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Nuclear Phase-out Under Stringent Climate Policies: A Dynamic Macroeconomic Analysis

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  • Lucas Bretschger
  • Lin Zhang

Abstract

In this paper we investigate the long-run economic consequences of phasing out nuclear energy in the presence of stringent climate policies. We integrate endogenous growth theory and technology-based activity analysis into a dynamic numerical general equilibrium model. Both market-based and policy-mandated nuclear phase-out are studied. Using data from the Swiss economy we find that the aggregate welfare loss of carbon policy is as large as 1.21% and that nuclear phase-out raises the loss to 1.58%. Nuclear phase-out has no significant effect on economic growth. Increased investment, induced innovation, and sectoral change are the reasons that the economic impact of nuclear phase-out and the trade-off between energy and climate policy are moderate, once the dynamics of an economy are taken into account. Optimal phase-out time for nuclear depends mainly on future cost escalation in the energy sector.

Suggested Citation

  • Lucas Bretschger & Lin Zhang, 2017. "Nuclear Phase-out Under Stringent Climate Policies: A Dynamic Macroeconomic Analysis," The Energy Journal, , vol. 38(1), pages 167-194, January.
    • Handle: RePEc:sae:enejou:v:38:y:2017:i:1:p:167-194
    DOI: 10.5547/01956574.38.1.lbre
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    1. Bretschger, Lucas & Ramer, Roger & Schwark, Florentine, 2011. "Growth effects of carbon policies: Applying a fully dynamic CGE model with heterogeneous capital," Resource and Energy Economics, Elsevier, vol. 33(4), pages 963-980.
    2. Gerlagh, Reyer & van der Zwaan, Bob, 2003. "Gross world product and consumption in a global warming model with endogenous technological change," Resource and Energy Economics, Elsevier, vol. 25(1), pages 35-57, February.
    3. Adriana Marcucci Bustos & Hal Turton, 2012. "Swiss Energy Strategies under Global Climate Change and Nuclear Policy Uncertainty," Swiss Journal of Economics and Statistics (SJES), Swiss Society of Economics and Statistics (SSES), vol. 148(II), pages 317-345, June.
    4. Goulder, Lawrence H. & Schneider, Stephen H., 1999. "Induced technological change and the attractiveness of CO2 abatement policies," Resource and Energy Economics, Elsevier, vol. 21(3-4), pages 211-253, August.
    5. Bretschger, Lucas, 2013. "Climate policy and equity principles: fair burden sharing in a dynamic world," Environment and Development Economics, Cambridge University Press, vol. 18(5), pages 517-536, October.
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    Citations

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    Cited by:

    1. Lucas Bretschger & Matthias Leuthard & Alena Miftakhova, 2024. "Boosting Sluggish Climate Policy: Endogenous Substitution, Learning, and Energy Efficiency Improvements," CER-ETH Economics working paper series 24/391, CER-ETH - Center of Economic Research (CER-ETH) at ETH Zurich.
    2. Adriana Marcucci & Lin Zhang, 2019. "Growth impacts of Swiss steering-based climate policies," Swiss Journal of Economics and Statistics, Springer;Swiss Society of Economics and Statistics, vol. 155(1), pages 1-13, December.
    3. Karydas, Christos & Zhang, Lin, 2019. "Green tax reform, endogenous innovation and the growth dividend," Journal of Environmental Economics and Management, Elsevier, vol. 97(C), pages 158-181.
    4. Hsiao, Cody Yu-Ling & Chen, Hsing Hung, 2018. "The contagious effects on economic development after resuming construction policy for nuclear power plants in Coastal China," Energy, Elsevier, vol. 152(C), pages 291-302.
    5. Panos, Evangelos & Kober, Tom & Wokaun, Alexander, 2019. "Long term evaluation of electric storage technologies vs alternative flexibility options for the Swiss energy system," Applied Energy, Elsevier, vol. 252(C), pages 1-1.
    6. Florian Landis & Adriana Marcucci & Sebastian Rausch & Ramachandran Kannan & Lucas Bretschger, 2019. "Multi-model comparison of Swiss decarbonization scenarios," Swiss Journal of Economics and Statistics, Springer;Swiss Society of Economics and Statistics, vol. 155(1), pages 1-18, December.
    7. Alena Miftakhova & Clément Renoir, 2021. "Economic Growth and Equity in Anticipation of Climate Policy," CER-ETH Economics working paper series 21/355, CER-ETH - Center of Economic Research (CER-ETH) at ETH Zurich.
    8. Hana Kim & Eui-Chan Jeon, 2020. "Structural Changes to Nuclear Energy Industries and the Economic Effects Resulting from Energy Transition Policies in South Korea," Energies, MDPI, vol. 13(7), pages 1-17, April.
    9. Rausch, Sebastian & Zhang, Da, 2018. "Capturing natural resource heterogeneity in top-down energy-economic equilibrium models," Energy Economics, Elsevier, vol. 74(C), pages 917-926.
    10. Cámara, Ángeles & Martínez, M.ª Isabel & Rodríguez, Leila, 2018. "El impacto económico del desmantelamiento nuclear en España || The Economic Impact of Nuclear Dismantlement in Spain," Revista de Métodos Cuantitativos para la Economía y la Empresa = Journal of Quantitative Methods for Economics and Business Administration, Universidad Pablo de Olavide, Department of Quantitative Methods for Economics and Business Administration, vol. 25(1), pages 244-271, Junio.
    11. Kan, Xiaoming & Hedenus, Fredrik & Reichenberg, Lina, 2020. "The cost of a future low-carbon electricity system without nuclear power – the case of Sweden," Energy, Elsevier, vol. 195(C).
    12. Sophie Maire & Philippe Thalmann & Frank Vöhringer, 2019. "Welfare effects of technology-based climate policies in liberalized electricity markets: seeing beyond total system cost," Swiss Journal of Economics and Statistics, Springer;Swiss Society of Economics and Statistics, vol. 155(1), pages 1-12, December.

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    More about this item

    Keywords

    Energy and growth; Decarbonization; Nuclear phase out; CGE; model; Induced innovation;
    All these keywords.

    JEL classification:

    • F0 - International Economics - - General

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