Nuclear Phase-out Policy in Japan Shiro Takeda (Kyoto Sangyo - - PowerPoint PPT Presentation

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A CGE Analysis of CO2 regulation and Nuclear Phase-out Policy in Japan Shiro Takeda (Kyoto Sangyo University, Japan) 15th IAEE European Conference 2017, 3rd to 6th September 2017, Hofburg Congress Center, Vienna, Austria Background Energy

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A CGE Analysis of CO2 regulation and Nuclear Phase-out Policy in Japan

Shiro Takeda (Kyoto Sangyo University, Japan)

15th IAEE European Conference 2017, 3rd to 6th September 2017, Hofburg Congress Center, Vienna, Austria

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Background

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  • Energy and environment

► Energy and environment are important policy issues in Japan since the

2011 earthquake.

► Climate policy + nuclear use

  • Climate policy in Japan

► 2050 target: CO2 reduction by 60-80% ► FIT for renewable energy has started since 2012 ► The rise in electricity price

  • Nuclear use

► 60% of Japanese citizens are opposed to the restart of nuclear power

plants (Nikkei, Feb. 29, 2016)

► But the Japanese gov. plans to use a certain amount of nuclear power

in the future (about 20% in total electricity generation in 2030).

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Purpose of analysis

3

  • Policy debates

► CO2 reduction target: 60%-80% (less or more?) ► Use of nuclear power: How much nuclear power do we use?

  • Economic impacts

► To determine climate and energy policies, we need information of their

impacts on economic activity.

  • Purpose of analysis

► We quantitatively examine impacts of CO2 regulation and nuclear

reduction on Japanese economy.

► Impacts on macroeconomy (GDP, income), electricity sector,

production sectors.

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Previous studies

4

  • Nuclear use (nuclear phase-out policy)

► Yamazaki and Takeda (2013), Yamazaki and Takeda (2016), Lee et al.

(2015)

► A static model, a global model, a macro-econometic model.

  • CO2 regulations

► Takeda et al. (2012, 2013) ► Previous studies have put little emphasis on the relation between CO2

regulation and nuclear use.

  • This research

► Construct a dynamic CGE model of Japan which tries to capture the

details of Japanese economy and energy system

► Examine various scenarios of CO2 reduction and nuclear use (and their

combination)

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Summary of the CGE model

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  • Summary of our CGE (computable general equilibrium) model

► A CGE model for Japanese economy. ► 48 goods and 41 sectors ► A recursive dynamic model to 2050 ► The benchmark data is 2005 IO table

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Structure of the model

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Export

Rest of the world

Import

Production activity Armington aggregation

Investment goods production

Carbon emissions

Household:

Consumption + Saving + Factor supply

Government

Supply to final consumption Export Import Intermediate inputs Supply to Domestic market Primary factor supply Emission permit revenue Production tax Transfer or tax Investment = Saving Supply to government Supply to investment Import Tariff CO2 emissions CO2 emissions

Flow of goods and factors Tax CO2 emissions

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Energy

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  • Energy goods and sectors

► 15 energy goods ► 9 energy sectors inc. electricity sectors

Notation Energy E_F Fossil fuel E_N Nuclear E_H Hydro E_S Solar E_W Wind

5 electricity sectors

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CO2 regulation

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  • CO2 regulation

► In the simulation, we examine impacts of CO2 regulation.

  • Type of CO2 regulation

► Cap & trade ► Initial allocation of emissions permit → auction ► Auction revenue → lump-sum rebate to the household ► Price of emissions permit

→ Determined by permit market (demand = supply)

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  • BAU

► Reference scenario ► Without no limit on CO2 ► Nuclear after 2020 will be limited to the half of 2005 level. ► This scenario is similar to “Current Policy Scenario” in WEO.

Simulation scenarios

9 Scenario Explanation

BAU Reference scenario 50% reduction in nuclear from 2005 level No regulation on CO2. N70 Nuclear reduction 70% reduction in nuclear from 2005 level N90 90% reduction in nuclear from 2005 level C40 Reduction in CO2 40% reduction in CO2 from 2005 level C50 50% reduction in CO2 from 2005 level C60 60% reduction in CO2 from 2005 level N70_C60 N70 + C60 N90_C60 N90 + C60

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Nuclear power and CO2 emissions

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50 100 150 200 250 300 350 2005 2010 2015 2020 2025 2030 2035 2040 2045 2050

Electricity generation by nuclear (TWh)

BAU N70 N90 200 400 600 800 1,000 1,200 1,400 2015 2020 2025 2030 2035 2040 2045 2050

CO2 emissions (MtCO2)

BAU C40 C50 C60

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Paths of CO2 emissions and GDP in BAU scenario

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1,159

200 400 600 800 1,000 1,200 1,400 2005 2010 2015 2020 2025 2030 2035 2040 2045 2050

CO2 emissions in BAU scenario (MtCO2)

726.1

0.0 100.0 200.0 300.0 400.0 500.0 600.0 700.0 800.0 2005 2010 2015 2020 2025 2030 2035 2040 2045 2050

Income and GDP in BAU scenario (Trillion Yen)

Income GDP

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Simulation results 12

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200 400 600 800 1,000 1,200 1,400 BAU N70 N90 C40 C50 C60 N70_C60 N90_C60 Fossil fuel Nuclear Hydro Solar Wind

Electricity generation by source (TWh, 2050)

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BAU Nuclear reduction CO2 reduction CO2 + Nuclear

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10 20 30 40 50 60 70 80 10 20 30 40 50 60 70 C40 C50 C60 N70_C60 N90_C60 carbon price (1000 yen/tCO2) CO2 reduction rate (%) CO2 reduction rate Carbon price

CO2 reduction rates and carbon price in 2050

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CO2 reduction CO2 + Nuclear

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  • 0.6
  • 2.1
  • 2.4
  • 4.3
  • 7.3
  • 8.1
  • 9.9
  • 0.4
  • 1.4
  • 1.5
  • 2.7
  • 4.5
  • 5.0
  • 6.2
  • 12.0
  • 10.0
  • 8.0
  • 6.0
  • 4.0
  • 2.0

0.0 N70 N90 C40 C50 C60 N70_C60 N90_C60

% change in income and GDP from BAU value (2050, %)

Real income GDP

Impacts on GDP and real income (%)

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Nuclear reduction CO2 reduction CO2 + Nuclear

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Summary

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  • Macro impacts

► Nuclear reduction has relatively small impacts on macro variables. ► CO2 regulation of 60% reduction rate has large negative impact on

macro variables.

  • Sectoral impacts.

► Both nuclear reduction and CO2 regulation have large negative impacts

  • n energy-intensive sectors.
  • Climate policy in Japan.

► Our analysis quantitatively shows that the current CO2 reduction

target (60-80% decrease in GHG by 2050) is likely to have large negative impacts on Japanese economy especially if it is implemented with nuclear reduction.

  • Limitations

► The benchmak data is old. ► Energy technology (efficiency) improvement.

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References

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  • Takeda, S., Horie, T. and Arimura, T. H., (2012). A Computable General

Equilibrium Analysis of Border Adjustments under the Cap-And-Trade System: A Case Study of the Japanese Economy. Climate Change Economics, 03(01), p.1250003. http://doi.org/10.1142/S2010007812500030

  • Takeda, S., Arimura, T. H., Tamechika, H., Fischer, C., and Fox, A. K. (2013)

“Output-Based Allocation of Emissions Permits for Mitigating Carbon Leakage for the Japanese Economy.” Environmental Economics and Policy Studies. http://doi.org/10.1007/s10018-013-0072-8

  • Yamazaki, M., and Takeda, S. (2016). “A Computable General Equilibrium

Assessment of Japan’s Nuclear Energy Policy and Implications for Renewable Energy.” Environmental Economics and Policy

  • Studies. http://doi.org/10.1007/s10018-016-0164-3
  • Yamazaki, M. and Takeda, S. (2013). “An assessment of nuclear power

shutdown in Japan using the computable general equilibrium model.” Journal

  • f Integrated Disaster Risk Management, 3(1), 36–

55.http://doi.org/10.5595/idrim.2013.0055

  • Lee, S., Pollitt, H. and Park, S.-J. (eds.) (2015) Low-carbon, Sustainable Future in

East Asia: Improving energy systems, taxation and policy cooperation, Routledge Studies in the Modern World Economy.