Portfolio managers seek nuclear option amid geopolitical uncertainty

At times of high pace of change, it is paramount to promote nuclear energy with advanced technologies to address upfront waste and proliferation problems, a precondition for durable nuclear electricity generation.

The general principle of nuclear fission in thermal reactors is to use fissile material, such as isotopes of uranium, to generate neutrons which split a nucleus to produce large amounts of energy.  A fertile material such as thorium, on the other hand, can capture neutrons and create new fissile isotopes of uranium.

Using thorium (Th) as fertile nuclear material, with a particle accelerator, is highly disruptive. It can produce efficient nuclear energy, heavily reducing waste’s life and toxicity, and insuring proliferation resistance not matched by uranium-plutonium (U-Pu) cycle reactors. Investors should pay close attention to these forthcoming developments.

High energy reset

Forthcoming electricity demand is expected to be exponential, caused by energy transition away from fossil fuels, magnified by communication and transport.

AI demand is estimated to double from 2024 to 980 terawatt-hours by 2030, according to International Atomic Energy Agency figures. These trends are nudging us towards an efficient and coherent energy basket.

While progressively lifting government bans, the nuclear industry is entering a renaissance. Small and modular reactors are becoming a global phenomenon. China is in the lead, with 28 nuclear power plants under construction. Public and private funding is flowing back into this industry. This rebirth comes with security and efficiency improvements to the old paradigm of the U-Pu nuclear cycle, but without sufficiently tackling the long-life waste problem, proliferation risks and resource of fissile materials.

Nuclear waste is a major bottleneck for social acceptance. Fear of proliferation is highly sensitive to the inherent uncertainty of geopolitics. Most of the 436 old generation reactors operating in the world are slow neutron reactors generating the bulk of waste. The US Department of Energy has estimated storage costs at $96bn. The U-Pu cycle is inefficient as it requires enrichment from the 0.7 per cent concentration of natural uranium and is prone to proliferation if enriched above the 20 per cent needed for some reactors. This is also typically the threshold needed for the highly enriched uranium used for the core of most nuclear weapons.

Fast neutron reactors known as ‘breeders’ and  molten salt reactors are more apt to recycle waste but fail on proliferation. Nuclear fusion is a promising research field but remains a far-fetched possibility. More realistically, thorium offers a chance to move away from the old U-Pu pitfalls and embraces the best which fundamental science has to offer for industrial applications.

In the early 1990s, the stroke of genius from Carlo Rubbia, the 1984 Nobel prize-winning physicist, was to lead a team at the European Organisation for Nuclear Research (CERN) to address upfront waste and proliferation risks and then derive solutions.

The result was to apply accelerators to a new fuel cycle by revisiting the fertile properties of thorium. Further developing the research led to creating the accelerator driven system (ADS) to produce energy with an outstanding advantage: ‘burning’ wastes as fissile fuel.

Related nuclear transmutation can drastically cut the half-life of several thousand years to an estimated 500 years, as compared with the Pu half-life of 24,000 years. If applied systematically, this dramatic new approach can burn almost all wastes accumulated over the last 70 years around the world.

Proliferation risks are also considerably limited by ADS. Efficiency is increased, with 100 per cent of thorium mineral resource deemed effective, as opposed to 0.7 per cent for natural uranium.

Applying sciences to the industry is moving fast in China where thorium ADS based machines are expected before 2030. On the engineering side, Transmutex is specialised in ADS design and software for energy creation and waste transmutation. Copenhagen Atomics offers plants based on the U-Th mix, using molten salt reactors. India has opened this path and owns one third of known reserves of thorium minerals.

In many developed countries, innovative firms are actively exploring transmutation for medical applications and waste management. In Europe, thanks to their experience in medical imaging and therapy, the Paul Sherrer Institute has developed the capacity to bridge the cyclotron learning curve into the ADS infrastructure.

Broadening the investment universe

Because of the complexity of the nuclear business, these is a considerable knowledge gap among the public and financial analysts. As a comparison, AI, still a complex domain, has demonstrated how new technologies can diffuse rapidly. This can also be done for advanced nuclear technologies, leading towards a broad debate for directing energy policies and resource allocation.

On the investment side, asset managers hoping to represent the nuclear energy ecosystem in portfolios should include more variety in their selection. A point of attention is that existing nuclear ETFs are too narrowly focused on the U-Pu cycle. With non-listed assets, the scope for choice is larger, mostly with venture capital firms. 

The race is now accelerating. Government agencies have the motivation to transform the energy equation. Qualified investors can participate in venture capital and private placements space, as well as listed markets, to arbitrage competing technologies.

Thorium can transcend the social pathos attached to the U-Pu cycle, a result of its ominous military origins, nuclear accidents and Dr Strangelove-style association with rogue states.

Didier Duret, chairman of Omega Wealth Management and general secretary of International Thorium Energy Comittee (iThEC), an independent non-profit association founded in 2012, under the auspices of Carlo Rubbia.