Economics of Nuclear Power and Climate Change Mitigation Policies

by Sam Peterson

The availability of nuclear power may be crucial in determining whether greenhouse gas (GHG) emissions can be reduced enough to reach the goal of limiting worldwide temperature increases to 2°C. The aforementioned goal, established during a 2009 United Nations climate change conference in Copenhagen, Denmark, appears contingent on the ability of nuclear power to generate electricity without GHG emissions (UNFCCC, 2009). In a 2012 study of the economics of nuclear power generation, Bauer et. al. utilized a “long-term global multiregional model ReMIND-R” intertemporal model to analyze the effects of four differing paths for global nuclear policy following the 2011 Fukishima Daiichi meltdown in Japan. Early shutdown and removal of nuclear plants is shown to contribute to “discounted cumulative global GDP losses of 0.07% by 2020,” and if policy dictates prohibition of investment in nuclear power, those losses will double. The study concluded that the discounted reduction in global GDP by 2035 would be significantly worse if global environmental policy shifts in the direction of a carbon budget of some kind, which would strongly suggest limits on and/or cap emissions from coal, natural gas and crude oil. Continue reading