Renaissance or Requiem: Is Nuclear Energy Cost Effective in a Post‐fukushima World?

Abstract

In the aftermath of Fukushima, decisions to slow or stop the future use of nuclear power have not been based on rational economic analysis. We find that there are cost‐effective technologies that would greatly mitigate future natural disasters. Even if the U.S. nuclear industry adopted new safety technologies and paid the full cost of insurance and borrowing, it is more efficient to continue to use existing nuclear plants than to replace them with new fossil fuel plants. However, new nuclear plant costs can exceed fossil fuel alternatives if the price of carbon emissions is below $118/ton. (JEL Q40, Q48, Q54)

How natural disasters affect carbon emissions: the global case

“…Frequent natural disasters have resulted in a diverse series of consequences. For example, it has been documented that natural disasters lead to deaths and injuries (Chen et al 2013 ; Tang et al 2017 ; Zhou et al 2014 ), infrastructure collapse (Botzen et al 2019 ; Seaberg et al 2017 ), and energy market volatility (Lee et al 2021 ; Schwarz and Cochran 2013 ). In addition, Khalid and Ali ( 2019 ) demonstrated that natural disasters can cause economic losses.…”

Impact of Natural Disasters on Energy Consumption: Evidence From Indian States

“…Second, the energy industry is the industry most affected by frequent natural disasters. Schwarz & Cochran (2013) examine the cost efficiency conflict regarding nuclear energy due to natural disasters, which affect the risk management of the energy industry in terms of future disaster mitigation.…”