Nuclear Energy: Cautiously Back In Fashion

Since the early 2000s, the world has started to move away from nuclear power, especially after the disaster at Japan’s Fukushima nuclear plant in 2011. This has led to a slowdown in nuclear power development, the shutdown of nuclear power plants in Kazakhstan and Lithuania, as well as in Spain and Germany, and a reduction in the share of nuclear energy in global production from 13% to 7% by 2035. Many countries have frozen nuclear power projects, despite the projected growth in electricity demand from 17,200 to 31,500 terawatt-hours.

However, with the growing global demand for electricity and the fight against climate change, interest in nuclear power is resurgent. At the Brussels summit in March 2024, some 30 countries expressed their support for accelerated nuclear energy development. The importance of nuclear power plants for reducing CO2 emissions was stressed and calls were made for new nuclear power plants, as well as for the introduction of modern small modular reactors (SMR).

Currently, there are 438 reactors in operation in 31 countries; a further 500 new ones are planned, which is a sign of the renewed interest in nuclear power against the background of environmental challenges. In particular, last March’s Nuclear Energy Summit 2024, held in Brussels by the International Atomic Energy Agency (IAEA), provided insights into key players’ perspectives regarding nuclear energy.

France is actively promoting nuclear power as a key element of its strategy to achieve carbon neutrality and energy security. President Emmanuel Macron stresses that the challenge is to reduce CO2 emissions, strengthen energy sovereignty, and create new jobs. Nuclear power now accounts for 25% of the world’s low-carbon electricity production. At the COP-28 conference, nuclear energy was included in the global stocktaking for the first time. France, a leader in nuclear power, aims to triple its capacity by 2050 and become the EU’s leading country in the new technological era. Macron advocates a balanced approach to the energy transition, integrating nuclear and renewable energies.

On 16 April 2023, Germany closed its last three nuclear power plants, completing the process of abandoning nuclear energy. Berlin’s wind energy plans have been threatened by rising inflation and equipment costs, calling into question the goal of 80% renewable energy production by 2030. The energy crisis and deficit have already led to de-industrialization, forcing energy-intensive enterprises to migrate abroad. Germany risks losing its status as an industrial power by 2024. Chancellor Olaf Scholz is aiming to fully switch to green energy in the future, but his government remains remarkably unpopular and shaky after less than three years in power; the Greens, which form part of Scholz’s “traffic light” coalition government, have seen a particularly pronounced drop in support.

Like France, Turkey is quite fond of nuclear power, with its foreign minister, Hakan Fidan, recently stating that March’s summit was a key event for the future of the country’s civil nuclear power. Nuclear power plant “Akkuyu”, after full commissioning, will provide 10% of Turkey’s electricity needs through the construction of small modular reactors.

In Belgium, Prime Minister Alexandre De Croo, alongside Energy Minister Tinne Van der Straten, stressed that to achieve full decarbonization, both renewable sources and nuclear energy are necessary. They proposed to extend the life of Belgian reactors Doel 4 and Tihange 3 by 20 years instead of the previous 10 years. IAEA Director General Rafael Grossy supported this approach, describing it as a “return to realism” in the context of the need for energy supply by society and industry in pursuit of zero emissions by 2050.

China plans to increase its installed nuclear capacity to 400 GWh by 2060, surpassing the current capacity of all world reactors. This growth will be achieved through a combination of traditional and innovative technologies, including the recently commissioned small modular HTR-PM reactor. Deputy Premier Zhang Guoqing stressed that nuclear power plays a key role in solving climate problems and ensuring energy security.

Canada is actively involved in supporting global energy security, focusing on the export of clean technologies and resources such as hydrogen, uranium and low-carbon building materials. In collaboration with European and global partners, Canada provides technology solutions including CANDU reactors, concludes fuel supply agreements and provides export financing to promote coal-free and clean and reliable energy transition.

The Czech Republic is actively working to ensure energy security, developing nuclear power as an effective way of decarbonisation and stabilisation of the energy system. The country has made progress in building a new power unit in Dukovany and is considering additional units. The current reactors are also planned to be extended by 60 years and small modular reactors will be introduced.

Rafael Mariano Grossi, IAEA’s Director-General, stressed that recognizing the need for nuclear power is not enough; nuclear energy is admittedly controversial, requiring active political action to create conditions conducive to its development. Grossi noted that without decisive action, nuclear energy could lose its potential in the transition to a “green” economy. He stressed that the summit should be a turning point in promoting increased investment in nuclear power worldwide, and assured that IAEA was ready to support this process.

The summit discussed improvements to European defence capability, which includes increasing military spending, coordinating the military industry, and joint procurement of weapons. The main task is to finance the defence industry in EU countries, despite their sovereignty. The project is comparable in scale to the creation of a common currency and the Schengen area. Private sector and the European Investment Bank (EIB) are to be involved. The Declaration on Nuclear Energy, which confirms its key role in reducing greenhouse gas emissions and ensuring energy security, has also been adopted. Special attention is given to financial aspects, including public and private investment, as well as the need for education and training in this field.

The renewed global focus on nuclear energy presents a mixed bag of opportunities and challenges for businesses in the affected regions. On one hand, the expansion of nuclear power plants and the development of small modular reactors (SMRs) create significant opportunities for companies involved in construction, engineering, and high-tech manufacturing. These sectors stand to benefit from increased demand for their expertise and products as nations ramp up their nuclear capacities.

For companies in the energy sector, the shift towards nuclear power provides a stable and long-term growth opportunity, particularly in markets like France, Turkey, and China, where nuclear energy is set to play a central role in future energy strategies. Firms that supply components, maintenance services, and nuclear fuel are likely to see a surge in demand, while those involved in research and development (R&D) may find new avenues for innovation, particularly in enhancing the safety and efficiency of nuclear technologies.

However, businesses must also contend with the complexities and risks associated with the nuclear industry. Regulatory requirements are stringent, and companies must navigate a highly scrutinised environment where safety and environmental impact are paramount. The capital-intensive nature of nuclear projects means that businesses must secure substantial investment and manage long-term financial commitments. Moreover, public perception and political factors can influence the success of nuclear initiatives, as seen in Germany’s decision to phase out nuclear power, which has left some companies in the sector facing uncertainty and potential losses.

For businesses in regions transitioning away from nuclear energy, such as Germany, the focus will need to shift towards renewable energy sources. However, as the challenges with inflation and equipment costs illustrate, this transition is fraught with difficulties. Companies must be agile in adapting to these changes, potentially exploring opportunities in renewable energy technologies or diversifying into other areas less dependent on government policies and public sentiment.

The resurgence of nuclear energy offers significant opportunities for growth and innovation in the regions where it is being embraced. However, businesses must carefully navigate the associated risks, including regulatory hurdles, financial challenges, and fluctuating public and political support, to ensure their success in this evolving energy landscape.