■IGES-ISEP Cooperative Project
-Economic Impact Evaluation of the Nuclear Power Phase-out and Renewable Energy Promotion Scenarios-

21 July 2011

Institute for Global Environmental Strategies (IGES)
Institute for Sustainable Energy Policies (ISEP)

Objective of the study

Major messages

  • Under the assumption of phasing-out the nuclear power, the renewable energy promotion scenario is more economically rational than the fossil fuel dependent scenario.
  • To achieve aggressive targets for reducing GHG emissions, it is necessary to introduce policies to promote renewable energy and energy-saving such as feed-in tariff (FIT) for renewable energy, emission trading, carbon tax and deregulation.


This study aims at evaluating the economic effects of phasing out nuclear power and introducing renewable energy based on the four energy scenarios below, as well as the following three aspects: technological possibility, supply cost, and environmental influence.

Four energy scenarios

  1. Reference scenario (REF):sustaining the energy supply and demand outlook before the Fukushima nuclear incident.
  2. Long-run nuclear phase-out and fossil fuel dependent scenario (SFF-LF): Reduce the ratio of energy supplied from nuclear power in three steps by the year 2050 and switch energy supply dependency onto fossil fuels.
  3. Short-run nuclear phase-out and fossil fuel dependent scenario (SFF-SR): Stop all energy supplied from nuclear power by 2015 and switch energy supply dependency onto fossil fuels.
  4. Nuclear phase-out and promoting renewable energy scenario (REN): Phase out nuclear power step-by-step and at the same time introduce renewable energy policy to supply 15% of the total energy from wind energy and 25% from solar energy by the year 2050.

Basic Assumptions

This analysis employs projections of the future GDP, population and energy source prices provided by the International Energy Agency (IEA). Based on these projections, the study evaluates the economic effects of the above four scenarios assuming final energy demands in Japan do not change, and no concrete energy and emission policies such as feed-in tariff (FIT) system for the renewable energy and emission trading system are introduced.


Results

We obtained the following four results from the provisional analysis of the model.

1. Effects on energy supply portfolio: If no concrete policies to promote renewable energy are introduced, fossil fuels such as liquid natural gas, natural gas and petroleum will remain as the major Japanese energy source.

2. Effects on the energy supply system: Figure 2 presents the net present value of the total cost of each scenario. If nuclear power is abolished, additional costs will evolve compared with the reference scenario. However, in the nuclear phase-out and renewable energy promotion scenario, the effects on Japanese economy can become smaller because variable costs such as fuel costs can be reduced.

※Click for larger image


Considering the effects on domestic employment and economic impact, the nuclear phase-out and renewable energy promotion scenario will be more effective for mitigating the negative impact on Japanese economy.

3. Energy producing cost and energy retail price in the market: In the short-run, the energy retail price is likely to rise in all nuclear phase-out scenarios including the nuclear phase-out and renewable energy promotion scenario. However, the nuclear phase-out and renewable energy promotion scenario can mitigate the energy retail price hike by 2050 at a lower level.

4. Greenhouse gas (GHG) emissions: The level of CO2 emissions will not be significantly reduced unless renewable energy promoting and/or energy saving policies are introduced. However, after the year 2040 when ratio of renewable energy supply exceeds a certain value, the amount of emission reductions will become larger in the nuclear phase-out and renewable energy promotion scenario compared to the reference scenario.

 

Contacts regarding this article

Institute or Global Environmental Strategies (IGES)
2108-11 Kamiyamagushi, Hayama, Kanagawa
Homepage: http://www.iges.or.jp/en/index.html
Tel: 046-855-3700 (Representative)


Anindya Bhattacharya, IGES, Economy and Environment Group, Senior Energy Economist Tel: 046-855-3842(office) / Email: bhattacharya@iges.or.jp

Jusen Asuka, IGES, Climate Change Group, Director / Professor, Tohoku University Tel: 046-855-3720(office) / Email: asuka@iges.or.jp

Satoshi Kojima, IGES, Economy and Environment Group, Director Tel: 046-855-3856(office) / Email: kojima@iges.or.jp

Emiko Doi, IGES, Public Relations officer Tel: 046-855-3734 (office) /Email: doi@iges.or.jp

Go to top of page