Perhaps no source of power is more controversial than nuclear energy. Nuclear produces virtually no pollution by volume compared with any other energy source and is vastly more efficient in terms of materials and land used.

Yet despite that, nuclear power is arguably the most vociferously protested source of power on the planet. Environmental groups decry its risks and residents protest any time a new nuclear plant is proposed in an area. At the same time though, mankind might be approaching a tipping point for climate change. With fossil fuel production continuing to grow, environmentalists now face a choice – potentially unstoppable global warming or more nuclear plants? Related: Global Oil Supply More Fragile Than You Think

Scientists are now increasingly coming to advocate the view that without a substantial boost in both nuclear power and other renewable fuels, society is not going to be able to stop global warming. Broad groups of scientists have published several open letters taking exactly this position. This leaves the world with a conundrum – which is worse, nuclear power and the associated risk of accidents or global warming and the havoc it will cause?

The truth of the matter is that, for all of the cost declines in renewable energy production, wind and solar power are necessarily intermittent. And while systems like Tesla’s Powerwall can help to deal with this issue, it would take an unprecedented level of investment to create enough batteries to power the world with intermittent generation sources. Nuclear is the only low polluting option that provides consistent power. For that reason combined with the low level of cost associated with nuclear power once the plants are constructed, nuclear is probably indispensable. Related: The Saudi Oil Price War Is Backfiring

The irony of the nuclear power issue is that, for all of the concerns over nuclear power accidents, there are actually very few deaths associated with nuclear. For instance, no one has died in the wake of the Fukushima plant accident, the worst accident in a generation. The World Health Organization reported that health risks are minimal from the “disaster” in fact. Yet coal pollution contributes to more than a million deaths each year.

None of this is to say that coal mining should be stopped tomorrow or that nuclear power is an overnight savior. In a capitalist economy, people have to let the markets decide what technologies are most efficient. But at the same time, if coal power is producing unpriced externalities like health risks, then it probably warrants greater scrutiny from investors simply to avoid future legal risks. Related: The Price Of ‘C’ In China

What does all of this mean for investors? Well to start with, if the pro-nuclear camp starts to gain steam, it would mean a dramatic change in the way investors look at nuclear power related stocks like BWX Technologies (BWXT) and Exelon Corporation (EXC). These companies are not expensive by most metrics, which probably reflects a combination of pessimism around nuclear power construction, and the low current prices for wholesale electricity.

It’s hard to say what would cause a tipping point that would shift the way the public thinks about nuclear power, but one possibility could be a bold political statement. As the U.S. Presidential campaign starts to get under way, investors should keep an eye on the campaign to see if any of the candidates embrace nuclear power as a partial panacea for global warming.

By Michael McDonald of Oilprice.com

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