From 60th to 102nd: How Australia's Anti-Nuclear Stance Triggered an Economic Complexity Crisis

• Australia's withdrawal from the New gen IV International Forum agreement and lack of support for nuclear energy is heavily criticized by experts who argue it puts the country at a competitive disadvantage.
• High energy prices driven by an overreliance on intermittent renewables are severely damaging Australia's manufacturing base and overall economic competitiveness, as evidenced by its declining rank on the Economic Complexity Index.
• Ambitious green hydrogen and renewable energy targets set by companies and supported by government subsidies are being walked back as unfeasible with current technologies and costs.
• There is growing community support across Australia for overturning bans on nuclear energy and uranium mining, with a parliamentary inquiry into the nuclear ban receiving unexpectedly positive responses.
• Despite Australia's vast uranium reserves, political opposition has stymied the development of new mines while global supply constraints worsen due to depletion, lack of investment, and pandemic disruptions.

As the world grapples with the urgent need to decarbonize the global economy, the debate around the optimal path forward has intensified. While renewable energy sources like wind and solar have seen remarkable growth, their intermittency and lack of reliable storage solutions present significant challenges for grid stability and energy security. In this context, nuclear power and uranium are re-emerging as critical components of a balanced, low-carbon energy mix. 

Interview with Jonathan Fisher

Australia's Struggles Highlight the Need for Nuclear 

The recent energy crisis in Australia serves as a cautionary tale for countries attempting to transition to a renewables-heavy grid without adequate baseload power. As aging coal plants are retired and replaced primarily by wind and solar, the country has found itself exposed to crippling power shortages and skyrocketing electricity prices whenever generation from intermittent sources dips.

The impact on Australia's economy has been devastating, says Cauldron Energy’ s CEO, Jonathan Fisher.

We are seeing our manufacturing industries just collapse.

Fisher also pointed out to Australia’s rising energy prices, 

Australia used to have some of the cheapest electricity in the world...the past 20 years and that's not the case. We've got some of the most expensive energy prices in the world here in Australia.  

He argues this loss of competitive advantage is directly responsible for Australia suffering the largest decline in living standards of any developed nation in recent years.

Australia's waning economic complexity is further evidence of the damage being wrought by runaway energy costs. The country has fallen from 60th to 102nd on Harvard's Economic Complexity Index as high-value manufacturing operations, unable to withstand the price pressures, have shuttered or moved offshore.

Fisher expressed bafflement at Australia's continued opposition to nuclear power despite these mounting economic costs. The country's decision to withdraw from the New Gen IV International Forum agreement on advanced reactors was "burning the books," he said, motivated by ideology rather than scientific or economic merit.

Nuclear power provides the abundant, reliable, and emissions-free baseload generation that countries like Australia desperately need to maintain grid stability and rein in power prices as fossil fuels are phased out. Next-generation small modular reactors (SMRs) offer even greater potential by enhancing safety, flexibility, and economics. Yet Australia has no nuclear plants and has legislated bans on the technology at both the state and federal levels.

Recognizing nuclear's necessity, the Australian public is increasingly supportive of overturning these bans. A parliamentary inquiry into the federal prohibitions has drawn surprisingly positive responses according to Fisher.

It was called by [Prime Minister] Albanese as a bit of a political move to try and catch the anti-nuclear brigade off guard...I think it's turned into something that he did not expect.

The Decarbonization Challenge and Renewables' Limitations 

Australia's struggles are emblematic of the broader challenges countries face as they seek to rapidly decarbonize in line with net-zero ambitions. While wind and solar will play a significant role, a renewables-only approach is likely to fall short on multiple fronts.

Intermittency remains a vexing problem, requiring prohibitively expensive storage buildouts or fossil-fueled backup generation that undercuts emissions goals. There are also the considerable land-use requirements of utility-scale renewables, which are already facing backlash in some regions.

The limitations of current clean energy technologies are becoming starker as countries attempt to expand their application beyond the electricity sector to hard-to-abate industries like steel, cement, shipping, and aviation. Green hydrogen has been touted as a solution, but Fisher highlighted several high-profile examples of energy companies abandoning or significantly scaling back major hydrogen projects after concluding they are uneconomic.

Japanese utility Kansai Electric's recent decision to withdraw from a massive project in Australia that had received significant government subsidies. Similar pullbacks by the likes of Fortescue's Andrew Forrest, an outspoken champion of green hydrogen, suggest the technology remains far from commercialization.

Uranium Supply Deficit Looms 

The outlook for uranium as a commodity is equally bullish. The world's 440 operable reactors consume approximately 60-70,000 tonnes of uranium annually, with a further 92 reactors under construction and over 300 planned. The prolonged bear market in uranium following the Fukushima disaster resulted in a dearth of investment in new mines. As existing deposits are depleted and secondary supplies like inventories are drawn down, the market is headed for a severe and accelerating supply deficit.

"There's a lot of uranium out there," Fisher noted of known resources, but a combination of low prices and political opposition like Australia's mining bans have stymied the development of new production capacity. He pointed to his own company, Cauldron Energy, as an example, stating they're "pretty happy with the amount of uranium we found" but are in somewhat of a holding pattern until the Western Australia mining moratorium is lifted, likely in March or April.

Utilities, which typically secure uranium through long-term contracts, are now finding themselves with dwindling options as legacy agreements expire. The competition to lock in supplies is expected to intensify, providing a catalyst for higher prices. Uranium equities, which are heavily leveraged to the commodity price, stand to benefit significantly. The impending bull market is likely to be further amplified by the growing presence of financial players like hedge funds and ETFs in the relatively small uranium market.