Trading Climate Change

Chris Rogers, utilities analyst at JP Morgan, believes that nuclear energy will be key to a zero-greenhouse gas hydrogen economy and that, if they want to be part of it, oil companies will have few options other than embracing nuclear power.

JP Morgan’s report, Trading Climate Change, suggests that within the next decade nuclear energy will be at the top of the world’s agenda, with the resurgence of nuclear a key element both in the drive to reduce carbon emissions from power generation and to develop zero-emission hydrogen-fuelled transport. In fact, the report envisages nuclear energy’s contribution to vehicle fuel services in 10 years’ time to be as important as ethanol is today.

Describing nuclear as the "renewable energy that dare not speak its name," Rogers said that he believes that oil giants BP and Shell may already be looking at nuclear in their strategic plans, although both those companies played down any nuclear interest in press reports. However French oil company Total has already spoken up for future involvement in nuclear, with incoming CEO Christophe de Margerie declaring that the company will one day have to be part of the nuclear industry. Total chairman Thierry Desmarest has also confirmed that the company would be interested in moving into nuclear if a suitable opportunity arose.

Future visions of a so-called hydrogen economy, in which hydrogen replaces hydrocarbons for transport, will require the production of hydrogen without associated carbon dioxide emissions. However the production of hydrogen is energy intensive, and nuclear power would provide an economic means of providing that energy without producing carbon dioxide. The JP Morgan report notes that nuclear-hydrogen offers a good value source of fuel to replace existing hydrocarbon sources, at a US Department of Energy cost estimate of $2.5 per gallon of gasoline equivalent compared to current traditional gasoline production costs are $1.5-2.0 per gallon ($5.68-7.57 per liter). On the downside, it notes that new nuclear build faces is not without challenges on the environmental, economic and planning fronts.