Last week Norway joined India, China, and others in testing thorium, regarded by some as the energy source of the future.Gary Krellenstein is one of those people. This former JP Morgan Energy and Environment Director penned a report calling thorium “The Best, Most Overlooked Solution to Global Warming and Long-Term Energy Supply.”
He’s quick to trumpet the benefits of thorium, especially compared to uranium (most of which we’ve discussed before) but also provides a perspective on some of thorium’s disadvantages, which include:
- High capital costs ($4000-$10,000/kW)
- Little existing infrastructure, no commercially operating plants
- Long lead times (estimated at over 10 years) and licensing issues
- The bad reputation of nuclear energy, due to meltdowns at Chernobyl and Fukushima
But these aren’t the definitive factors that have prevented thorium’s proliferation – Krellenstein has a very direct answer for what’s keeping thorium on the sidelines:
The natural gas revolution.
Krellenstein claims that advances in fracking technology gives the U.S. another 100 years of domestic natural gas reserves, under current demand. Moreover, the price is expected to stay under $5/million cubic feet through 2022.
Thorium power technology cannot economically compete with electricity generated by gas so long as NG prices remain in the $3-$6 per mmbtu price range.
Simply, investors (who don’t care about societal benefits of thorium) have to go for the best possible return on their principal. Krellenstein develops the argument that this means choosing natural gas – for now:
- Gas plants can be build more quickly and are cheaper than nuclear plants
- Natural gas has less harmful emissions than other fossil fuels
- Alternative energy sources are too expensive and unreliable
He doesn’t see contamination caused by fracking as a threat to natural gas production, stating that it “appears to be a problem only where the shale is near the water aquifer, and there is no shortage of deep shale deposits.”
But, in his opinion, there’s only so long before we transition to thorium. Here’s a list the preconditions Krellenstein thinks are necessary for thorium to thrive:
- Stricter regulations regarding greenhouse gases
- Tests which demonstrate its viability
- Investment grade credit ratings in order to finance the project
- Price guarantees from contractors
- Public knowledge of the benefits of thorium
- A stronger global economy
His report, presented at the 2011 Thorium Energy Conference, closes with a ringing endorsement of the energy source of the future:
Unpredictable changes in natural gas availability and price, potential climate change issues, uncertainty in future electrical demand, and the need for a sustainable long-term environmentally acceptable energy source make this technology too important to be abandoned at this time.
NOW WATCH: Money & Markets videos
Business Insider Emails & Alerts
Site highlights each day to your inbox.