ESG Investing

Will Nuclear Fusion Become a Reality? Investors Seem to Think So

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Nuclear fusion has long been portrayed as a potential panacea for the world’s energy needs. Although challenging to harness via power engineering, this energy production process essentially recreates the phenomenon in the plasma core of the sun, where energy is released when hydrogen nuclei combine together to form helium.

Achieving nuclear fusion could indeed change the face of the world, creating virtually limitless amounts of zero-carbon energy. Yet nuclear energy from conventional fission reactors has received relatively little engagement from the ESG world, which leans instead towards renewables such as solar, wind, and biomass power. Nevertheless, fusion may prove more attractive as developing technology wins the backing of A-list investors including Jeff Bezos and Bill Gates.

Tracing Current Engineering Challenges

Modern fusion projects use experimental machines such as tokamak reactors or stellarators to magnetically confine ultra-hot plasma. The principal engineering challenge is to ensure that the rate of heat emitted by a fusion plasma is greater than the rate of energy infused into the plasma.

The process also carries safety concerns, such as handling radioactive waste. Safeguards must be put in place to prevent potentially fatal leaks of tritium, a radioactive isotope of hydrogen. However, unlike traditional nuclear energy, fusion reactors would not create long-lived radioactive waste or face the risk of meltdown.

Proponents of nuclear fusion believe it is uniquely positioned to offer clean, utility-scale energy on demand.

Pivoting to Future Fusion Projects

Including the US, some 35 nations are collaborating on the $25 billion ITER project. The undertaking is meant to create the world’s largest tokamak, with 10 times the energy potential of any tokamak in operation. Actual nuclear fusion is set to begin in 2035.

Various private sector players hope to beat ITER to the punch via their own innovative reactor designs. California-based ITAE Technologies claimed to have achieved a significant fusion milestone in April: producing stable plasma at 50 million degrees Celsius (90 million Fahrenheit). It has raised $280 million this year alone and $880 million total; backers include Google parent company Alphabet, the UK’s Welcome Trust, sovereign wealth funds, and venture capital firms.

Other promising ventures include Massachusetts-based Commonwealth Fusion Systems, which has raised more than $200 million, including from Bill Gates–affiliated zero-carbon Breakthrough Energy Ventures fund. Elsewhere, Jeff Bezos is among the leading investors in Canada-based General Fusion, which recently announced plans to build a fusion demonstration plant in the UK.

Seeking Energy on Demand

Proponents of nuclear fusion believe it is uniquely positioned to offer clean, utility-scale energy on demand. This could provide a companion to the intermittent electricity power generated by renewables—particularly during downtimes of sun and wind or in extreme weather events. Amid forecasts of rising demands for electricity, bringing such power sources together could prevent overreliance on a single power source in the second half of the century.

All the signs point toward nuclear fusion playing some sort of role in the world’s energy needs. Dire climate change forecasts emphasize the need; ESG investors might find nuclear technology worth another look as its benefits become clear.

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