The World’s Third-Largest Economy Is Going Nuclear…Again

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In today’s Money Morning…Europe is now scrambling to find the best possible solution…overcoming past mistakes…a better way forward…and more…

It’s been fascinating to see just how numb the media has become towards the war in Ukraine.

Apparently, the invasion was only good for captivating attention for a few weeks. Now, despite the conflict still raging on, only a few headlines cover the day-to-day developments.

Quite the sad reality if you ask me.

More importantly, though, from an economic and market perspective, it is creating more challenges. The fact that this war isn’t going to go away anytime soon has placed huge pressure on energy supply and demand.

Russian oil and gas were a huge component of meeting global energy needs. Taking it away, perhaps for good, has now put many economies in a tough spot.

Many European nations, for example, are now having to turn to US exports to shore up supply. But as a temporary agreement, it is unclear how sustainable this move will be. It doesn’t help that many of Europe’s gas stockpiles were already fairly low prior to the invasion either.

As a result, Europe is now scrambling to find the best possible solution. It’s a challenge that requires them to not only provide adequate energy supply but also continue to meet their climate change goals.

In my view, the answer is simple…

And it seems the world’s third-largest economy — Japan — has come to the same conclusion…

Overcoming past mistakes

Japanese Prime Minister Fumio Kishida has told his people that nuclear power is back on the table.

It’s a bold decision for the Japanese leader to make, especially when the 2011 Fukushima meltdown is still likely to be in the minds of many citizens. But it was precisely the response in the wake of that disaster, to rely on Russian gas instead of nuclear power, that has brought them to this predicament.

Just like Europe, Japan is now faced with the challenge of higher prices and dwindling supplies of imported gas — a situation that is reinforcing just how important localised energy security is for modern economies.

So with an election coming up and power prices only rising, Kishida is betting big on nuclear.

In his own words, from a recent visit to London:

We will utilise nuclear reactors with safety assurances to contribute to worldwide reduction of dependence on Russian energy,

Restarting just one existing nuclear reactor would have the same effect as supplying 1 million tonnes of new LNG (Liquified Natural Gas) per year to the global market.

Fortunately, despite the past disaster, it does seem as though public opinion is on his side too. As Reuters reports:

But a majority of the public and businesses want the government to restart nuclear reactors to address energy security, with the Ukraine crisis and higher energy costs having added momentum to that shift in opinion.

Clearly the Japanese people can’t afford the rising costs of this energy crisis — a fact that should help usher in a revitalised nuclear industry in Japan that is safer and more effective than ever before.

As for Europe, I expect it won’t be long before we see a similar change of tune.

The better way forward

I’ve already mentioned it before, but both the UK and France are leading the way on this nuclear front.

Boris Johnson has already committed his nation to build new nuclear plants. And while he hasn’t set out any definitive plans, he said this week that ‘we’re going to build one [nuclear plant] every year’.

That is certainly ambitious, but at the very least, it shows his commitment to a nuclear solution.

France, similarly, is coming off the back of re-election of Emmanuel Macron. And while his agenda for energy is focused largely on renewables, it is clear that nuclear power will be pivotal in this long-term transition.

In time I fully expect we’ll see more European economies come around to the idea as well.

After all, as divisive as nuclear power is, it’s hard to argue against its capabilities in the current climate.

The bigger point, for investors like yourself, is that this shift to nuclear is a huge opportunity. I’ve recently been telling many of our paid subscribers all about it — including one very specific Aussie small-cap that has the potential to solve all of Europe’s energy woes.

You can read all about that right here.

Because whatever the future of energy markets may look like, nuclear will play an important role in it. The only question is how big it will be and how much return early investors could make…


Ryan Clarkson-Ledward Signature

Ryan Clarkson-Ledward,
Editor, Money Morning

Ryan is also co-editor of Exponential Stock Investor, a stock tipping newsletter that hunts down promising small-cap stocks. For information on how to subscribe and see what Ryan’s telling subscribers right now, click here.

About Ryan Clarkson-Ledward

Ryan Clarkson-Ledward is an Editor at Money Morning.

Ryan holds degrees in both communication and international business. He helps bring Money Morning readers the latest market updates, both locally and abroad. Ryan tackles all the issues investors need to know about that the mainstream media neglects.

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