Abstract
Summary The Swiss energy strategy until 2050 envisages ambitious CO2 emission reduction targets along with substantial cutbacks in electricity consumption to establish a low-carbon economy without nuclear energy. Our computable general equilibrium analysis finds that compliance with stringent CO2 constraints requires high CO2 taxes on economic activities which are not eligible for international emissions trading; likewise, electricity consumers are burdened with substantial electricity taxes. Environmental tax reforms are not likely to generate welfare gains without accounting for the benefits of improved environmental quality. However, economic adjustment costs to a low carbon economy without nuclear energy remain modest and can be markedly reduced through revenue-neutral cuts of initial distortionary taxes. On the other hand, alternative recycling strategies pose a trade-off between efficiency and distributional justice which has to be resolved on normative grounds.
Highlights
Over the decades Switzerland will be challenged with a massive restructuring of its energy system
computable general equilibrium (CGE) models build upon general equilibrium theory that combines assumptions regarding the optimizing behavior of economic agents with the analysis of equilibrium conditions: producers combine primary factors and intermediate inputs at least cost subject to technological constraints; given preferences consumers maximize their well-being subject to budget constraints
We investigate two policy scenarios – POM (“Politische Massnahmen Bundesrat”) and NEP (“Neue Energiepolitik”) – which differ in their stringency of reduction targets for long-term CO2 emissions and electricity demand
Summary
Over the decades Switzerland will be challenged with a massive restructuring of its energy system. Following the devastating earthquake that struck Japan in March 2011 and the ensuing nuclear disaster at Fukushima, Switzerland decided to withdraw from the use of nuclear energy within the decades on a step-bystep basis: The existing five nuclear power plants are to be decommissioned when they reach the end of their safe service life, and will not be replaced by new ones. In 2011 the Federal Council and Parliament endorsed a variety of policy measures to promote expansion of renewable energy production and energy efficiency improvements. These measures have been designed to fill the nuclear gap and at the same time achieve a reduction in per-capita CO2 emissions to roughly 3.8 tons in 2050. The adopted measures – constituting the business-as-usual (BaU) – will still not be sufficient to reach Switzerland’s ambitious climate policy targets
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