It may not yet have dawned on Australia, but the rest of the world is waking up to the threat of net zero policies. At our recent editorial meeting in Melbourne, I was shocked to discover just how far behind Australia is on this awakening.
Almost all media coverage in Europe and the US is already highly critical of net zero. Even the politicians have woken up.
In Europe, French President Emmanuel Macron has called for a halt on new green legislation coming out of the EU.
Germany successfully torpedoed the EU’s attempt to ban combustion engine cars.
In the UK, some councils are refusing to cooperate with the government’s demands to impose net zero policies.
Net zero is so unpopular in the UK that politicians are using it as a punching bag for all sorts of barely related shortcomings. For example, one minister is blaming her inability to carry out Brexit reforms on the constraints imposed by the emissions commitment.
Companies worldwide are also turning their backs on net zero at an increasing pace. Seven insurance companies have quit the Net-Zero Insurance Alliance — a part of the powerful group called the Glasgow Financial Alliance for Net Zero — which pressures financial industries into adopting net zero policies.
Even the only remaining cheerleaders for net zero — journalists — are having second thoughts. The Financial Times covered ‘the staggering cost of a green hydrogen economy’.
Financial markets cottoned on to this shift first. Green energy stocks plunged in 2022 and clean energy tech companies’ favourite bank in California went bust in 2023…
Just when an energy crisis was supposed to prove renewable energy’s credentials and capabilities, the world concluded the precise opposite. It turned to coal instead.
While Australia still grapples with the impossible implications of net zero, the rest of the world is already moving on to pondering solutions instead. And, as slowly as humanly possible, they’re reaching the painlessly obvious solution: nuclear power.
In October 2021, the UK’s Independent Review of Net Zero report commissioned by the government concluded that nuclear power is ‘a no-regrets option’ for the UK.
In April 2022, the UK government outlined its plans for nuclear power. These include building eight new reactors plus smaller modular reactors, set to provide 25% of the UK’s electricity demand by 2050.
In Japan, utility companies are applying for 27 reactor restarts, with 17 passing safety checks and 10 resuming operations.
In South Korea’s March 2022 presidential elections, a pro-nuclear candidate defeated an anti-nuclear incumbent who planned to phase out nuclear power.
The country’s 26 reactors produce about a quarter of its electricity, but the new president wants to increase this to at least a third. Plans include extending the life of existing reactors and building new ones.
Macron committed to building six new reactors at a cost of nearly €52 billion. And government-owned power utility EDF is set for nationalisation to make the government’s plans happen.
To achieve its emissions commitments, China’s government plans to build more than 150 nuclear reactors by 2035 — more than the rest of the world in the last 35 years. It currently has 49 operational power plants and 17 under construction.
The list goes on and on and on. It’s important to note that many of these plans are dramatic shifts away from phasing out nuclear to growing it. It’s a huge change.
Of course, it took quite a bit of pain to get there. Pain that didn’t play out in Australia in quite the same way. But Europe has been in an energy crisis since 2021, well before Russia invaded Ukraine.
Why? Ever since governments committed countries to the goal of net zero, without figuring out how to do it first, more and more analysis has been done on what that might mean.
The growing consensus is that it isn’t going to happen, and any attempt to make it happen will crush living standards to a point that is not politically viable in a democracy.
Now, some people’s conclusion is that we need to impose these changes anyway. We are, after all, trying to save the planet, democracy be damned. And the only thing that justifies more draconian policies than a pandemic is saving the planet.
But, if those economists, engineers and physicists who have done the analysis are correct, we’re discussing imposing something worse than the Second World War rationing.
Given the choice between adopting nuclear power and destroying our standard of living entirely, governments are increasingly opting for nuclear power. Well, they’re opting for coal and then nuclear power.
As energy consultants and commentators, Doomberg put it:
‘There is simply no path to a low carbon economy without a massive nuclear power renaissance. If you are simultaneously opposed to fossil fuels and nuclear power, you are for mass starvation and extreme human suffering (whether you realise it or not).’
Nuclear offers the most plausible solution for a long list of reasons.
It is much safer than other forms of power which cut emissions — only solar comes close in terms of deaths per unit of emissions.
It is much more environmentally friendly than other forms of renewable energy.
It takes up far less space.
It provides easy energy security.
It isn’t intermittent.
It can be located anywhere.
Its output can be controlled reasonably well.
It doesn’t require a backup grid to be ready to fire up.
It doesn’t require vast energy storage capacity.
And so on, and so forth…
But this solution poses a bit of a problem for Australia. And not just because of our fossil fuel exports.
Nuclear power remains illegal in Australia. No number of facts, evidence, public polling or experience seems to convince our government to shift. And even if it did, a nuclear rollout on a scale that cuts emissions radically appears a lifetime away.
Heck, given the choice between fossil fuels and nuclear, I’m not sure what Australia’s Government would choose. Which, of course, puts the whole climate change story into perspective…
But the threat is that Australia will be left behind as a result, as it has been on perceptions about net zero. Our delay in providing safe, clean and reliable nuclear power will leave Australia in the dark, as Europe was in 2021 and 2022.
Australia better learn to stop worrying and love nuclear, fast.
The good news is that Aussie investors need not wait for their government and fellow voters to get their act together. Investing is an individual’s game not driven by mob mentality. You can chart your own course.
Indeed, a lot of investing success is driven by anticipating change and being one step ahead of the crowd.
Given the Australian stock market’s uranium mining opportunities, that’s not terribly difficult to do either.
So, instead of waiting for your government to figure it out, do it yourself.
Until next time,
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Nickolai Hubble,
Editor, The Daily Reckoning Australia Weekend
