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Economics of Nuclear Power and Climate Change Mitigation Policies

Economics of Nuclear Power and Climate Change Mitigation Policies

Full Title: Economics of Nuclear Power and Climate Change Mitigation Policies
Author(s): Nico Bauer, Robert J. Brecha, and Gunnar Luderer
Publisher(s): Proceedings of the National Academy of Sciences
Publication Date: October 1, 2012
Full Text: Download Resource
Description (excerpt):

The events of March 2011 at the nuclear power complex in  Fukushima, Japan, raised questions about the safe operation of  nuclear power plants, with early retirement of existing nuclear  power plants being debated in the policy arena and considered by  regulators. Also, the future of building new nuclear power plants  is highly uncertain. Should nuclear power policies become more  restrictive, one potential option for climate change mitigation will  be less available. However, a systematic analysis of nuclear power  policies, including early retirement, has been missing in the climate  change mitigation literature. We apply an energy economy model  framework to derive scenarios and analyze the interactions and  tradeoffs between these two policy fields. Our results indicate that  early retirement of nuclear power plants leads to discounted cumulative global GDP losses of 0.07% by 2020. If, in addition, new  nuclear investments are excluded, total losses will double. The effect of climate policies imposed by an intertemporal carbon budget on  incremental costs of policies restricting nuclear power use is small.  However, climate policies have much larger impacts than policies  restricting the use of nuclear power. The carbon budget leads to  cumulative discounted near term reductions of global GDP of 0.64%  until 2020. Intertemporal flexibility of the carbon budget approach  enables higher near-term emissions as a result of increased power  generation from natural gas to fill the emerging gap in electricity  supply, while still remaining within the overall carbon budget.  Demand reductions and efficiency improvements are the second  major response strategy.

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