Environmental campaigners may have inadvertently contributed to climate change by opposing what has historically been one of the cleanest sources of energy – nuclear power.
This is according to Dr Paul Jourdan (pictured), co-founder of Amati and manager of the TB Amati UK Listed Smaller Companies fund.
Last year, Amati launched the mining-focused TB Amati Strategic Metals fund, which led some people to question Jourdan about how this was compatible with the company’s environmental, social and governance (ESG) aims.
Jourdan said: “People have such naive ideas about how you solve the energy transition problem, because you can’t do that without a very large amount of metal.
“The most well-known one is lithium [for batteries], which is really under supplied in any kind of reasonable transition scenario. We will also need more nickel and rare earth metals for motors.”
The metals fund also has exposure to miners of uranium, demand for which should rise as governments rely more on nuclear power.
Jourdan added: “I weep for the fact that we haven't cultivated a nuclear industry in the past two decades, in large part thanks to the green lobby, who ironically campaigned against it.
“They’ve got a lot to answer for in respect of climate change, because that is the single biggest part of the solution to the energy transition. We're three decades behind where we should be, and we need to get a move on.”
Opposition to nuclear power is not the only counterproductive move by environmentalists, according to Jourdan.
Divestment has been a major theme in ESG investing, and oil & gas companies have been pressured to explore alternative sources of energy rather than fossil fuels. Again though, Jourdan said this suggested a misunderstanding of the realities.
“People forget about coal, which accounts for something like 30% of carbon emissions, and if you switch to gas, you save more than half of that,” he continued.
“Then there are 600 million people in the world that still cook by burning wood. We would be lucky if they switched to gas. This is such a complex system, but we love to go for cheap headlines that grab attention.”
As an example, he pointed to a report from the International Energy Agency last year that said there was no need to develop new oil & gas fields. An update published recently that said more of this infrastructure was needed to reduce our reliance on Russia went largely unnoticed.
Jourdan was also critical of the windfall tax on oil majors. He said that while the government “got away” with it the first time, the second version “may well finish off North Sea oil & gas”.
“We want new investment in the North Sea, and I know it’s heavily subsidised, but the major players aren’t enthusiastic and I can't really blame them,” he added.
“Over the last decade, Europe decided to buy gas principally from Russia, because it was cheap and available in large quantities. But I don't think you should buy natural resources from dictators of that level of brutality, because you're stealing from the local population and supporting their oppression. I don't want to make money out of other people's suffering.”
So what does Jourdan suggest we do instead? Produce as much of our energy needs locally as we can. While the manager was critical of the windfall tax, this had more to do with the panicked way it was implemented, rather than the tax itself.
He would like the tax to be permanent, but with a reflexive element, meaning it rises and falls with the price of the underlying commodity. Applying it this way would allow companies to account for it in their long-term planning and remove the uncertainty of being hit with a sudden demand from the government.
The manager would also like to see a carbon tax that targets usage. While he accepted such a move would likely be met with resistance, it has been rolled out with success in Canada.
“They did it in British Columbia and it was apparently unpopular at first,” he said. “But then people realised they all got a carbon dividend, and that there was a redistributitive element to the tax.
“Everybody starts with a rebate, but there is then a tax on carbon emissions from fossil fuels, with those who use the most paying more, while those who use the least pay less and come out of it better off.”
However, even if it were executed in this way, Jourdan said it could still prove unpopular, as it makes climate change the electorate’s problem rather than politicians’.
“People would prefer to have a scapegoat to blame – the ‘horrible oil companies’, without whom we wouldn't have an economy,” he said.
“We couldn't survive the winter without them – if anybody doubts that, just go and speak to the Ukrainians.”
Not everyone agrees with Jourdan. Craig Bonthron, co-manager of the Artemis Positive Future fund, has written extensively about what he sees as the “folly” of investing in nuclear energy.
He admitted that it is the lesser of two evils when compared with fossil fuels but pointed out that even if the UK had approved a nuclear plant in 2000, there is a good chance it still wouldn’t be online.
As an example, he highlighted Hinkley Point C, which was approved by the government in 2010.
“Originally planned to come online in December 2017, it is now expected to produce its first electricity almost a decade later than hoped – in June 2027,” he said. “So that wouldn’t have done much to reduce emissions over that period.”