Damien Lardoux, Portfolio Manager at EQ Investor, has given his view on the government’s controversial decision regarding Hinkley Point. The full comment can be found below:
Following a final six-week review and after agreeing a ‘golden share’ deal, the UK Government has given the green light to two nuclear reactors at Hinkley Point in Somerset. The controversial move will see the first new nuclear plant built in the UK for 20 years.
As a leader on tackling climate change, the decision can be viewed as a major milestone to achieving a reduction in greenhouse gas emissions of 80% by 2050. Low and zero carbon sources represented slightly less than 50% of the UK energy mix in 2015. At 20%, nuclear power is the fourth biggest source of energy after gas, renewables and coal – contributing significantly to the 38% drop in greenhouse gas emissions since 1990. So why do I have reservations?
First, let’s take a look at the technology behind it. The European Pressurised Reactor (EPR), designed by Areva and EDF, has faced huge problems in its two European implementations to date, Finland and France. Significant design faults have resulted in six – and nine – year delays, and they aren’t expected to complete before 2018. Costs have more than tripled the initial forecasts and in Finland they have cancelled the option for a second reactor.
I find it hard to believe that EDF, the main contractor at Hinkley Point, will be on time and on budget.
Much has been made about the Chinese involvement, but the state-owned CGN brings its own experience of building two EPR reactors. These are expected to start producing electricity next year, after only a four-year delay! Less is known on these two reactors but concerns have been raised about faulty components and a lack of safety test data.
Without one working instance of the new EPR technology, it can’t be denied that the UK Government is taking a gamble, even if EDF is taking on the construction risk.
Interestingly, the Chinese themselves are not planning to build anymore reactors on home soil due to the high cost! Onshore and offshore wind farms currently produces electricity at a cheaper rate than what Hinkley Point promises. According to WindEurope, wind turbines have become 10% more powerful year-on-year, with high competition also reducing costs. The electricity produced by Hinkley Point is indexed to inflation and will soar over the 35 years of the contract.
Comparing the build times also raises questions. Hinkley Point will take at least nine years to establish, whilst onshore and offshore wind farms take eighteen months and four years respectively. It becomes quite clear that renewables would help to meet the climate change deadline sooner and with more certainty than the unproven EPR technology.
While nuclear power does not create climate change-related ‘greenhouse’ gases, it does poses security and health concerns. Chernobyl, Three Miles Islands and Fukushima caused serious consequences for the surrounding areas. Climate change itself may further increase the risk of nuclear accidents as heat waves causes cooling problems, as seen in France and the US. Uranium mining also creates health issues for the workers and the local community. That’s not forgetting the perennial challenge for the nuclear industry of what to do with reactive waste.
Rightly, the advocates of Hinkley Point argue that to only rely on renewables is risky, particularly at peak demand over the winter months. However, the development of interconnectors between the UK and other European countries would help to meet this demand and bring cheaper electricity when needed.
Looking at this from the demand side, Government measures to increase energy efficiency particularly of commercial and residential buildings would substantially reduce the UK’s need for generating new capacity. At times of peak demand, the rescheduling of non-essential use of electricity by energy intensive industries would alleviate pressure on the grid and could help to avoid building a new nuclear plant.
Bearing all of this in mind, I really struggle to understand why the Government under Theresa May felt the need to rush through a decision. Perhaps it sets the right tone for our post-Brexit economy?
We firmly believe it would have been wiser for the UK to promote cheaper and more reliable solutions to face the coming energy challenges. At EQ, we have developed the Positive Impact Portfolios to help finance companies that are helping the world to reduce greenhouse gas emissions. While nuclear energy is not entirely screened out, it represents less than 0.1% of our portfolios’ allocation. Furthermore, we have engaged with our fund managers to ensure that they only invest in energy companies which get more of their energy mix from renewables than from nuclear.
7 New Technologies That Could Radically Change Our Energy Consumption
Most of our focus on technological development to lessen our environmental impact has been focused on cleaner, more efficient methods of generating electricity. The cost of solar energy production, for example, is slated to fall more than 75 percent between 2010 and 2020.
This is a massive step forward, and it’s good that engineers and researchers are working for even more advancements in this area. But what about technologies that reduce the amount of energy we demand in the first place?
Though it doesn’t get as much attention in the press, we’re making tremendous progress in this area, too.
New Technologies to Watch
These are some of the top emerging technologies that have the power to reduce our energy demands:
- Self-driving cars. Self-driving cars are still in development, but they’re already being hailed as potential ways to eliminate a number of problems on the road, including the epidemic of distracted driving ironically driven by other new technologies. However, even autonomous vehicle proponents often miss the tremendous energy savings that self-driving cars could have on the world. With a fleet of autonomous vehicles at our beck and call, consumers will spend less time driving themselves and more time carpooling, dramatically reducing overall fuel consumption once it’s fully adopted.
- Magnetocaloric tech. The magnetocaloric effect isn’t exactly new—it was actually discovered in 1881—but it’s only recently being studied and applied to commercial appliances. Essentially, this technology relies on changing magnetic fields to produce a cooling effect, which could be used in refrigerators and air conditioners to significantly reduce the amount of electricity required.
- New types of insulation. Insulation is the best asset we have to keep our homes thermoregulated; they keep cold or warm air in (depending on the season) and keep warm or cold air out (again, depending on the season). New insulation technology has the power to improve this efficiency many times over, decreasing our need for heating and cooling entirely. For example, some new automated sealing technologies can seal gaps between 0.5 inches wide and the width of a human hair.
- Better lights. Fluorescent bulbs were a dramatic improvement over incandescent bulbs, and LEDs were a dramatic improvement over fluorescent bulbs—but the improvements may not end there. Scientists are currently researching even better types of light bulbs, and more efficient applications of LEDs while they’re at it.
- Better heat pumps. Heat pumps are built to transfer heat from one location to another, and can be used to efficiently manage temperatures—keeping homes warm while requiring less energy expenditure. For example, some heat pumps are built for residential heating and cooling, while others are being used to make more efficient appliances, like dryers.
- The internet of things. The internet of things and “smart” devices is another development that can significantly reduce our energy demands. For example, “smart” windows may be able to respond dynamically to changing light conditions to heat or cool the house more efficiently, and “smart” refrigerators may be able to respond dynamically to new conditions. There are several reasons for this improvement. First, smart devices automate things, so it’s easier to control your energy consumption. Second, they track your consumption patterns, so it’s easier to conceptualize your impact. Third, they’re often designed with efficiency in mind from the beginning, reducing energy demands, even without the high-tech interfaces.
- Machine learning. Machine learning and artificial intelligence (AI) technologies have the power to improve almost every other item on this list. By studying consumer patterns and recommending new strategies, or automatically controlling certain features, machine learning algorithms have the power to fundamentally change how we use energy in our homes and businesses.
Making the Investment
All technologies need time, money, and consumer acceptance to be developed. Fortunately, a growing number of consumers are becoming enthusiastic about finding new ways to reduce their energy consumption and overall environmental impact. As long as we keep making the investment, our tools to create cleaner energy and demand less energy in the first place should have a massive positive effect on our environment—and even our daily lives.
Responsible Energy Investments Could Solve Retirement Funding Crisis
Retiring baby-boomers are facing a retirement cliff, at the same time as mother nature unleashes her fury with devastating storms tied to the impact of global warming. There could be a unique solution to the challenges associated with climate change – investments in clean energy from retirement funds.
Financial savings play a very important role in everyone’s life and one must start planning for it as soon as possible. It’s shocking how quickly seniors can burn through their nest egg – leaving many wondering, “How long your retirement savings will last?”
Let’s take a closer look at how seniors can take baby steps on the path to retiring with dignity, while helping to clean up our environment.
Tip #1: Focus & Determination
Like in other work, it is very important to focus and be determined. If retirement is around the corner, then make sure to start putting some money away for retirement. No one can ever achieve anything without dedication and focus – whether it’s saving the planet, or saving for retirement.
Tip #2: Minimize Spending
One of the most important things that you need to do is to minimize your expenditures. Reducing consumption is good for the planet too!
Tip #3: Visualize Your Goal
You can achieve more if you have a clearly defined goal in life. This about how your money can be used to better the planet – imagine cleaner air, water and a healthier environment to leave to your grandchildren.
Investing in Clean Energy
One of the hottest and most popular industries for investment today is the energy market – the trading of energy commodities. Clean energy commodities are traded alongside dirty energy supplies. You might be surprised to learn that clean energy is becoming much more competitive.
With green biz becoming more popular, it is quickly becoming a powerful tool for diversified retirement investing.
The Future of Green Biz
As far as the future is concerned, energy businesses are going to continue getting bigger and better. There are many leading energy companies in the market that already have very high stock prices, yet people are continuing to investing in them.
Green initiatives are impacting every industry. Go Green campaigns are a PR staple of every modern brand. For the energy-sector in the US, solar energy investments are considered to be the most accessible form of clean energy investment. Though investing in any energy business comes with some risks, the demand for energy isn’t going anywhere.
In conclusion, if you want to start saving for your retirement, then clean energy stocks and commodity trading are some of the best options for wallets and the planet. Investing in clean energy products, like solar power, is a more long-term investment. It’s quite stable and comes with a significant profit margin. And it’s amazing for the planet!