Report touts nuclear energy’s investment attractiveness based on ESG standards

November 17, 2022, 9:30AMANS Nuclear Cafe

Nuclear energy “has exceptional characteristics that make it uniquely qualified to address all three facets of the energy trilemma: affordability, sustainability, and reliability,” according to a new report, Solving the Energy Trilemma: The Case for Nuclear as a Sustainable Investment. Developed by the Center for ESG and Sustainability (CESG), which has a partnership with Columbia University’s International Research Institute for Climate and Society, the report concludes, “Even absent ESG [environmental, social, and governance] considerations, nuclear is an investible asset. However, its strong ESG performance makes the case for investment even stronger.”

ESG standards: The report examines the performance of the U.S. nuclear power industry according to the socially and environmentally aware (ESG) standards, which financial investors are increasingly using to make their investment decisions. This is a controversial area that has been criticized by conservatives as “woke capitalism.” Nevertheless, ESG has a major impact today on where investment money goes, so the new report is good news for the nuclear industry. It found that the industry “performs well across major ESG topics addressed by the world’s most recognized framework organizations. ESG rating agencies should better reflect this performance in its analyses of nuclear energy producers. Assessments to date have not accurately reflected nuclear energy’s performance as a source of reliable, clean energy and its role in helping the United States and the world reach net zero emissions goals while addressing energy poverty and still growing the global economy.”

Policy moves: The report describes some of the recent policy moves that have given a boost to nuclear energy around the world. “The EU’s classification of nuclear as a green energy source will help provide access to billions of dollars in climate finance tools, including green bonds, and has been followed by a similar decision in South Korea. Following the first green bond issuance for nuclear energy in Canada, other such financings can be expected to occur as nations around the world seek to meet energy demand.” In the United States, the report states that momentum for nuclear energy is coming from “government actions to delay planned closings of nuclear facilities and the passage of legislation in the United States that will provide incentives to keep existing nuclear assets generating and fund future nuclear energy generation, including advanced reactors such as SMRs [small modular reactors] and microreactors.”

Investor education: The report calls for more outreach to investors to increase their awareness of the high performance of nuclear industry on ESG standards. “The financial community also increasingly recognizes the importance of nuclear energy and its positive ESG characteristics. This is critical to attracting needed investments to fund nuclear generation in the years and decades ahead. Further education regarding the importance of nuclear and its climate, reliability, and other ESG attributes should be focused on the financial community (including ESG rating agencies) as well as decision makers and the public.”

Meeting challenges: CESG vice president Jack Belcher commented on the report by observing that the nuclear energy industry “is poised to play a pivotal role in helping the United States and the world solve some of society’s most pressing issues by effectively addressing the climate crisis and reducing or eliminating energy poverty while supporting the global economy. Without nuclear, there is no pathway to meeting our energy and climate goals.”

CESG president James Duncan added, “Technological innovation currently underway, including small modular reactor and microreactor technology, is poised to make nuclear energy even more accessible and attractive as a financial investment. These new technologies will bring reliable, affordable, and sustainable power to new markets and further improve the industry’s ability to meet the world’s biggest challenges in a sustainable manner.”

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