GLOBAL - The nuclear industry's future looks challenging after the Fukushima Daichii plant disaster in March, which saw its operator Tokyo Electric Power Company (TEPCO) lose 36% of its share price in the first 10 days of the crisis, according to MSCI ESG Research.
The report 'Implications of the Japanese Nuclear Disaster: An ESG Research Perspective', by Douglas Cogan and Jerome Le Page, says a much-anticipated nuclear renaissance could be curtailed as the world absorbs the lessons from the worst nuclear accident since the Chernobyl disaster 25 years ago.
The accident may boost low-carbon generating sources, such as natural gas and renewable energy, they said.
MSCI's Global Alternative Energy index, for example, recorded a 10.1% gain in the first 10 days after Japan's nuclear crisis began, while the MSCI Japan Electric Utilities index lost 22.8% over the same period.
Coal may also get a short-term lift, since nuclear power is its chief rival in providing base-load power generation.
German rating agency oekom research says while share prices of solar and wind power companies have shot up in the wake of the nuclear disaster in Japan and debate about an energy transition, systematic energy saving is being largely neglected.
It suggests Europe could reduce its energy consumption substantially by increasing energy efficiency.
"The financial market has a key role to play in increasing energy efficiency," said Rolf Häßler, director product and market development at oekom research.
"Financing and investment policies can give important stimuli to the economy for improving energy efficiency."
While MSCI ESG Research regards the Japanese nuclear power disaster as a major setback for the industry, with financial pressure and regulatory scrutiny certain to increase, it may not prevent the industry from growing in the long term.
The report points out that economic and environmental damage from global warming could be far greater than a single nuclear power accident.
It says nuclear power's greatest long-term challenge may yet be its ability to generate competitively priced electricity, as many under-construction reactors face billions of dollars of overruns.
More government subsidies will be needed to attract investment capital to sustain global nuclear expansion.
Michael Riley, portfolio manager at Swiss-based SAM, said: "While wind and solar power can help ease the additional need for clean power generation, their intermittent nature does not allow them to fully replace the 24-hour availability of base load nuclear power.
"Energy efficiency can replace base load power while reducing costs, and it can do so without the aid of subsidies."
He said Japan had already recognised the potential of energy efficiency as a response to its energy crisis and planned to invest ¥1trn (€8.3bn) in energy-efficiency measures to help reduce power shortages.
"The current nuclear crisis will only accelerate investments in energy efficiency as the most cost-effective way to both satisfy energy demand and meet climate change-related targets," he added.