A new paper reveals the financial and environmental costs of Germany’s nuclear power phaseout.
I spent the first fifteen years of my life in Northern Bavaria, right next to the wall facing East Germany and Czechoslovakia. The air quality was reminiscent of what you encounter in some of the worst polluted places on earth these days. Snow would fall, two days later it was brown and black from the particulate pollution spewing from coal fired power plants on the other side of the wall, and the cars zooming by at 120 mph powered by leaded high octane gasoline in the West.
Part of Germany’s strategy to fight air pollution, while providing a reliable supply of electricity was to invest heavily in nuclear power plants. While I was growing up, there was a lively debate around the safety of these reactors and how to deal with the spent fuel storage issue. Much of this debate reached mainstage when the Chernobyl reactor exploded in 1986 and most of us schoolkids were not allowed to go outside and play in the rain (we usually did that because sunshine is rare in Northern Bavaria). Until 2011, Germany generated about one quarter of its electricity from nuclear power. Then Fukushima happened. And Germany decided to retire its nuclear fleet.
Today the number of reactors is down from its peak of 17 to 7 reactors, which are all slated to be shut down in the next three years. Today Germany generates 12% of its power from nuclear and north of 40% using coal. My fellow Germans are at the same time heavily investing in the renewable future, rolling out solar, wind, and biofuels. Under the new European mandate to be carbon free by 2050, this is going to be interesting as nuclear power is, well, carbon free. So the question many of us had was what the current consequences of the nuclear shut down have been on the indicators we care about – air pollution and carbon emissions.
Enter stage left – a new paper by our fabulous graduate student Stephen Jarvis (who will be on the market next year), Olivier Deschenes (UCSB) and recent Energy Institute visitor Akshaya Jha. They do something really clever to estimate the effect of the nuclear shutdowns.
What we need to know is what the remaining power plant fleet would have done if the nuclear power plants had not been phased out. We call this a counterfactual. Sort of like a parallel universe (which we never see in reality. Beam me up Scotty!). They employ a machine learning algorithm to study changing patterns of production in response to individual plant shutdowns, using hourly electricity load data, and then use those patterns to simulate a system with the nukes shut down. (Yes, for you critical super nerds, that is an oversimplification, but this is a blog and you can read the paper here.)
This is one of these beautiful papers that asks a hugely policy-relevant question, uses cutting-edge methods and teaches us 5 important things:
- The shutdown worked. Production from nuclear power plants went down drastically. Duh. But it’s always good to check that your algorithm works and your data are properly read into your ‘puter.
- The decrease in nuclear production was offset by production from coal- and gas-powered plants in Germany as well imports from its European neighbors.
- The cost of electricity generation went up due to the phaseout, resulting in higher prices. This is not surprising, given that the marginal cost of generation for nukes is very low (they cost a pretty penny to build though).
- The most important finding is that emissions of (often not very salient) local (think NOx, SOx and other crud) and global (think CO2) pollutants went up quite a bit. If you translate the increased emissions into damages in dollars, that number is $12 billion a year (about $150 per German).
- The benefits in terms of lower accident risk (which is very salient, since the idea of a nuclear accident is very scary) and reductions in spent fuel storage costs come nowhere near the $12 billion dollars in damages.
So where is the rub? A lot of people are going to read this paper and interpret this as economists throwing shade on the nuclear phaseout. I think this is only part of the story and maybe not the most important takeaway message.
The paper, like any econometric paper, has to rely on data from the past. In this case, this means the paper assumes the historical grid as its counterfactual. Not some shiny new solar, wind, biofuel and alicorn powered 0% emissions grid. If we had that grid, these numbers would change. In that world, if you turned off a nuke, a shiny clean renewable plant would “ramp” up (or storage would kick in). Marginal costs for renewable energy (at least the ones generating electricity) are very low, but we have discussed the economics of grid-scale renewables at length on this blog.
So, what I am saying is that the costs of this phaseout in a future grid do not necessarily have to be as high as the ones cited in the paper. It all depends on the economics of the renewable grid. But for now, Germans are paying the price from the phaseout in terms of higher rates, worse air quality and increase GHG emissions.
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Suggested citation: Auffhammer, Maximilian. “No Nukes, Mo Problems.” Energy Institute Blog, UC Berkeley, January 27, 2020, https://energyathaas.wordpress.com/2020/01/27/no-nukes-mo-problems/
Maximilian Auffhammer is the George Pardee Professor of International Sustainable Development at the University of California Berkeley. His fields of expertise are environmental and energy economics, with a specific focus on the impacts and regulation of climate change and air pollution.