Costs of meeting international climate targets without nuclear power

Abstract

The impact of a global phase-out of nuclear energy is assessed for the costs of meeting international climate policy targets for 2020. The analysis is based on simulations with the Prospective Outlook on Long-term Energy Systems (POLES) global energy systems model. The phase-out of nuclear power increases GHG emissions by 2% globally and 7% for Annex I countries. The price of certificates increases by 24% and total compliance costs of Annex I countries rise by 28%. Compliance costs increase most for Japan (+58%) and the US (+28%). China, India, and Russia benefit from a global nuclear phase-out because revenues from higher trading volumes of certificates outweigh the costs of losing nuclear power as a mitigation option. Even for countries that face a relatively large increase in compliance costs, such as Japan, the nuclear phase-out implies a relatively small overall economic burden. When trading of certificates is available only to countries that committed to a second Kyoto period, the nuclear phase-out results in a larger increase in the compliance costs for the group of Annex I countries (but not for the EU and Australia). Results from sensitivity analyses suggest that the findings are fairly robust to alternative burden-sharing schemes and emission target levels.Policy relevanceNew calculations show that the impact of a global phase-out of nuclear energy on global mitigation costs is quite modest, but that there are substantial differences for countries. Total compliance costs increase the most for Japan and the US, but these are rather marginal if measured in terms of GDP. China, India, and Russia benefit from a nuclear phase-out because their additional revenues from selling certificates outweigh the additional costs of losing nuclear power as a mitigation option. The findings also highlight the importance of certificate trading to achieving climate targets in a cost-efficient way. If Japan or the US were to be banned from certificate trading, along with other countries, because of their non-participation in a second Kyoto period, then their compliance costs would increase substantially under a nuclear phase-out. The EU, however, would benefit because certificate prices would be lower.