In a working paper for the National Bureau of Economic Research (NBER), a team from UC Berkeley, UC Santa Barbara and Carnegie Mellon University (CMU) calculates that the social cost of the phase out of nuclear electricity production in Germany is approximately $12 billion per year.

More than 70% of this cost comes from the increased mortality risk associated with exposure to the local air pollution emitted when burning fossil fuels; the researchers found that the lost nuclear electricity production due to the phase-out was replaced primarily by coal-fired production and net electricity imports.

The decision to phase-out nuclear production in many countries seems to suggest that the expected costs of nuclear power exceed the benefits. Yet, there remains considerable uncertainty about some of these costs and benefits as there is a glaring lack of empirical studies quantifying the full range of economic and environmental impacts from large-scale nuclear sector closures.

This paper presents a first attempt at filling this important gap by documenting the impact of the phase-out of nuclear power in Germany on multiple market and environmental outcomes. In particular we focus on the shutdown of ten of the seventeen nuclear reactors in Germany that occurred between 2011 and 2017 following the Fukushima accident in Japan. This context affords us several advantages over previous research studying the impacts of nuclear power plants closures.

First, and most importantly, Germany shut down over 8 GW of nuclear production capacity over a few months in 2011, representing close to a 5% reduction in total capacity. By 2017 this had increased to a total of 11 GW of closed nuclear production capacity. This is far larger than the reductions in capacity studied by previous research that focused on the shutdown of a small number of nuclear plants in the United States.

Second, Germany plans to shut down all of its remaining nuclear reactors by 2022. Our study thus provides timely policy-relevant information on the consequences of Germany’s nuclear phase-out moving forward. Third, studying electricity markets in the European context gives us the opportunity to examine how cross-border trade was impacted by a large shock to production in one country.

Finally, Germany’s nuclear phase-out was the direct result of political actions taken following extensive anti-nuclear campaigning in Germany as well as a sudden increase in the perceived risk of nuclear power following the Fukushima accident. Importantly, the phase-out was not caused by changes in the economic or environmental conditions pertaining to nuclear production in Germany. This facilitates a causal interpretation of our analysis based on comparing the conditional averages of economic and environmental outcomes before versus after the nuclear phase-out.

—Jarvis et al.

The researchers used hourly data on power plant operations and a novel machine-learning framework to estimate how plants would have operated differently if the phase-out had not occurred. They estimated the economic and environmental costs of the nuclear phase-out in Germany using the rich plant-level data and ambient pollution monitor data.

The novel machine-learning approach predicted which power plants increased their output in response to the nuclear plant closures.

NBER working papers are circulated for discussion and comment purposes. They have not been peer-reviewed or been subject to the review by the NBER Board of Directors that accompanies official NBER publications.

Resources

• Stephen Jarvis, Olivier Deschenes, Akshaya Jha (2019) “The Private and External Costs of Germany's Nuclear Phase-Out” NBER Working Paper Nº 26598 doi: 10.3386/w26598