Little Things Matter, for Smart Investors – Ben Heard (on Nuclear) (Transcript)

Interview with Ben Heard, Founder of Bright New World. Nuclear’s new outlook.


What should uranium investors make of the new look nuclear’s role in energy provision?

An eco-modernist based in Adelaide, Australia, Heard grew up as an anti-nuclear advocate. However, as part of being a proponent for a carbon-neutral future, he quickly became aware that nuclear power is a necessity for our clean energy needs.

Heard talks us through how his own identity was transformed by education, how Nuclear SMRs and smart energy mixes are currently being implemented and can be further implemented in the future in countries around the world.

Finally, he talks about how exactly these modern technological advancements will be funded. What is the incentive?

What did you make of Ben Heard? What would you like us to ask him in our next interview? Comment below and we will respond.

We Discuss:

  1. Ben’s Background: What’s an Eco-Modernist?
  2. Moment in Ben’s Life That Said “This Isn’t Right For Me, My Mindset Has to Change”
  3. Smart Energy Mixes: What’s Going to Trigger Development in the Energy Space?
  4. Research on Nuclear and SMR’s: The One That Can Do it All
  5. Funding it All: Who’s Responsible for Supporting Green, Renewable Energy?

CLICK HERE to watch the full interview.

Matthew Gordon: Ben, how are you doing, sir?

Ben Heard: I am really, really well here this evening, Matt. It is so good to be on the show.

Matthew Gordon: Well, look, thanks for joining us on a Friday night in Australia. I’m sure you’d rather have a cold one in your hand and be reading a good book, I would have thought?

Ben Heard: I have a few good books on the go. We’ll get to that later in the evening.

Matthew Gordon: Well look, Ben, we have been really keen to speak to you. We have been trying for a while to find a time which suited us both. So, one – thank you very much for agreeing to come on the show, and two – I’m excited for this because you’re going to talk to us about smart energy uses. So that’s the broad theme of this conversation. And we are also excited to be getting into a little bit more detail about SMRs, which is a topic that I think our viewers have been hearing a lot from us recently. I need you to describe, maybe give people a little bit of background about yourself, because you describe yourself as an eco-modernist. Let’s try and give people a sense of what you’ve been doing over the past few years. And what’s an ecomodernist?

Ben Heard: Yes, look, I’d be delighted. I mean, ecomodernist: it’s a place I have arrived at, probably in the last few years at the end of a fairly long journey. So, I would have described myself for a very long time as an environmentalist, and you know, that came about, I used to work in healthcare, so my undergraduate studies were in occupational therapy, and I worked in hospitals for some time. And then, just in the course of reading a couple of influential books I got very, very connected with environmental sustainability and very, very passionate about those challenges, and I went through a substantial professional redirect. I took a Master’s in sustainability at Monash University in my mid to late twenties. I found myself getting far better marks than they ever got in undergrad. I figured I was on a winning choice. And really, I eat up the content, you know, I really, really enjoyed thinking about the economics, the legal, or the technological and engineering challenges of environmental sustainability, which was tremendous and lots and lots of fun.

And from there, I was able to begin consulting with some major consulting houses in climate change and sustainability-related matters. A lot of stakeholder consultation and risk communication also. And this was all good to a point. And that point probably came when I had been doing climate change related work for quite a long time, and long enough to have done some quite large projects in climate change adaptation. You know, trying to think about how cities and settlements might adapt to the change that’s coming down the pipeline, as well as some work in the mitigation space; so how can we reduce the emissions to make that adaptation challenge more tractable? And unfortunately, what I was experiencing was a serious mismatch between the two. I was seeing a very large and significant problem here. And I was seeing a portfolio of solutions in the form of renewable energy, carbon neutrality processes, revegetation, and energy efficiency, which while laudable were just outgunned, just thoroughly outgunned.

And that was depressing to be brutally honest. It was actually very, very difficult to have gone on quite a journey, got to myself to a position, and then suddenly started thinking, I’m not really sure if we can do this. And doing work in particular on the emissions that would be associated with just one desalination plant in Australia. You know, one of the very earliest desalination plants, right in the height of drought, around about 2007. And the emissions that would come from that, because it was connected to the Victorian grid, which was running on lignite. You know, it was just so high. It started to get me acquainted with the scale of what we are talking about here. One thing led to another, and when I returned to my home city where I live now, Adelaide, I, for various circumstances, I began my own consultancy and I felt like I had the intellectual freedom to go back to something I’d rejected a long time ago, which was nuclear power and nuclear technology.

As an environmentalist, it felt like something of a package deal; that you sign up to several positions and points of view. And one of them is that you are rejecting nuclear technology. So that’s fine. I was signed up. Not a problem. I was antinuclear, without having ever thought terribly hard about it. And I spent a couple of years thinking really, really hard about it. And basically, I found that I had cornered myself and had to change my mind on that position. And with, you know, with the zeal of the converted, I decided I should probably start talking about that. I did, and I fundamentally haven’t stopped. That’s been an exciting journey: a lot of blogging, a lot of popular articles, the beginning of making some independent contributions, like a process we did called Zero Carbon Options, to try to bring some new thinking into the space.

I met a lot of great people, and that included a tap on the shoulder from a guy I was working with, Barry Brook at the university of Adelaide to say, you know, what about a PhD? How about you come and do that? So that became the next step. A couple of years ago, in 2018, I was awarded that PhD, and I was looking at bringing together, well, I was looking at first of all, establishing the need for nuclear power in that decarbonization challenge. And I guess really firming up with certainty that yes, that need is there. And if it is there, what’s the right blend of technologies that we might consider. And what are the conditions for considering different technologies to achieve a given outcome, which we might generally take for granted as energy being reliable, affordable, and also sufficiently clean to really seriously tackle climate change.

Now, at the end of all of that you get to something called ecomodernism. And what happened along the way is I came into contact with a lot of people who were thinking like I used to be thinking as an environmentalist, but fractionally different, you know, just pivoted in a slightly different direction. And one of those was the supervisor, and he was one of the co-authors of a document called The Ecomodernist Manifesto. I knew several of the authors of this document. It is a good document. And when I read it, it really spoke to me. And what seems to have happened is that a breakaway, I guess, of environmentalism has sprung up. And it is people who are very, very connected with a need to protect the natural world. Very, very attached to a world that has natural beauty in it: clean air, clean water, and a clean environment. Unlike the environmentalism that I was originally brought up on, it is a validly pro-technology, it is a validly pro-innovation. It has a very strong slant that our best chance of solving these challenges is that we will need to technologically innovate our way to solutions, and that states should play a strong role in funding innovation. If there is a good place for state-based money it is in that innovation gap.

Ecomodernism tends to be quite humanist, quite human-loving, which really suited me back to my roots, having been raised as a Catholic with a strong social justice ethic. Where environmentalism can have quite an undercurrent, or sometimes quite an overt misanthropy about it. Ecomodernism really rejects that very solidly. There really can’t be a trade-off between achieving these environmental goals and achieving the goals of furthering human potential, progressing human health and wellbeing. And indeed, if ever we do try to trade them off, the environment loses. And we really need to stop doing that. It tends to advocate very strongly for intensifying what we do. So, bring our impacts in to small areas. And a lot of that comes down to clean plentiful energy, because energy is such a great substitute. You know, if we have enough energy, we can substitute for a lot of services that were previously being provided by nature, and then leave nature alone.

So, whereas during my Masters of sustainability, we were thinking about things like pricing ecosystem services. You’ve probably had some idea of this, you know; let’s look at the value of that watershed in terms of providing clean water, we’ll put a price on it and then people won’t mess with it, right? Well, no, that’s not what happens actually. There’s a difference between putting a hypothetical price on something and getting people to pay for it. The other problem is, if you can demonstrate great value from liquidating it, it gets liquidated. And there’s, there’s more of an idea in ecomodernism that the better pathway is to make those areas redundant for our material wellbeing, and then they are free to be there for our spiritual and environmental wellbeing. So rather than pricing them, we make them valueless because we don’t need what they’re providing anymore for our material wellbeing. We used to call that notion ‘priceless’. It’s this interesting pivot between no value and priceless. So that is difference and, you know, the more I’ve gone down this route, the more I’ve realised, that is what I am. And it’s actually a different thing to an environmentalist. It’s an ecomodernist.

Matthew Gordon: Let’s talk about that for a bit, because I know we are here to talk about different energy mixes, and I do want to talk about SMR. But I quite like that because what you’ve done, how you’ve evolved, because when people talk about environmentalists, you know, from the sixties onward, it seemed a very, a fundamentalist type approach. You know, there was unthinkingly moving a certain direction and almost alienating in a way, the rest of society who didn’t like the extremism of thought of behaviour. I think there is a little bit of that, for sure. And I liked the evolving nature of the conversation over the, I think the past decade, you know, people like Michael Schellenberger, who has switched, segued, to be a pro-nuclear advocate in that time, and possibly even anti-renewable to a degree. It is fair to say that the conversation, the narrative has changed and evolved. But what was the moment for you? I know you touched upon it there, but what was the thought in that moment which said to you, something has got to change? Because the definition of insanity is repeating the same thing over and over with the same results. So where was that?

Ben Heard: Oh yes, gosh, you know, there were a number of them that worked on different bits of my psyche, you could say. One was, for example, was trying to implement a carbon neutrality project on a fairly modest piece of infrastructure in Melbourne. And when I could see the administrative and data verification burden that was actually reasonably required to make that claim, that helped me look at that and go, that’s not going to scale up. That’s too much work for too little difference to rely on stuff like that. That’s not going to scale up. Another very big one was being in charge of the spreadsheet for the greenhouse gas emissions of this desalination plant, and looking at it and then going and turning over and looking at the scale of the wind or the solar that we were looking at at that time, and just feeling quite gobsmacked by the scale of the difference there. You know, one single new piece of infrastructure was going to require so much new renewable energy just to break even on an emissions basis. And when I was looking at the adaptation, realising, oh, we are going to need to desalinate in Australia, you know, it’s coming. It can’t work that way.

 And then there was a very interesting moment, which was a behaviour, more of a behavioural moment actually, where I was probably pretty close to changing my position on nuclear power, which is probably the core of my ecomodernism – it was centred on the nuclear power issue. And I went to a debate at Adelaide University with Barry Brooke, who went on to become my PhD supervisor and friend and mentor. A gentleman called Tom Blees from the United States. He wrote a tremendous book called Prescription for the Planet, and a couple on the opposing side; an academic called Mark Diesendorf, an activist called David Noonan. And I’d been following Barry’s work very carefully, and I’d been following the climate science work very carefully and I had become very familiar with the rhetorical zigzags that people who wished to criticise climate science would take. I had become quite a good detective on going, oh, no, hang on. You’re not playing straight with this here. And then I saw the antinuclear activist replicate that exact behaviour in the forum. I saw a professor, which was Barry, and a very humble, and a very nice guy, Tom, who was playing a very straight bat with an audience. And then I saw a clear cherry pick piece of behaviour over here. And it was actually, it was a moment of identity where I went; I can’t identify, I don’t want to identify with that anymore. If that’s what that is, I don’t like it. And I reject it. And so, you know, it’s why I’m always very keen for people who are passionate about the same causes that I am, I ask them to always check their behaviour very, very carefully, because if we are interested in the task of persuasion, we must be appealing. You know, we must look like people that you would want to stand next to it. Our conduct is critical. And seeing that example writ large, that really got me quite over the line.

And then actually, the other thing was that night was learning about the integral faster reactor and fast breeder reactors and realising that we could recycle all of the nuclear waste. I thought maybe I might step over the line and change my mind. Instead, I triple jumped over it, you know. I just went, ‘Oh my God, I’m so pro-nuclear now. Because, you know, I didn’t realise this was available. And so that just was a, quite a divot on the mindset.

But you know, people are often asked for the lightning bolt moment. It’s not quite like that, but there are a number of memorable moments along the way, which is something else that’s worth keeping in mind if we are dealing with anybody. Give them time, it’s going to be an accumulation of experiences and knowledges that leads to a change in position, not a magic moment.

Matthew Gordon: You are pro-nuclear? I promise that we will talk about SMRs, for sure. And fast breeders and Newgen et cetera. I’m excited to talk about them. But you are also an advocate for smart energy mixes. And obviously, different geographies, different countries will have their own drivers there. In Australia, Spain, lots of solar I suspect. Off the coast of Scotland will have, you know, lots of wind. So there are lots of different ideas and solutions out there where, you know, I referenced Mike Shellenberger a second ago, pointing at the fallacy of renewable being entirely carbon free, because you have to dig stuff out of the ground to produce it and your do transport it around the world. And it, you know, it has the emotional connection with people believing that it’s all good stuff. But the reality is somewhat different. That’s not to say we shouldn’t do it. You’ve obviously had a good look and a rummage around renewables as part of your learning. What would you say to people in terms of, you know, how the world should be looking at this? because I think you have given us some clues there; this can’t be bottom up. This has to be top down.

Ben Heard: This isn’t going to come from decentralized small ball solutions at a household level, ultimately. Some of that can aggregate up and make an impressive contribution. But it’s far from what we require ultimately to get to where we are going.

I think you started with something that I would probably want to lead towards, which is that because of the differences in resource availability, geography and need, there are always going to be different energy sources that are going to have different merits in different places. And it is appropriate, legitimate, and just smart to have all of those options on the table at all times. And the challenge is to try to balance the need for optimisation, the optimal mix of solutions keeps changing because the technology keeps changing, the costs keep changing and the needs keep changing, with enough prescription and certainty to actually get things going on a decent amount of timeframe. What I’m generally interested in looking for is what is the no regrets, relatively ironclad level of prescription that we can have around in technology pathways, in different jurisdictions and in different places.

When I look at Australia, at the moment we operate a lot of coal. For a relatively small nation, we’ve got like 25 gigawatts of coal. And it’s going to go. It has to, unfortunately, or fortunately, however you look at it, it’s not to be replaced. It’s going to be retired. Is it going to be retired with 25Gw of things that behave in exactly the same way in the system? Maybe not. Maybe – but maybe not. But on the basis of my modelling, should we build at least 10? Yes, we should. So I’m really confident that that even if you take a country like Australia, which has an excellent solar resource and an excellent wind resource, and a lot of coastline, if your goal is a deeply decarbonized economy and a deeply decarbonized energy grid, there’s a virtually ironclad case for at least 10,000 megawatts of nuclear power in that mix. And that’s more than enough to get you started and plan and keep learning and see for the next cycle.

Now, when I talk about smart energy mixes, in my city a lot of houses here now have rooftop solar PV. Now, Adelaide is a sunny place, a very Mediterranean climate. It makes a lot of power, and that it is cheap electricity now. That’s good. One of the dumb things we did is that we used that solar PV to try to make high volumes of electricity. We faced them all north to get the largest quantity of power out of them that we could during the day. I keep stressing to everyone, we should have faced them west because that’s when the power peaks. We should have used the solar PV to create high-value electricity. The difference in the value of electricity on a stinking hot day in Adelaide, when everyone’s running their air conditioner between midday and between 5:00PM and 6:00 PM. And by the way, it keeps getting hotter until about 4:00PM or 5:00 PM here on those days. And then everyone’s come home. All the offices are still running. All the houses come and flick on their air conditioners. The difference in the wholesale price in our market can be thousands of dollars. The strain on the network is sky high at those times. And if all of those units were facing West, that’s when they’d be maxing out their production, and that should be an aid to the network and an aid to the grid. They would be lowering the demand on the distribution network, lowering the demand on the transmission network, lowering the demand on the generators, because they are producing power when we need it most. Whereas when they are north facing, they peak at midday and they are seriously waning by the time that that 4:00 PM to 6:00 PM period comes around.

That’s just what I mean by smart. That’s not pro or anti-solar, that’s just looking at how does the network work, and what is the best use of that technology in that need. Whereas what we are creating now is the same thing that they have in California: it is this duck curve factors – as that is waning, and the demand is peaking, you have got to ramp a long hard way to get up there. And so, unfortunately, what we are starting to see, and what I’ve seen in jurisdictions like Australia and particularly South Australia, where I live, Germany, California, is that those low costs, low energy cost renewables like wind and solar, are very attractive in the early stages of an energy transition because they’re able to append to a power distribution system and power creation distribution system that was built with a lot of redundancy as part of the design. And they profit off that redundancy because there’s enough of everything still there. It gets harder in a nonlinear way as that penetration goes up. And that’s where we must be smart about what we are doing with the right amount of everything used in the right way.

The beautiful thing about nuclear technology is that it can work pretty much everywhere, and it isn’t weather dependent. There’s probably a role for it in Australia. Is there going to be a role for onshore wind, offshore, wind, and solar, in getting us to that position?  Yes, I am virtually certain that there is. And certainly, the degree to which that brought their costs down over the last couple of decades has pulled that in really strongly. I am not as hard on that position as say, Mike is, and you know, he and I see certain things very, very similarly, and we see this one a little differently. He may yet be right. But you know, on the other hand, from a decarbonization perspective, nuclear, probably at the moment isn’t on the footing to actually go and deliver all of that right now. We are going to be getting more wind and solar I’d like to see us using it in a smart way. And to work out what that optimal mix is, if it’s going to be more nuclear, it’s going to need to be better nuclear. It’s going to need to be cheaper nuclear. It’s going to need to be nuclear that is easier to deliver. It’s going to need to be nuclear that that just makes it so much more of a no-brainer for investors, communities, governments, to bring onto their system. And that’s part of the challenge. So yes, I think wind and solar is going to have a big role everywhere.

When you look at Kenya, you know, they’ve done quite well with their hydro-geothermal resources. Why wouldn’t they? I mean, they have it. They have quite a good shallow hydrological geothermal resource. So that is a really smart way for Kenya to make power. Bring it in, bring it into the mix.

So I just, I’d like people to do their best to set their ideology aside, remain open to the evidence, look forward just in a medium-term way into the future and decide, well, what are our best steps with the reasonable time horizon that we’ve got, understanding that we need to take some action. And we are not going to be able to optimise perfectly, but what can we do that is relatively smart and no regrets and have gateways and keep reappraising as we move forward. Under that a framework, I see a strong future for all of those technologies. Ultimately, end game; if you make good enough nuclear, it can pretty much do everything, but we are not there yet

Matthew Gordon: Quite a few topics there. I am fascinated. I hope we can come back to them another day. You know, when we talked about bottom-up versus top-down and, you know, governments needing to open up to the possibility, or the possibilities, but they are also going to have to fund some of this. And some of it is going to be private, and it needs to be easy for private money to recoup their investments. There are existing infrastructures, which either need to be replaced, upgraded. There is energy storage; VRFB – is that going to come through in time to be able to, you know, in an economic way, whether it be for industry, for houses. Like I say, there are lots and lots of topics there. And I’m going to have to go back over this interview and just write these down because we should talk about those, but we are here today to talk about something which you know a lot about, which is nuclear and SMR – small modular reactors. I know you’ve been looking specifically at the US, UK and Canada. I think there’s a couple of other quite big players in the market who have, I think, taken the market: Russia with their own designs. And China has got its own designs too. But I’m interested in that ecosystem going forward. You’re going to talk to us about some of those specific delivery mechanisms. But in the background, you’ve also got this former powerhouse in the shape of the US – Westinghouse, I think, of old, who are trying to step back in and be a player again. So why don’t you tell us where you’ve been working, what you’ve been looking at with SMRs.

Ben Heard: Right. Yes, look, absolute pleasure. It was probably an ending point in my thesis was to start thinking about some of the more advanced nuclear technologies. In particular there, I was looking at some of the fast breeder reactors, which are small, but that that’s not necessarily the key characteristic there. Again, it goes back to context, and which economic context you’re looking at. There are a lot of middle income, fast-growing nations where very large nuclear has still got a really clear role, right? Fast growing economies, fast growing energy demand, strong state-driven markets standing up projects of many gigawatts of large plants-built side by side. It is still going to be an eminently achievable and probably very cost-effective thing. And to the extent that KEPCO has done that in the United Arab Emirates, we are going to see that in Turkey. We are going to see that in Egypt. We are going to keep seeing that in China. There is still a role for those big reactors, and there is so much energy out there in the world that needs to be made cleanly. They’re not going away.

Having said that, then you come to markets like mine, where A – we are very long and skinny grid. Connecting 1000 megawatts, 1200, or 1600 megawatts onto our grid is hard, hard work. And it’s very hard work in the developing world as well. Getting the political will to stand behind maybe a decade’s worth of USD$10 or $20 billion worth of project all at once – not actually that easy anymore. We used to do stuff called nation building in Australia. I wasn’t born at that point. Okay. So now we are at the point where we are pretty mature and it’s more about replacement and rejuvenation, like you said. So can that be nuclear? So, yes, it can, but it would need to be a different type of nuclear, and that is in small modular reactors.

I have been telling a bit of a story lately, and some discussion papers and some research, I’m currently in the midst of delivering some seminars to a mining major here in Australia who wants to know and understand more about these reactors. Nuclear began small. So only three years after it first made electricity and light bulbs, there were 25Mw power plants to submarines. And we’ve always had small nuclear reactors, and they have been for propulsion on the ocean. And there’s about 200 small reactors charging around in submarines, icebreakers and aircraft carriers. We have known how to do it. And then the first commercial prototype plants were about 250Mw units.

And then for the sake of economy of scale, they got a lot bigger a lot more quickly, up to about a thousand. And then heading to the biggest in the world is the 1600 megawatts in the single unit, which is the European pressurised reactor being built in the UK and a few other places around the world.

The law of the land there was economies of scale. That can work provided you build, you keep building, you build lots, you maintain a trained workforce, and you get extremely, extremely good at it. If you forget how to do it, if you lose your skill, if you lose your knowledge, you get a situation that happened in the United States: 20 to 25 years’ worth of a build hiatus trying to start again. It wasn’t that radical a design, and it ran into a lot of difficulties.

What if you go back to that smaller size? What happens if you go all the way back to where it began, with all of the experience of 50 years and the massive step ups in our ability to consider and use computational tools to solve different challenges? What would you do if you had a clean drawing board with a small reactor? What we are seeing now from companies like NuScale Power, General Electric Hitashi, and Rolls-Royce; those three in particular, they’re taking mature, very well-known fuel cycles. So, these three players are not innovating the fundamental fuel cycle that’s in the reactor. It is still pressurised water reactor or a boiling water reactor. But by shrinking it right back down they achieved a couple of things: first of all, it moves the nuclear reactor, or at least the nuclear part of the nuclear power plant away from a construction paradigm towards the manufacturing paradigm, which has served wind power and solar power so well, is to have a manufacturing-based paradigm where the product arrives and is installed.

You can have these reactor units assembled fully in a factory. Quality controlled. Shipped to site and installed in a really standardised way. It also turns out that when you shrink them down, you can overcome that economy of scale because you actually find yourself, little by little, actually eliminating, altogether eliminating several systems that were required to achieve certain outcomes in such a large core size. You can achieve passively what used to be achieved, actively. Things that required pumps, valves, motors, can now be done with convection. They can now just be done using natural forces. And so suddenly things are starting to get designed out. Then you need less structural concrete, less steel, fewer systems. And you are starting to end up with a lean, mean design. And then you are also only asking for USD$1Bn, which opens up the number of customers you can have for that product – a lot compared to asking for USD$6Bn to $10Bn. And you can ask for a billion dollars at a time, and if it works, you can do the next one. And so that’s where that small modular reactor paradigm excites me a lot, it makes me, I believe it’s going to make it commercially so much more achievable.

I’ve been monitoring this for probably 10 years, and it has accelerated greatly in the last two to three. And even the last six months have seen another real step up. And not only is the technology improving, but the context around the technology is changing greatly. You’ve mentioned the United States and the loss of their lead – it hasn’t gone unnoticed. And the USA is really quite openly backing small modular reactors technologies as a way of regaining that strategically. We now see things like the advanced reactor development program, to help that first build, just close that gap between the innovation and the commerciality. That is the exact right spot for the state money to reside. Things like the versatile fast test reactor. So more and more commercial companies can get their materials testing done for their advanced reactor designs. Opening up the US development bank for the first time ever, to actually fund zero carbon nuclear in developing nations on the back of now having what they feel is a suitable nuclear product to do so. And let’s be honest, in so doing, regain strategic influence and geopolitical influence that they have ceded.

This context is changing rapidly. The government of Canada has a strong strategic roadmap for small modular reactor technologies. The UK consortium, led by Rolls-Royce, is looking at developing 25 small modular reactors in the UK, and returning to that industrialisation of making and providing your own energy, where the UK has become increasingly reliant on Chinese money and Chinese knowledge in its energy development.

The context around it is just getting friendlier and friendlier. The regulatory agencies are realising that, particularly in the United States, that they were running a very prescriptive model, built around large light water reactors? And it was unfriendly to innovation. And this change started a few years ago, and now we are really seeing the fruits of it. If we take, for example, my friends at Oklo, who have designing something called the Aurora Powerhouse, they have achieved a dramatic reduction in what they think is going to be the regulatory time, by taking a different pathway through the regulatory agencies. The New Scale power station has provided an evidence base that their passive safety is so great that there is no requirement for an emergency planning zone. They brought a case of evidence to say, our emergency planning zone should be the site boundary. And the NRC has currently had, it is in consultation right now, that is a proposed rule change that these facilities do not require an emergency planning zone. That’s a dramatic de-risking of an energy project that can bring it right into the heart of an industrial precinct. That can raise confidence about having these facilities in more places.

We are seeing a regulatory response that I think had to come. I mean, part of what’s going on here is that we have had 30 years of failure in climate policy. You know, the IPCC effort is about 30-years old now, and it has not worked. Whatever we have been trying has failed. So back when the IPCC was born, about 80% of the world’s energy was fossil based, 30 years later, about 80% of the world’s energy is fossil based. We’ve grown the clean energy sources, but the overall energy consumption has gone along with it. And in emissions terms, things have just gotten dramatically worse. And something we haven’t been doing a lot of in that 30 years is innovating and building a whole lot more nuclear power. It has been a real gap.

We are seeing that emerge really strongly now. And then we have innovators like Terrestrial Energy from Canada with the Molten Salt reactor that takes it a step further. That device is atmospherically pressured. It’s doesn’t require any structural steel to contain it. There’s no energy trying to get out. You can’t have a meltdown when the fuel is already molten. The fuel and the coolant is the exact same thing, circulating passively in this device. It has a molten salt loop that can direct heat up to 5km away from the plant in molten salt. It is effectively a heat plant. And they are very open about this. If you want to generate electricity with it, generate electricity with it, because they’re sending out good 600 to 700 degrees centigrade heat, zero carbon. No other technology can do that. So if you want to make hydrogen with that, if you want to desalinate water with that, if you want to do beneficiation in minerals with that, if you want to make ammonia or other chemicals with that, or if you want to make electricity with that, or some combination of the both with cogeneration, you can.

And so these innovations are, I think, going to lead to, well, this goal that we ultimately need, which is someone who is quite, let’s imagine an ambivalent utility investor who is ambivalent about climate change, but whose job is the financial returns, clearly chooses the clean energy technology. That’s when you’ve won. And that’s what I feel, particularly in the more mature industrialised markets where we are already relatively saturated in energy, but we must transition ourselves off and onto something new, I think that that’s where small modular reactors are going to have a crucial role to play.

Matthew Gordon: Fascinating romp through the world of small modular reactors there. And interesting to hear about the different types of innovation coming through as well. Again, many, many topics, which we can probably come back to on another call, because each one deserves its own spot in the sunlight.

You talked about the way that these things get funded. And I always wonder, and certainly when we’ve been having conversations around nuclear, the way that governments allow funding to happen. Either the government has got to stump up with the money, in which case you need bipartisan agreement across the board. And in some countries, that’s a lot easier said than done because these are not small numbers. I agree with you, the SMRs makes it cheaper, but at the end of the day, the entire infrastructure, wherever the individual assets are, is still in the tens of billions of dollars. These are big decisions which need to be made. And I, you know, again, I come back to the US where these assets are owned by utilities, it is in private hands. Governments can lay the foundations in terms of funding. I think you referred there to funding some of these innovations coming through, and they can talk the language of wanting to be innovators in the market, and for the sole purpose of control, or at least the ability to exert some level of control geopolitically. Because energy is a must have, rather than, you know, something more frivolous. But it is a great bargaining tool.

Are you seeing, because you have looked at the US and Canada, are you seeing those types of conversations being driven politically or out of an actual need to sort out the basic energy infrastructure?

Ben Heard: Yes, so both, I mean, in the markets themselves, particularly in Australia where we are not yet allowed to use it, but we are well aware of the problems we are beginning to face. As well as in the United States and Canada, it’s still going to be predominantly private money through utilities, but government appears to be understanding that they’ve got to establish the conditions and the preconditions, and do that bridging to help steer those crucial industries towards the future that as government, they feel they should be stewarding toward, which fundamentally is a clean energy future. It seems very difficult for country that have liberalised their energy economies, to contemplate rolling that back to a more state-owned model. I haven’t seen anybody really put that up as anything more than a thought balloon. There doesn’t seem to be any appetite towards that at all.

But stepping in at those crucial moments where maybe an innovator has, you know, it might be 10, maybe they have got through their first 10-years, and they’ve innovated to a substantial point, but then they’re facing a real valley of death, but they’re sitting on a great product; that is an excellent place for government.

When you look more internationally and into other markets it is different. Yes, energy is the master enabler. It is not optional. Energy and water and food are not optional, and energy in particular, it is not the end in itself, you know, it’s what the people in the economy do with it. But if you haven’t got it, you can’t do much of anything at all. And when you look at the moral imperative and the environmental imperative and the economic imperative to see the reduction of poverty, which comes through the economic development process, and you understand that their emissions will count for just as much as ours. If you can see, if you have one eye and understand that will, you know, if this becomes a coal-driven process, we are in 10 kinds of trouble. That’s where making that fundamental enabler affordable is a role for funding.

Now, the fact that development banks have rejected nuclear for so long is a travesty. And even recently in the Asian infrastructure development banks, energy strategy for Asia locked out nuclear developments while funding, you know, best in class technology coal. How can we possibly get a climate change outcome under those types of conditions? So now in particular with nuclear power, a lot of it really just comes down to lowering the cost of capital. They still can pay for it, but the price of money is usually influential in nuclear, because even with small nuclear; you are right, it is still a large sum of money. And it’s a really long-lived asset, so you’re going to get value out of it for 60 or maybe 80-years. But if, yes, if you’ve got a discount rate that is any more than 5%, you know, anything beyond 30 years, any value is invisible in the numbers that you are looking at for the energy project. If you’ve got discount rates of 5%, 7%, 9%, 10%, 25-year economic lives, well, that’s fine for a wind project or a solar project, because guess what? Their technical life is probably 25-years. The technical life and the economic life are a pretty good match. When you get to the end of it, they are clapped out and they need to be replaced. They’ve copped a lot of impact from their exposure over time. Solar PV begins to degrade from day one, a little bit at a time, year on year. Wind turbines have to put up with a lot of stress and strain. They actually are on the way out at that point that a nuclear power station is just getting started.

So, all countries where their greatest asset would be a pool of young intelligent people who want to work and want to be out of poverty, they must have energy so that there can be something to be done with that. It must be clean. And the journey there is a journey of many generations. So simply providing low cost money is sometimes, yes, certainly when you fiddle around with the levelized cost of electricity, changing that discount rate is hugely influential. It still needs to be bought and paid for, but unless we lower the cost of money, we are cheapening the future. If we are looking at situations where they are matters of intergenerational equity and poverty, and they are matters of intergenerational equity in terms of dealing with climate change, that has to be acknowledged in the why we fund. And that for me is another, in my opinion, should be a relatively low-controversy space for government. That if you have an asset, now, I don’t care whether it is a nuclear asset or it’s another asset, but if you have an asset that can provide clean energy reliably for potentially the next 80 years, there should be cheap money to enable that because it’s going to have enormous societal value for that period of time. And that is something I am now finally, thankfully, beginning to see.

Now, China and Russia had been doing it for many years now. It is really dawning on a lot of countries.

Matthew Gordon: That is a really big conclusion to this conversation, because we’ve got to find a way to make nuclear energy affordable in comparison to all the other alternatives. It has got to be a non-discussion. And unfortunately, at the moment, I think, I’m looking back to the US here specifically, and possibly even France to a degree, and definitely Germany, where the reactors are of a certain age. There has got to be more investment. Can governments help by, say, making that money available? Can they make it available cheaply to reinvigorate those sectors? I think the answer is yes. It doesn’t necessarily need to come through actual cash. They could be in the way of, you know, tax breaks or similar, right? So there are lots of ways they can play with money on the spreadsheet, but the point is it has got to be a level playing field, and we have got to remove this language, which is something we talked about at the beginning of this conversation, which is it’s a, you know, this  competitive environment for energy. It should be all of the above – equal.

Ben Heard: I’ll have to caveat that; so, my position as an ecomodernist and somebody who started this whole journey on climate change, is no, I want it weighted against the fossil fuels. I do. Right? Or should I say, against the unabated fossil fuels. If you can put together a carbon capture in a storage project, I’m all for it, right. And that should be on the drawing board. But no, ideally, I want those policies weighted against the unabated fossil fuels. Ideally, in the end, I’d like to not need a policy environment where you get to the point where you simply wouldn’t bother to dig up any a better thing now. Yes, of course. That’s what I would ultimately want.

Matthew Gordon: Thank you for clarifying. I see exactly what you meant, but I didn’t say.

Ben Heard: It is a minefield of a discussion.

Matthew Gordon: Brilliant discussion. It’s fascinating. I’ve loved every second of this, but there’s more to be talked about, which is great news. Ben, thanks very much for your time today. You are part of the Frazer-Nash group. That’s your company, but you’ve also –

Ben Heard: Frazer-Nash consultancy,

Matthew Gordon: Frazer-Nash Consultancy. People can look that up. I’m sure there’s some useful information there as well. But you are also part of the bright new world. You have got, what is the URL actually for the website people can go to?

Ben Heard: So there’s no .au for Australia. It’s just One word. It is an ecomodernist nongovernmental organisation. You know, we established it because we wanted to offer people a home if they felt like they didn’t have an NGO that they could support, because they also felt adrift of the values of Greenpeace or Friends of the Earth. But they were still passionate about climate change, conservation, recycling, things that we are very into at Bright New World, but they needed a value set that they could subscribe to that was more pro-human and pro-technology, and avowedly optimistic in every stage, that’s what we started Bright New World for. So please check us out. We blog regularly, and we are particularly active on submission writing here in our Australian environment to achieve change. And we’ve actually had some real wins. I’m really proud of the organisation and its community. So please come and check us out.

Matthew Gordon: Do that. For intelligent data, to have an intelligent debate, for people who make their own minds up. Not just follow the herd. Definitely have a look at that.

Ben Heard: They can follow this herd.

Matthew Gordon: Oh my goodness. You have used that before.

Ben Heard: No, that just came to me, promise.

Matthew Gordon: Well that’s quite quick-witted. Okay. Only follow the Ben Heard, not the regular herd. Brilliant. Ben, thanks so much for your time. I really genuinely am looking forward to speaking to you again. You are so passionate about this topic, some great data points there for us to go away and maybe research and we’ll speak to you again soon.

Ben Heard: If anybody needs more on the small modular reactors, look me up. We are deep in it these days. And there’s a lot of exciting things to talk about there. I would love to speak again, Matt, let’s do it again.

Company Website:

If you see something in this article that you agree with, or even disagree with, please let us know in the comments below.

Any advice contained in this website is general advice only and has been prepared without considering your objectives, financial situations or needs. You should not rely on any advice and / or information contained in this website or via any digital Crux Investor communications. Before making any investment decision we recommend that you consider whether it is appropriate for your situation and seek appropriate financial, taxation and legal advice.

Leave a Reply

Your email address will not be published. Required fields are marked *