According to a Bloomberg article, Germany is likely to fall short of its goals for reducing carbon-dioxide emissions even after spending over 500 billion euros by 2025 to overhaul its energy system. A large part of the reason for this failure is Germany’s concurrent goal of phasing out nuclear reactors.
The Bloomberg article highlights that it is unlikely that any nation can reach its goal of cutting emissions without a significant increase in nuclear energy.
Uranium, the key component in nuclear energy, has the potential to benefit if nations begin to ramp up nuclear production.
The North Shore Uranium ETF (URNM) may provide investors with an attractive vehicle to gain access to uranium miners.
Germany’s Environmental Goals
Germany’s ambitious climate goals include reducing greenhouse gas emissions by 40% when compared to 1990, reducing primary energy consumption by 20%, and increasing the share of renewables in energy consumption to 20%, all by 2020.
Germany has made some notable progress on the climate side. Renewables are close to replacing coal, and the use of natural gas is declining. However, it does not appear that Germany will meet its 2020 goals, which puts their even tighter goals for 2030 in question.
Phasing Out Nuclear
The biggest issue behind Germany’s failure is its concurrent goal of phasing out nuclear reactors in response to the 2011 Fukushima Daiichi meltdown in Japan.
Nuclear plants can generate power 24 hours a day, regardless of weather conditions. Renewables, like wind or solar, are not dependable.
On dark, breezeless days, wind farms and solar plants won’t provide much energy to the power grid. On the other hand, when its windy and bright, solar and wind may provide so much energy that prices in the wholesale market may drop below zero.
A Roadmap for the World
Germany’s economy is dominated by services that require less energy and produce less of a carbon footprint than those economies that are tilted toward industry and manufacturing. Therefore, greater problems may also arise for other nations if even Germany is having an issue meeting climate goals.
Thus, it appears that without nuclear energy, the nations of the world will have a difficult time meeting environmental goals.
Wake Up Call
We believe that the nations of the world will come to realize that they will likely need to increase their use of nuclear energy to meet climate goals. Nuclear energy has the ability to reduce climate change without hindering economic growth. It is a 100% emissions free form of energy that can produce power 24/7.
Uranium Is the Key Component of Nuclear Energy
Uranium is the key component of nuclear energy. Should the nations of the world realize their potential and begin to ramp up production, uranium prices are well-positioned to benefit from the possible increase in nuclear energy production.
How may investors gain exposure to uranium?
The North Shore Global Uranium Mining ETF (URNM)
The North Shore Global Uranium Mining ETF (URNM) seeks to provide investment results that, before fees and expenses, correspond generally to the total return performance of the North Shore Global Uranium Mining Index (the index).
By seeking to replicate the index, URNM looks to provide investors with access to both miners and holders of uranium.
Wilkes, William; Warren, Haley & Parkin, Brian, Germany’s Failed Climate Goals: A Wake-Up Call for Governments Everywhere, Bloomberg, 8/15/18
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Shares are bought and sold at market price (not NAV) and are not individually redeemed from the Fund. Brokerage commissions will reduce returns. Beginning July 10, 2020, market price returns are based on the official closing price of an ETF share or, if the official closing price isn't available, the midpoint between the national best bid and national best offer (“NBBO”) as of the time the ETF calculates current NAV per share. Prior to July 10, 2020, market price returns were based on the midpoint between the Bid and Ask price. NAVs are calculated using prices as of 4:00 PM Eastern Time. The returns shown do not represent the returns you would receive if you traded shares at other times.
Commodity prices may be influenced or characterized by unpredictable factors, including high volatility, changes in supply and demand relationships, weather, agriculture, trade, changes in interest rates and monetary and other governmental policies, action and inaction. Uranium Companies may be significantly subject to the effects of competitive pressures in the uranium business and the price of uranium. The price of uranium may be affected by changes in inflation rates, interest rates, monetary policy, economic conditions and political stability. The price of uranium may fluctuate substantially over short periods of time, therefore, the Fund’s share price may be more volatile than other types of investments. In addition, they may also be significantly affected by import controls, worldwide competition, liability for environmental damage, depletion of resources, mandated expenditures for safety and pollution control devices, political and economic conditions in uranium producing and consuming countries, and uranium production levels and costs of production. Demand for nuclear energy may face considerable risk as a result of, among other risks, incidents and accidents, breaches of security, ill-intentioned acts of terrorism, air crashes, natural disasters, equipment malfunctions or mishandling in storage, handling, transportation, treatment or conditioning of substances and nuclear materials.