I am in Washington DC this week, pet sitting my daughter’s dog while she is vacationing in Italy. While Carolyn is enjoying sunsets over the Mediterranean Sea, I’m picking up Fiona’s poop during our morning walks along the Potomac River.
That may not sound like a fair exchange, but I’m enjoying my time at the place I called home for the first 64 years of my life. Especially this week, which includes the July Fourth holiday that puts almost everyone in a festive mood.
However, that mood could change quickly. The Israel/Iran conflict could flare up again with little notice, while President Trump’s “big, beautiful bill” (BBB) could add trillions of dollars to the federal budget deficit.
That is one reason why I moved to southeastern North Carolina two years ago. There, taking care of your dog is considered time well spent while politics is viewed as a dubious way to make a living.
Speaking of politics, the Trump administration is taking dead aim at the renewable energy sector. Its latest revisions to the BBB would eliminate most federal subsidies for wind and solar projects within the next two years.
I wrote about that two weeks ago (“Taking the Wind out of Renewable Energy”). I said then about renewable energy companies that rely on subsidies to remain solvent: “For many of them, eliminating the tax credits is all but a death knell.”
That may be true, but there is a flip side to that equation. The ones that can survive will have considerably less competition to deal with. For them, the BBB could be a blessing in disguise.
One reason why the Trump administration is opposed to solar energy is that China is far ahead of the United States in developing that technology. China produces approximately 80% of the world’s solar energy panels.
Of course, China has good reason to develop renewable energy sources. Unlike the United States, it consumes far more energy than it produces and has limited petroleum reserves to exploit.
China also plays the long game when it comes to infrastructure development. It knows that the world’s proven reserves of oil, coal, and natural gas aren’t expected to make it to the end of this century.
If you think that’s a long time away, consider this: the year 2100 is as far into the future as the year 1950 is in the past!
When that day comes, renewable energy will be here for good. That is, if nuclear energy doesn’t become the dominant form of energy generation first.
To be sure, there will always be a place for solar energy in sunnier parts of the world. And wind energy will make sense in certain places, too. But everywhere else, the favorable economics of nuclear energy may be too compelling to ignore.
That is one reason why I have climbed aboard the nuclear energy bandwagon. Although it is not renewable, it is quite clean. And if the BBB is passed in its current form, most of its potential competition may be put out of business.
Even if I am correct in my assessment, that does not assure investment success. The nuclear energy sector has been largely dormant in the United States for several decades. People who bought into the nuclear energy sector in the past have seen little return on their investment.
That may soon change. At the same time the Trump administration is taking money away from renewable energy projects, it will be directing federal dollars towards nuclear energy development in this country.
I don’t know which companies will emerge as leaders in the nuclear energy sector. But I do know this; the ones that do could be as dominant during the second half of this century as “big oil” has been for the past century.
Perhaps the safest way to play the nuclear energy sector is the Global X Uranium ETF (NYSE: URA). Its top holdings include Cameco (TO: CCO), Oklo (NYSE: OKLO), and NuScale Power (NYSE: SMR).
During the first half of this year, URA gained 40 percent. However, that figure is misleading. Over the past twelve months it has gained 29 percent, which is impressive but hardly excessive. There should be plenty of upside potential remaining in this fund.
Over time, new players in the sector will emerge that will rapidly appreciate in value. As that happens, this fund will add them to its portfolio. If you want to participate in the ultimate winner of Trump’s big, beautiful bill, now is the time to get started.
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