With the recent breakthrough in fusion energy technology, the debate around the feasibility of nuclear fusion as a commercialized energy source may leave investors wondering, is it a holy grail or a pipe dream? Global Head of Sustainability Research and North American Clean Energy Research Stephen Byrd and Head of Thematic Research in Europe Ed Stanley discuss.----- Transcript -----Stephen Byrd: Welcome to Thoughts on the Market. I'm Stephen Byrd, Morgan Stanley's Global Head of Sustainability Research and North American Clean Energy Research. Ed Stanley: And I'm Ed Stanley, Morgan Stanley's Head of Thematic Research in Europe. Stephen Byrd: And on the special episode of Thoughts on the Market, we'll discuss the potential of nuclear fusion technology in light of a key recent breakthrough in the space. It's Tuesday, December 20th, at 10 a.m. in New York. Ed Stanley: And 2 p.m. in London. Stephen Byrd: Ed, you recently came to this podcast to discuss your team's work on "Earthshots", technologies that can accelerate the pace of decarbonization and mitigate some of the climate change that's occurring as a result of greenhouse gas emissions, trapping the sun's heat. In a sense, Earthshots can be defined as urgent solutions to an intensifying climate crisis and nuclear fusion as one of these potential radical decarbonization technologies. So, Ed, I wondered if you could just start by explaining how nuclear fusion fits into your excellent Earthshots framework. Ed Stanley: Absolutely. So in Earthshots we laid out six technologies we thought could be truly revolutionary and changed the course of decarbonization. Three of those were environmental and three were biological innovations. In order of investability, horizon carbon capture was first, smart grids were next, and then further out was nuclear fusion on the environmental side. In early December the U.S. Department of Energy announced the achievement of fusion ignition at the Lawrence Livermore National Laboratory. So Steve, passing back to you, can you give us a sense of why this was considered such an important moment? Stephen Byrd: Yeah Ed, you know, as you mentioned, ignition was achieved at the government lab. And this is very exciting because this shows the potential for fusion to create net energy as a result of achieving fusion. So essentially what happened was two megajoules of energy went into the process of creating the ignition, and three megajoules of energy were produced as a result. So a very exciting development. But as we'll discuss, a lot of additional milestones yet to achieve. Ed Stanley: And there's been significant debates around nuclear fusion in recent days caused by this. And from the perspective of a seasoned utilities analyst, but also with your ESG hat on, is fusion the Holy Grail it's often touted to be, or do you think it's more of a pipe dream? And compared to nuclear fission, how much of a step change would it be? Stephen Byrd: You know, that's a fascinating question in terms of the long term potential of fusion. I do see immense long term potential for fusion, but I do want to emphasize long term. I think, again, we have many steps to achieve, but let's talk fundamentally about what is so exciting about fusion energy. The first and foremost is abundant energy. As I mentioned, you know, small amount of energy in produces a greater amount of energy out, and this can be scaled up. And so this could create plentiful energy that's exciting. It's no carbon dioxide, that's also very exciting. No long live radioactive waste, add that to the list of exciting things. A very limited risk of proliferation, because fusion does not employ fissile materials like uranium, for example. So tremendous potential, but a long way to go likely until this is actually put into the field. So in the meantime, we have to be looking to other technologies to help with the energy transition. So Ed, just building on what we're going to really need to achieve the energy transition