A computable general equilibrium assessment of Japan’s nuclear energy policy and implications for renewable energy

This study assesses the economic and environmental impacts of Japan’s nuclear power scenarios and examines the implications for renewable energy. To assess nuclear power scenarios, we use the following three scenarios: “new policy scenario” of the International Energy Agency as a reference; a 40-year operational time limit of nuclear power plants; and no restart of nuclear power plants. For all scenarios, renewable energy with feed-in tariffs is considered. In addition, to assess the impact on the international competitiveness of Japanese industry, we construct a multi-regional, recursive dynamic computable general equilibrium model based on version 8.1 of the Global Trade Analysis Project database. Compared to the reference scenario, the other two scenarios increase CO2 emissions through an increase in fossil fuel electricity generation and decreases Japan’s real gross domestic product, although renewable energy supply also increases. In particular, a nuclear power phase-out negatively impacts Japan’s energy-intensive and trade-exposed sectors. However, our model does not consider externalities from fossil fuel usage and nuclear risk. The results of this simulation study represent the first step in answering important questions on energy policy but further research on externalities of fossil fuel and nuclear power usage should be conducted.