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Financiers shun nuclear, upbeat on climate investment

Mick Tsikas/AAP PHOTOS

Nuclear energy is last on the list of technologies that investors want exposure to, according to a survey of big institutions.

The vast majority of investors do not see nuclear power as a good investment, with less than one in 10 exploring this technology, the survey released on Monday found.

Opposition Leader Peter Dutton is spruiking nuclear reactors as an option for Australia's future low-carbon economy although the energy source is illegal under existing laws and Labor has ruled it out.

Renewable energy is tipped to deliver the best long-term financial returns, with half the investors surveyed exploring opportunities to invest.

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Investors have also become more confident about Australian climate policy under the Albanese government, according to the survey by the Investor Group on Climate Change.

"Investors have given the government a pretty good report card," the group's policy chief Erwin Jackson said.

But Australia will need globally competitive, targeted incentives to suit the nation's economic strengths and values to stop "ongoing capital flight" to the United States and Europe where there are more generous tax breaks.

Clear timelines for the phase-out of fossil fuels by 2050 would also help investors manage transition risks and remain invested in the Australian economy, according to the group.

This year's data includes 63 superannuation funds as well as other asset owners and managers, with more than $37 trillion in assets under management globally. Their beneficiaries include more than 15 million Australians.

Emerging priorities include clear timelines for phasing out coal, oil and gas and clear policies to build resilience and adapt to physical damage from climate change.

Opinions citing policy and regulatory uncertainty as a barrier to clean economy investment in Australia have changed dramatically, supported by four out of 10 investors compared with 7 out of 10 in 2021.

Renewable energy (47 per cent) was picked as the best option for long-term climate solutions, followed by nature-based schemes including biodiversity projects (34 per cent).

But investors are still in the dark on the federal government's sector-by-sector decarbonisation plans for heavy polluters such as the energy, transport, agriculture and resources industries - and on the scope of the 2035 emissions reduction target.

"Credible and clear sector by sector decarbonisation plans to achieve a 2035 target with the highest possible level of ambition are critical for investment and it is critical to build on the steps already taken," Mr Jackson said.

Climate Change and Energy Minister Chris Bowen has said the 2035 target will be "ambitious and achievable", with advice to come from Australia's recently beefed-up Climate Change Authority.

The sectoral review by the authority has an August 1 deadline, and will be released shortly afterwards.