Host Jack Belcher is joined by Brent Greenfield, vice president with the Center for ESG and Sustainability, for the latest installment of Energy Policy Watch.
Greenfield and Belcher jointly completed a recent study entitled "Solving the Energy Trilemma: The Case for Nuclear as a Sustainable Investment," which shows how nuclear energy performs in terms of ESG metrics and as a reliable, affordable, and sustainable energy source.
In this installment of Energy Policy Watch, Greenfield discusses how nuclear energy can add to the diversified fuel mix and help supply the world with reliable energy.
Jack Belcher: Can you tell us a little about the Center for ESG and Sustainability? What is it and why did it conduct this study?
Brent Greenfield: Absolutely. Well thank you for having me Jack. So the Center for ESG and Sustainability was established last year as an organization focused in a few areas. So climate forecasting and scenario analysis, risk assessment, certification and research. And in this case, ESG embarked upon a research project to look at the U.S. nuclear industry and specifically to look at several areas, one, the investability of nuclear as an asset. Two, the sustainability performance across various environmental, social and governance metrics for the U.S. nuclear industry, the importance of access to finance, including climate finance for nuclear to fully realize its potential here in the U.S. and around the world. And then also the degree to which improvements are needed in terms of recognizing the benefits of nuclear and its positive attributes from a sustainability and financial perspective.
JB: Well, investability certainly is important because so many funding sources like private equity, like pension funds are focused on socially responsible investing and they want strong ESG scores. And the oil and gas industry of course has been challenged with a lack of investment capital due to investors shying away from fossil energy. The nuclear energy industry has faced the, some of these same challenges as I understand it. What does a report say about nuclear's performance in terms of ESG metrics?
BG: Well, on the whole, it finds that looking across various E, S and G categories and we looked at about 18 different metrics and it found that nuclear is best in class among many of these metrics and is overall a very strong performer. But a couple of the areas that really stand out, we're gonna talk about several others, but especially in today's environment, reliability and affordability really stood out. And when we talk about reliability, thinking about it in terms of capacity factor. So for a nuclear generation facility, of all the energy that it could produce, how much is it actually generating? And when you look at it from that perspective, from capacity factor, nuclear is best in class among all electricity generation technologies at about 93%. And we can look at recent events that have happened over the last few years, whether we're talking about Winter Storm Uri in Texas last February of 2021.
If we go back a little further and look at Hurricane Harvey in 2017. And what we found is that nuclear performed very strongly and was resilient in being able to provide electricity during those events. And we've seen at other times where after a natural disaster, the Navy, for example, has deployed ships with nuclear power to provide electricity to those on shore that are lacking power due to that weather related event. So seeing a lot of those positive attributes from the reliability angle and then also from affordability. When you look at the levelized cost of energy for electricity production, existing new nuclear technology offers superior performance. And when you look at, there have been studies assessing what would happen if you took a nuclear plant offline in terms of electricity rates and how would it affect rate payers. And we actually have a case study from real world scenario that occurred in 2021 when a nuclear plant went offline and shut down in New York state. And what they found after at the grid operator did an assessment that the rates went up significantly for consumers in the region for electricity. And that was largely attributed to the closure of the plant. And so again, seeing really reliability and affordability front and center when looking at sustainability performance of the nuclear industry. And I know in developing this report, that's something that you saw also in a global context outside the United States as well.
JB: Very interesting. Well, another key issue in finding right in the report has been nuclears. You were talking about it near zero emissions and its ability to compliment renewable energy because it's addressing that intermittency issue that that renewables have much like natural gas does as well. And so the critical thing is achieving it's very critical to achieving net zero climate goals while at the same time pro providing reliable power, those two things, which the report concludes can't be done without nuclear. I know investability is a huge part of the story. What can you say about nuclear in terms of it as an investible asset?
BG: Yeah, so it's really interesting. So one of our co-authors atom McNulty took a deep dive on that very question. And what we found in the report is that when you just look at nuclear from a straight up investability standpoint based on financial performance, and you look at the top nuclear generators in the United States and you compare their financial performance with that of the S&P 500 benchmark going back decades, the nuclear industry outperforms the S&P 500. And so just from that financial perspective, it certainly has been shown to be an investible asset. When you add in its performance in areas like reliability and affordability and emissions and the various sustainability elements that we looked at, it really makes the case for the investability of nuclear even stronger. And, and, and looking at that, what we found is that the more that a company or an industry or a project is able to check off those boxes across the various factors relating to sustainability performance, the more it's going to de-risk the operations and the more attractive it's gonna be from the investability standpoint because it's gonna, by de-risking the operations, it's gonna reduce the average cost of capital.
So again, financially, yes, an investible asset and then accounting for sustainability makes it even more investible is what we found.
JB: So where do we go from here?
BG: So there are a couple of things that we found in the report that would be very important going forward to ensure that the full potential of nuclear is able to be realized. One is an awareness initiative and really focused on multiple audiences, certainly the public, because policymakers listen to the public. And increasingly the financial community listens in response to public sentiment, but also including policy makers and the financial community there as well. Because what we found is gonna be key, including for things like accessing finance and climate finance as well, is that there's going to need to be a recognition by the financial community and the ESG rating agencies in particular of the actual performance of the nuclear industry as they evaluate and report on their performance and as decisions are made about investing in these types of industries.
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