Energy – Cover story
The Chernobyl disaster in 1986 and the Fukushima accident in Japan 25 years later were turning points in public attitudes towards nuclear energy. The human cost and widespread environmental impact of those disasters sparked protests around the world. They also forced a shift in energy policy. South Korea, Germany, Switzer- land, Austria, Sweden, Belgium and the Philippines joined Japan in announcing plans to phase out nuclear energy in the aftermath of the Fukushima disaster. Fast forward 11 years and attitudes towards renewable energy appear to be thawing. While the consequences of the climate crisis are now far more tangible than they were in 2011, the aftermath of the pandemic and the war in Ukraine have sent the price of energy through the roof. Faced with the acute risk of gas shortages, energy security appears to be the order of the day. Many of the countries that were once committed to ending nuclear energy production have decided to keep such plants open for longer. Japan has gone a step further by intending to build new nuclear power plants, despite the Fukushima disaster still fresh in the memory. And Germany, the country once so committed to the Energiewende – the transition to renewable energy – now intends to keep its last nuclear power plants open, albeit temporarily. The UK is particularly exposed to rising energy prices, with gas powering almost a third of the national grid, according to Ofgem, the energy regulator. And the effects of wholesale gas prices soaring by more than 70% mean that household energy bills were set to rise by 80% in October. However, in September, Britain’s new prime minister, Liz Truss, announced the end of a ban on fracking and the launch of new oil and gas licensing. This followed her predecessor announcing significant subsidies for fossil fuel extraction and the construction of nuclear power plants.
Does the new focus on energy security mean that investors are turning their backs on renewable energy?
What does the surge in demand for energy mean for the transition to a regenerative economy? Mona Dohle reports.
Floating upstream
On the surface, major oil and gas companies can prove a lucra- tive investment. Not only are energy companies relatively resil- ient to recession risks, they have also booked record profits. For example, Shell made a £9.5bn profit in the second quarter of 2022 while BP’s earnings tripled to £6.9bn in the first six months of this year and British Gas owner Centrica’s profits rose fivefold to £1.3bn during the same period. Those not directly exposed to the energy sector could still receive a boost with the sector accounting for almost 10% of the FTSE100. But a closer look reveals a much more nuanced picture, as Tancrède Fulop, senior equity analyst of European utilities at Morningstar, argues. “Generally speaking, the upstream
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