Fuelling the future: perspectives on nuclear energy and the utilities sector
April 2011
The nuclear crisis that has unfolded at the Fukushima Daiichi plants in Japan is severe, and has added significantly to the tragedy of the earthquake of 11 March. The global nuclear industry has reacted rapidly to these events, and further measures undoubtedly will follow once the full nature of the events in Japan is understood. In this article, we explain our views on nuclear power, how our investments in utility companies are framed by our thematic approach, and how we conduct thorough analysis of the industry, company fundamentals, and responsible investment issues to identify associated areas of risk and opportunity.
Nuclear power is a constituent of the utilities sector, in which two of our investment themes are highly relevant: Earth matters and energy supply. Our Earth matters theme highlights the growing importance of environmental considerations to the sector's fortunes, and the effects of increased global demand for natural resources.
The utilities sector is the world's largest contributor to greenhouse gas emissions, so government efforts to implement the Kyoto Accord tend to start with these companies. CO2 is not the only emission that has been targeted for reduction. For example, limits on emissions of mercury, sulphur oxides and nitrogen oxides (commonly called "SOx and NOx") are being tightened in the U.S. and Europe: the latter because of their contribution to smog, and mercury because of its toxicity, and the ease with which, when emitted, it finds its way into local ground water. Coalfired power generation is rightly viewed as the main emissions-related culprit, and investors should question the sustainability of profits from coal-fired generation. This stance also suggests that cleaner forms of energy should enjoy structural support. In this context, nuclear energy appears an attractive alternative on account of its low CO2 profile.
To read the full content, please download
Fuelling the future: perspectives on nuclear energy and the utilities sector
