Addressing Climate Change: A close but brief look at the future of Small Nuclear Energy

Climate change has had an enormous impact on our planet and is continuing to affect our earth daily. However we as humans have the ability to prevent further impact if we act now. This is a global problem and no one country alone can fix it. While climate science is fairly complicated; the majority of the world’s climate scientists are in agreement that carbon emissions are changing the climate in ways that are changing global temperatures. In recent years the consequences of climate change have become more serious. Every year new records are set. The world is experiencing more heat waves, and in fact the last 22 years have been the hottest on record. The world also has the most melting of ice ever recorded in the North Pole.

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Climate Change has been a pivotal issue in public discussions

A Brief Background

The world has released over 1.5 trillion tons of carbon dioxide or CO2 into the Earth’s atmosphere since the beginning of the industrial revolution. In 2019 alone, the world has released around 37 billion tons more. That’s 50% more than the world emissions in the year 2000 and almost three times emissions as much as 50 years ago. It’s not just CO2 that is causing global warming, the world is also releasing growing emissions of other greenhouse gases such as methane and nitrous oxide.

If we stay on this course, our situation is not going to get any better. As we look into the future, the world’s population, according to the World Bank, will reach 10 billion by 2050. At the same time, the world’s demand for raw materials could double by 2060, according to the Organization for Economic Co-operation and Development. These projections only mean that the world’s energy consumption is only going to get higher and consequently carbon emissions will keep rising despite the need to be reduced to zero. These future projections means that the transition to zero carbon needs needs to be accelerated as we progress into the future. One technology that can help this transition is the use of small modular nuclear reactors.

The State of Nuclear

Before going into more details about small modular nuclear reactors, we need to explore the state of the nuclear industry and its business dynamics. Looking at bulk financial numbers, the nuclear energy industry was worth 300 billion dollars in 2012. While from an operation standpoint, there are currently around 450 nuclear reactors operating worldwide as of 2020. These nuclear reactors produced around 15.2% of the world electricity in 2006. As they stand nowadays nuclear power generation facilities totaled around 389.9 gigawatt electricity in 2019. From a purely technical point of view, these facilities are critical to the global electricity production because they provide base load power. The type of energy source that provides base load power to any electric grid must be the most reliable component of that great. Because this electricity will be used for industrial processes, mission critical applications, to power homes, roads, and every building connected to the grid at all times.

One important business aspect to understand is the ownership model for these nuclear power generating stations. While ownership for these facilities usually vary from one area to another; they are predominantly owned by government entities in countries like France, Russia, India, Pakistan, Iran, and China, but in some other cases a nuclear power station can be owned by private entities like in Canada where Bruce Power has biggest operating nuclear reactors in the world and it is not owned by a government entity.

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Share of Nuclear Energy in Global Electricity Generated in 2017

Regulation is another very important component in the nuclear business because nuclear energy technology can be utilized to manufacture and make weapons. Historically speaking, nuclear energy has been under strict scrutiny by regulators all over the world with a very important emphasis on safety. The regulation’s emphasis on safety made the design, engineering, construction, and servicing of nuclear facilities highly regulated, which required specific sets of skills when it comes to human capital working in this industry.

From a business perspective, the importance of regulation in the nuclear industry stems from the fact that regulation affects construction timelines for nuclear facilities as well as overall cost of doing business. For example, the construction timelines for nuclear reactors range between 5 to 15 years for large nuclear reactors. These timelines make it problematic for big nuclear projects to compete or be feasible for investment. However, the pressing question is: can smaller projects have faster timelines and deliver an economic benefit while providing carbon free electricity ? We will explore this in part II. Stay tuned.

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