The quest for a carbon neutral world faces a big conundrum. On one hand, the globe is still overdependent on dirty fossil fuels for energy. On the other hand, renewable power derived from wind, water and solar isn’t enough to break that dependence.

That has people thinking about nuclear energy. Nuclear power generates zero greenhouse gas emissions. And it offers a stable source of reliable energy to meet consumer demand, also known as “baseload energy,” which is becoming increasingly crucial as the demand for electricity soars.

Investors are taking notice, too, if exchange-traded funds are any indication. ETFs tied to the nuclear sector have crushed the performance of energy stocks inside the S&P 500.

Take the VanEck Uranium+Nuclear Energy ETF (NLR), which has jumped almost 33% during the past year while the Energy Select Sector SPDR Fund (XLE), which tracks S&P 500 energy stocks, has risen only 5.91%.

Uranium, the fuel that keeps nuclear plants humming, has been a hot commodity too.

For instance, the Sprott Uranium Miners ETF (URNM) has soared 49.67% during the past year, while the Sprott Junior Uranium Miners ETF (URNJ) has risen 43.79%. At the end of last year, the first fund held 18.92% of its exposure in physical uranium, while the rest of the fund was made up of the stocks of uranium miners and producers.

Besides its use in meeting consumer power demands, nuclear power is on the upswing for national security reasons as well.

“In 2022, when Russia invaded Ukraine, people really realized that if you didn't have a secure supply of energy, whether that was natural gas or coal or oil or uranium, that they could put your economy and national security at risk,” said John Ciampaglia, CEO at Sprott Asset Management.

Today, there are about 434 active nuclear power plants around the world; 59 more are being built, and another 100 plants are in pre-construction planning. These figures don’t include small modular reactors, also called “SMRs,” which some observers see as the next phase of nuclear energy’s growth. These smaller reactors represent a major technological advancement: They’re faster and less expensive to deploy than larger scale conventional nuclear power plants.

Ciampaglia notes that SMR technology could be used to power towns and smaller cities by offering a versatile source of electricity and heat.

In many cases, it takes too long to build a conventional nuclear power plant, and the cost is prohibitive. For example, Plant Vogtle, which is under construction near Augusta, Ga., has projected costs that will top $34 billion, according to the Cato Institute. Moreover, the plant’s construction has faced multiple delays.

By contrast, the projected cost to build an SMR in Idaho by NuScale Power was recently projected to be $9.3 billion for 462 megawatts (electric) of generation capacity (though in November it was announced that the Idaho project was canceled).

Could these smaller reactors eventually replace the current energy infrastructure?

While each power plant has its own unique design, there’s hope that smaller reactors could be used to replace dirty coal plants. These coal-fired power stations could be retrofitted with clean and more efficient SMRs.

The United Kingdom, the United States and Canada are at the forefront in seeking approved designs for small modular reactors. After regulatory approval, it’s expected that SMR technology can be commercialized and deployed at scale.

All these factors—the aggressive carbon-neutral targets, the skyrocketing demand for electricity and the technological advancements—have reignited the interest in nuclear power. And uranium and nuclear focused ETFs are rising fast.

Energy investors might consider that their exposure should go beyond what the energy sector is right now and consider what it will become in the future.

Ron DeLegge II is the founder of and author of several books, including "Habits of the Investing Greats" and "Portfolio Architecture: A Handbook for Investors."