The world is in the middle of a major energy dilemma. Rising prices and reduced availability of natural gas have forced a shift to increased dependence on coal generated electricity. Even before the war in Ukraine, many countries were turning to coal, probably the dirtiest fossil fuel, to meet the increasing demand for electric power. This has been particularly hard on Germany, ironically after taking a leadership position in renewables and electric vehicles.
Long term, the path to ample electricity and climate goals leads through a combination of renewables and nuclear power. Both are going to require a significant investment and time. We discussed the long term potential for nuclear power, particularly respecting the outlook for small modular reactors, in our blog of August 25, 2021, “Do Nuclear Reactors Have a Future?” In any event, both renewables and nuclear, are long term solutions.
The question for investors, and all of us, is what do we do now? It would seem that the only clear, short term answers are, coal and conservation. Unfortunately, even coal has its limits with most suppliers operating at or near capacity.
All comments and suggestions are welcome.
Walter J. Kirchberger, CFA