RP0153 – Innovation Benefits from Nuclear PhaseOut: Can They Compensate the Costs?

Division ECIP - Economic analysis of Climate Impacts and Policy Division
1/2013

Authors

  • Enrica De CianCMCC - Euro-Mediterranean Center on Climate Change, FEEM - Fondazione Eni Enrico Mattei
  • Samuel CarraraCMCC - Euro-Mediterranean Center on Climate Change, FEEM - Fondazione Eni Enrico Mattei
  • Massimo TavoniCMCC - Euro-Mediterranean Center on Climate Change, FEEM - Fondazione Eni Enrico Mattei
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This paper investigates whether an inefficient allocation of abatement, due to constraints on the use of currently available low carbon mitigation options, can promote innovation in new technologies and eventually generate welfare gains.
We focus on the case of nuclear power phase out, when accounting for endogenous technical change in energy efficiency and in low carbon technologies. The analysis uses the Integrated Assessment Model WITCH, which features multiple externalities due to both climate and innovation-market failures.
Our results show that phasing out nuclear power stimulates additional R&D investments and deployment of infant technologies with large learning potential. The innovation

CC by Curtis Gregory Perry at Flickr.com

benefits which this would generate and that would not otherwise be captured due to intertemporal and international externalities almost completely offset the economic costs of phasing out nuclear power. The technological change benefit depends on the stringency of the climate policy and is distributed unevenly across countries.

  • jel: H40, O33, Q40, Q55
  • Keywords: technological change, climate policy, nuclear phaseout

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