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From cradle to grave? On optimal nuclear waste disposal

Pauli Lappi and Jussi Lintunen

Energy Economics, 2021, vol. 103, issue C

Abstract: This paper analyses socially optimal nuclear plant operation and nuclear waste management. Two waiting rules are derived: the first characterizes the optimal continuation of electricity production, and the second gives the optimal nuclear waste disposal date. Both rules balance the cost and benefit of either continuing production or delaying waste disposal into a deep geological repository. In addition, multiple regulatory options are investigated. The optimized waste storage and disposal cost forms the payment that should be collected from the nuclear power firm into a nuclear waste fund. The properties of this payment and other regulatory options including a tax to be paid at the shutdown date of the plant are investigated, and it is shown that the money can be collected by a plant-specific constant fee targeted at firm’s profit or output. Numerical illustration shows that waste disposal to a deep geological repository is a cost-minimizing solution only with very low interest rates. For interest rates above one percent it is optimal to store the waste in an on-ground storage facility in perpetuity.

Keywords: Hazardous waste; Nuclear power; Nuclear waste; Optimal timing; Waste management (search for similar items in EconPapers)
JEL-codes: Q48 Q53 Q58 (search for similar items in EconPapers)
Date: 2021
References: View references in EconPapers View complete reference list from CitEc
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Persistent link: https://EconPapers.repec.org/RePEc:eee:eneeco:v:103:y:2021:i:c:s0140988321004308

DOI: 10.1016/j.eneco.2021.105556

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Energy Economics is currently edited by R. S. J. Tol, Beng Ang, Lance Bachmeier, Perry Sadorsky, Ugur Soytas and J. P. Weyant

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