Professor of Economics, University of California, Santa Barbara
Title: The Private and External Costs of Germany’s Nuclear Phase-Out
Abstract: Many countries have phased out nuclear power in response to concerns about nuclear waste and the risk of nuclear accidents. This paper examines the shutdown of more than half of the nuclear production capacity in Germany after the Fukushima accident in 2011. We use hourly data on power plant operations and a machine learning approach to estimate the impacts of the phase-out policy. We find that the lost nuclear electricity production was replaced primarily by coal-fired production and net electricity imports. Our estimates of the social cost of the phase-out range from 3-8 billion euros per year. The majority of these costs comes from the increased mortality risk associated with exposure to the local air pollution emitted when burning fossil fuels. Policymakers would have to be extremely risk averse, or significantly over-estimate the risks of nuclear accidents, for the benefits of the phase-out to outweigh our estimates of the social costs. We discuss the likely role of behavioural biases in this setting, and highlight the importance of ensuring policymakers and the public are informed about the health effects of local air pollution.