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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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    References listed on IDEAS

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    Cited by:

    1. Gao, Xing & Wang, Huizi & Zhang, Xingman, 2026. "Climate policy and green energy technology justice from a whole life-cycle perspective," Energy Policy, Elsevier, vol. 208(C).

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