Inconvenient Truth: Why Nuclear and Fossil Fuels Will Likely Remain the Inevitable Future of Energy

Popular author Doomberg recently wrote: 

Energy is not an input into the economy, IT IS THE ECONOMY.

Humanity organizes its economic activities to ensure a steady growth in the extraction and exploitation of primary energy because energy is life, standards of living are defined by how much energy is available to be exploited, and all humans everywhere are perpetually seeking a higher standard of living.[1]

As the world grapples with the complexities of transitioning to renewable energy sources, in our view, we can't ignore the undeniable reality: fossil fuels and nuclear energy will likely continue to dominate the energy landscape, especially electricity generation.

Despite the push for renewables, electricity generated by fossil fuels remains a vital component of our energy mix. The demand for power continues to surge, potentially presenting significant investment opportunities in the sector. The push for renewables has also caused many energy company valuations to tumble, offering a potentially attractive entry point for investors.

The Role of Fossil Fuel and Nuclear in the Clean Energy Transition

Fossil fuels and nuclear energy will likely play a vital role in the transition to clean energy. Renewable energy, such as solar and wind, face constraints that may limit their ability to replace fossil fuel completely.

As demand may be greater than most anticipate, companies in the fossil fuel and nuclear energy ecosystems may present individuals with an attractive investment opportunity.

Renewables Alone May Not Replace Fossil Fuel

What factors may limit renewables’ ability to replace fossil fuel completely?

• Renewables Are Intermittent: The sun doesn’t always shine and the wind doesn’t always blow. Thus, there may be times when renewable energy may not be able to meet total energy demand.
• Storage: Fossil fuels can be stored to generate electricity at a later time. Renewable energy is not as easily stored for future use.
• Supply Chain Issues: Renewable energy technologies are resource-intensive and require more materials than their fossil fuel equivalent. 
• Geographic Constraints: Renewable energy often cannot be produced in the locations where it is often needed.  Additionally, solar and energy farms require large tracts of land.
• Growth in Renewables Is Not Keeping Up with Growth of Energy Demand: An article on CNBC noted that the world is not spending enough to meet its future energy needs and that by 2050, the world will need to produce three times as much electricity as is being produced today.[2]
• The Electrical Grid Will Need To Be Rebuilt: The grid was built for a system that relies on fossil fuel. However, wind and solar are produced in different locations than fossil fuel-based energy. Thus, new lines and connections to the grid will need to be built.

Fossil Fuels and Nuclear Energy Can Bridge the Gap

Traditional fossil fuels and nuclear energy can help facilitate the energy transition. 

• Fossil fuels and nuclear energy can provide power when renewable supply does not meet demand.
• They are readily available and dispatchable when demand is high.
• The current infrastructure favors fossil fuel and nuclear.

Strategically Designed ETFs

Range ETFs aim to capitalize on the enduring importance of nuclear and fossil fuels in the energy sector., These ETFs look to offer investors an opportunity to navigate the evolving energy landscape.

Explore our Range ETFs today as you consider your position in the energy sector.

• Range Nuclear Renaissance Index ETF (NUKZ): designed to provide exposure to companies in the nuclear energy sector including utilities, construction, services, fuel, and advanced reactors.
• Range Global Coal Index Fund (COAL): seeks to provide exposure to companies involved in the metallurgical and thermal coal industry.
• Range Global LNG Ecosystem Index ETF (LNGZ): seeks to provide investors with exposure to companies involved in the liquified natural gas ecosystem.
• Range Global Offshore Oil Services Index ETF (OFOS): looks to provide exposure to companies in the offshore oil services ecosystem.
  
   

[1] www.doomberg.substack.com/p/atlas-wont-shrug
[2] Tan, Weizhen, What Transition? Renewable Energy is Growing, but Overall Energy Demand is Growing Faster, CNBC, 11/3/21

Risk Disclosures:

Investing involves risk, including possible loss of principal. There is no guarantee the Funds will achieve their stated investment objectives.

Investments in the energy industry are subject to significant volatility due to changes in commodity prices. Additional risks include changes in exchange rates, government regulation, world events, economic and political conditions in the countries where energy companies are located or do business, and risks for environmental damage claims.

Exchange Traded Concepts, LLC serves as the investment advisor of the funds. NUKZ, LNGZ, COAL, and OFOS ETFs are distributed by SEI Investments Distribution Co. (SIDCO, 1 Freedom Valley Drive, Oaks, PA 19456), which is not affiliated with Quasar Distributors, LLC, Exchange Traded Concepts, LLC, or any of its affiliates.