nuclear-related investments within the remit of European ESG and sustainable funds reported to have reached €4trn, or 40% of all assets managed in the EU.

The site wrote: “Timur Tillyaev, an international investor in energy and renewables, welcomes the move to facilitate investment in nuclear power, which he describes as ‘an overlooked solution that would help Europe’s short- and medium-term energy transition’. He adds this decision has also ‘opened the door for investors to realise the potential of nuclear energy to combat the climate crisis and energy insecurity’.”

Also quoted in the piece was portfolio manager Todd Lomnitzer of Janus Handerson Investors.

He said: “Given nuclear power’s green energy classification, fuels such as uranium could see a new surge in demand, and this may create some attractive investment opportunities.”

That the EU would label some gas and nuclear investments as being ‘green’ is not a surprise, given that we wrote on it in these pages last December. And the month before that, Rolls Royce signalled its intention to begin building small modular reactors (SMR), after funding worth £400m was secured. That funding will take place over three years, and consists of £195m from Rolls Royce Group, BNF Resources UK, and Exelon Generation, coupled with £210m from the UK’s Research and Innovation funding.

Energy is a huge story over here in mainland Europe now, with the supply of gas from Russia being jerked around like a dog on a leash by Vladimir Putin following sanctions for invading Ukraine. In March, the European Commission outlined a new plan, to be known as REPowerEU, that seeks to make the continent independent of Russian fossil fuels within the next eight years.

The plan additionally looks to tackle rising energy costs across Europe and replenish gas stocks for winter 2022. It said that REPowerEU will seek to diversify gas supplies, speed up the roll-out of renewable gases, and replace gas in heating and power generation. The EC predicted that this could reduce EU demand for Russian gas by two-thirds before the end of the year.

Over here in Germany, as the BBC wrote this week, “The war in Ukraine has upended Germany’s energy policy. Since the start of the war Germany has reduced its dependence on Russian oil from 35% to 12% and on Russian gas from 55% to 35%.”

Ironically, there was a huge push in Germany 11 years ago to abandon nuclear power after the disaster in Fukushima, Japan. Back then, the government pledged to get rid of all nuclear facilities within its borders, closing eight facilities.

As Deutsche Welle wrote last year: “In only a matter of weeks, the political momentum unleashed by Fukushima became palpable. Merkel’s close ally and a big supporter of atomic energy, Stefan Mappus, lost as the incumbent state premier in Baden-Württemberg to Winfried Kretschmann of the Green party. It was a political first for the anti-nuclear party, and in a conservative state, no less. Three months later, the German parliament voted to phase out atomic energy by the end of 2022. But energy companies sued the government for damages. It took nearly 10 more years for both sides to agree to damages worth €2.4bn ($2.86bn), with taxpayers footing the bill for Merkel’s phaseout detour.”

It is the end of August and already some cities are beginning to think of how they can cut power usage if Russia continues to strangle the gas supply. Winter is coming and if there are solutions to be found, it had better be soon.

Pete Carvill

Pete Carvill is a reporter, writer, and editor based in Berlin who has been writing for the B2B and mainstream media since 2007. He is a contributing writer for Expert Investor and, in addition, has...

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