Energy has quickly become the talk of the Money Morning office.
Between the existing breakdown of fossil fuel markets, emerging renewable technologies, and a smattering of other alternatives, energy is at the heart of a lot of issues at hand. It’s a conclusion that every person can certainly see and feel if you’ve received a power bill recently.
Between the pandemic, inflation, and the invasion of Ukraine, energy has become scarce. Or at least a hell of a lot scarcer than what it was.
This has resulted in a massive global scramble to shore up energy supplies. And if you’ve been paying any attention to market updates, you’ll know it isn’t going well for most…
It is simply too hard to accommodate the kind of upheaval that we’re seeing.
Europe, in particular, is facing a deeper crisis than most due to the cut-off of Russian gas. Many of the proud economies in the region have even been forced to turn to coal. It’s a turn of events that flies in the face of the progressive image much of Europe likes to portray.
And even then, as the cost of coal soars, it can’t sustain energy needs alone…
Desperate times, desperate measures
No matter how you look at it, the world clearly needs a new energy alternative.
Fossil fuels certainly aren’t going anywhere, but underinvestment has hamstrung short-term output. As for the long-term outlook, opinion varies on whether supplies will remain sufficient. Either way, I’d wager that oil, gas, and coal are viewed more as stopgap solutions.
After all, if 2022’s energy issues have proved anything, it’s that energy security is imperative. And unlike Australia, many of the world’s nations aren’t blessed with such rich commodity reserves.
I suspect that before this decade is over, almost every developed economy is going to ensure they don’t have to rely on external energy supplies for the majority of their power. And love it or hate it, that means that going nuclear is going to be the best option for many.
Because if you’re looking for a sustainable fuel that is also climate-friendly, nuclear power is still the best bet there is. That is why public opinion and interest in nuclear has quickly turned; even in places you may not expect it. Take these comments from the director general of the International Atomic Energy Agency (IAEA), Rafael Grossi, for instance:
‘Until just a few years ago, nuclear would not be present, and perhaps not even welcome at the annual COP conferences,
‘The IAEA has moved quite fast from almost an intruder into a very welcomed participant in this dialogue where nuclear has a place.
‘The mere fact that we are talking about COPs with nuclear in Egypt, and in the Gulf, in and by itself is telling you a lot of what is happening and how we are changing and the possibilities that we have and that could have been almost unforeseeable just a few years ago.’
Like any energy solution, though, switching to nuclear power will require significant investment. That’s why the US Department of Energy is forecasting a US$1 trillion explosion in nuclear demand — a sum that includes a need for not only more construction of reactors but also the crucial fuel that powers them: uranium.
For investors like yourself, this is a development that you cannot afford to ignore.
Land of the rising (nuclear) sun
The reason I’m so confident about this nuclear resurgence is because governments are some of the most vocal proponents.
Normally, when it comes to energy solutions, the policymakers are the last ones to arrive at the table…long after the private sector and its investors have already paved the way forward.
That doesn’t appear to be the case for nuclear this time around, though.
In Japan, for instance, a nation that endured the most serious reactor meltdown since Chernobyl, nuclear power is making a big comeback. The Kishida government is pushing heavily to revive the local nuclear industry.
As Reuters recently noted (emphasis added):
‘In the financial year to March 2021, nuclear accounted for 3.9% of Japan’s power mix, but the government still aims to boost it to as much as 22% by 2030.’
This push was confirmed just yesterday after confirmation that the Japanese government is already looking into constructing new nuclear plants. That is in conjunction with the revival of seven existing plants that will be brought back online to shore up energy needs.
Make no mistake about it, Japan is committed to a nuclear future. And with a third of its uranium supplies coming from Australia as is, some of our local suppliers stand to profit very nicely.
For that reason, I’d be taking a serious look at some of the uranium pure plays on the ASX right now. Because while many of them are delivering mixed results at the moment, don’t be shocked if that quickly changes.
After all, Japan is just one very big example of a shift that is likely to take place around the world.
This is the dawn of a new nuclear age…
Editor, Money Morning
Ryan is also co-editor of Exponential Stock Investor, a stock tipping newsletter that hunts down promising small-cap stocks. For information on how to subscribe and see what Ryan’s telling subscribers right now, click here.