Before March 11, 2011 the future of the global nuclear power industry looked bright. Growing concerns over climate change had increased interest in the nuclear power option as a low-carbon alternative to coal-fired power plants. A quarter of a century had passed since the devastating Chernobyl nuclear accident in 1986, and attitudes toward nuclear power were improving.

The growth of global nuclear power capacity, which had been on a strong upward trend prior to the Chernobyl accident, slowed substantially in the wake of Chernobyl. But as the years passed with no more serious nuclear accidents, Chernobyl began to look more like a fluke — a product of shoddy design from the Soviet era.

In the past decade, following a series of disputes between Russia and the Ukraine over natural gas that limited supplies for many European countries, some countries began to see nuclear power as a better energy option than Russian gas. The possibility of a gas shortage from Russia loomed for many as an imminent threat to energy security.

Italy had shut down its four nuclear power plants in the wake of the Chernobyl disaster. But by 2009, it began to reconsider that decision. Claudio Scajola, Italy’s minister for economic development, said the Russian gas crisis had “made the Italians understand the importance of energy security [and that] we must go back to nuclear power if we want to become less dependent on others’ moods.”

Germany was also reconsidering nuclear power after announcing in 2000 that it would phase out its 17 reactors. In 2007, German Chancellor Angela Merkel began to question that decision, saying, “we have to consider what consequences there will be if we shut down nuclear power stations.”’

Chancellor Merkel, who holds a doctorate in the sciences and had long supported nuclear power, viewed it as an effective way to reduce carbon dioxide emissions.

Merkel argued that pro-nuclear policy changes in Italy and the UK left Germany as the only country in the G8 with anti-nuclear policies. She called the phaseout plan “absolutely wrong.” Michael Glos, the Minister for Economics and Technology in Merkel’s cabinet, said it would be impossible to fulfill the Kyoto Treaty objectives for cutting emissions of greenhouse gases without nuclear energy.

Nuclear power’s star looked to be once more on the rise. But everything changed on March 11, 2011.

Located on the coast in an earthquake-prone area, the Fukushima Daiichi Nuclear Power Plant on Japan’s east coast was certainly designed with safety in mind. Tsunamis are an ever-present possibility in the region. Thus, the 4.7-gigawatt plant — the 11th largest nuclear power plant in the world at the beginning of 2011 — was designed to withstand major earthquakes and a tsunami wave of nearly 20 feet.

On March 11, 2011, a massive 9.0 magnitude earthquake took place under the ocean east of Japan. The Fukushima nuclear power plant was subsequently hit with a tsunami estimated to be nearly 50 feet high—almost two and a half times the wave height the plant had been designed to withstand.

Immediately following the earthquake, the reactors did shut down as they were designed to do, and emergency generators came on to continue circulating water to cool down the reactors. When the tsunami actually breached the sea wall of the nuclear power plant, all power to the plant was lost. The emergency generators were flooded and shut down. The back-up batteries provided power for less than a day, and once those batteries were depleted, cooling to the reactors was lost.

In the days following the tsunami, three of the reactors reportedly experienced full meltdown. A meltdown means that the nuclear fuel gets hot enough to melt (because cooling had been lost), and this has the potential to melt through the casing around the reactor and release radioactive material into the environment.

The aftermath turned into the worst nuclear accident since Chernobyl, and once more countries that had been promoting nuclear power as a good alternative to fossil fuels had to do an about-face. Within 10 days of the accident in Japan, Germany signaled a retreat from nuclear power once again, suggesting that the incident would force governments everywhere to reassess their policies.

Within three months of the accident Merkel announced that all of Germany’s 17 nuclear reactors would be closed by 2022. In announcing the closures, Merkel indicated that the consequences of the disaster were beyond her imagination: “After what was, for me anyway, an unimaginable disaster in Fukushima, we have had to reconsider the role of nuclear energy.”

Shortly after the decision in Germany, voters in Italy rejected a referendum proposal put forth by the government to restart the country’s nuclear energy program. This vote put an end to government plans to obtain 25 percent of Italy’s electricity from nuclear power by 2020.

Protests were held in many countries calling for the closure of nuclear reactors. A poll taken in Japan after the accident showed that 74 percent of those polled favored phasing out nuclear power.

As an engineer, I believe nuclear power plants can be designed to be fail-safe, but not fail-proof. To be fail-safe means that if an accident does take place, the system goes to a safe state. A simple example of this is an electrical fuse. If too much current tries to flow across the fuse, it melts and stops the flow of electricity before further damage can occur.

But the designs at Chernobyl and Fukushima were not fail-safe. As a result, unimaginable accidents happened with severe consequences, and thus many people have developed a very high distrust and/or fear of nuclear power. In fact, people tend to have a fear of radiation in general.

As an example, consider that food irradiation can be used to kill potentially dangerous pathogens like E. coli, and it has the potential to save thousands of lives each year. But even though the treatment does not create radioactive food, the US Department of Agriculture has reported that less than half of consumers would be willing to buy irradiated meat because of concerns about its safety.

If consumers aren’t even willing to eat non-radioactive food that has been irradiated, they are certainly not going to be comfortable with the risk of elevated radiation levels after a nuclear accident — and in fact many find the scenario terrifying. Unless one happens to live in the immediate area of a nuclear accident — where radiation poisoning is likely a bigger concern — contamination of food and water is probably the single biggest fear related to a nuclear accident.

Thus, it isn’t surprising that opposition to nuclear power is strong. The most recent global figures for nuclear power generation show a decline since Fukushima, and according to the US Energy Information Administration, nuclear generation in the US fell by 3 percent from 2011 to 2012, after declining 2 percent from 2010 to 2011.

Does the World Need Nuclear Power?

Nuclear power has long been an important part of the world’s electricity generating mix, presently accounting for about 15 percent of global electricity production. Under normal operations, a nuclear plant produces no carbon dioxide emissions, and therefore nuclear power is often mentioned as an important tool in the world’s efforts to rein in carbon emissions.

Whether the world “needs” nuclear power is a matter of perspective. The world needs nuclear power in the same way I need a car. I can get by without a car, but that entails considerable inconvenience. Likewise, there are some consequences of living without nuclear power (good and bad).

Germany is showing what happens in a rapid phaseout of nuclear power. Electricity costs there are soaring, and coal is making a resurgence in order to offset the loss of the dependable power that nuclear energy was providing. Grid instability has forced manufacturers to purchase their own backup power generators.

At a minimum, taking the nuclear option off the table will force electricity costs to rise. But while some countries like Germany will decide that higher electricity prices are an acceptable cost of living without nuclear power, others like India and China are expected to continue rapidly expanding their nuclear power production (although China has announced tighter safety standards for future plants).

Many developing countries are engaged in an “all of the above” strategy as they industrialize. While China has garnered a lot of positive press from environmentalists for adding wind power, its nuclear power generation has more than tripled in the past decade. Over the same time frame, its coal consumption has risen by 155 percent. The country currently has 28 new nuclear power plants under construction or in the design phase.

India currently has six operating nuclear power plants, and the seven now under construction  should more than double the country’s nuclear generating capacity by 2016.

Thus, even as the developed world slows down construction of new nuclear capacity, there will be substantial opportunities for the nuclear power sector in the developing world. But for investors, betting on companies in developing countries entails an added layer of risk. This is not necessarily an unacceptable risk, but when combined with significant opposition in many developed countries to nuclear power, I find the overall proposition unpalatable.

Which is just as well, because for an industry generating a significant percentage of the world’s power, nuclear offers few worthwhile investing vehicles. The typical nuclear exchange-traded fund, like the Market Vectors Uranium + Nuclear Power ETF (NYSE: NLR), is a mishmash of utilities and fuel suppliers likely to respond very differently to changes in the prices of uranium. Most of the nuclear utilities also have plenty of non-nuclear power plants, making them poor proxies for atom-splitting. And pure plays like uranium miner Cameco (NYSE: CCJ) have fallen on hard times in the wake of Fukushima as Japan’s nuclear moratorium depresses uranium prices.

Science Facts and Science Fiction

There are two nuclear power possibilities for the future that are viewed as inherently less risky than uranium-based nuclear power (the current basis of the global nuclear power industry).

Besides the generation of nuclear waste, one disadvantage of using uranium-235 as fuel for nuclear power plants is that it can also be used for nuclear weapons. Rogue states known to be enriching uranium have usually claimed that it is for peaceful uses as atomic fuel. North Korea, among others, did just that. But the North Korean government ultimately admitted that it had used the enriched uranium to produce nuclear weapons. Much of the world suspects that Iran is in the process of doing the same thing.

Commercialization of power derived from thorium or, alternatively, controlled fusion reactions would dramatically reduce (although not eliminate) the risk of nuclear weapon proliferation. Thorium is abundant relative to uranium and does not have to undergo the enrichment process that uranium requires. Further, thorium reactors have little risk of melting down because climbing temperatures will decrease the power output, eliminating the runaway reaction possibility present in a uranium-fueled reactor. This is the sort of fail-safe design desirable for a nuclear reactor. The primary disadvantage is that thorium reactors are still mainly at the experimental stage and therefore commercial viability has not yet been clearly demonstrated.

Controlled nuclear fusion has been proposed for decades as a safe alternative to nuclear fission for power. Fusion reactions power the sun, and have been used on earth as the source of the destructive power of hydrogen bombs. Fusion is the joining together of two atoms to make a larger atom, which is accompanied by a large release of energy. However, attempts thus far to develop a commercial fusion reactor have not advanced past short-lived experiments because of the high temperatures and extreme pressures required to initiate and contain the fusion reaction. Thus, energy from controlled nuclear fusion remains a very long-term possibility and of little interest to investors at present.