Advanced Nuclear Power: Combining Economic Analysis with Expert Elicitations to Inform Climate Policy

Abstract

The relationship between R&D investments and technical change is inherently uncertain. In this paper we combine economics and decision analysis to incorporate the uncertainty of technical change into climate change policy analysis. We present the results of an expert elicitation on the prospects for technical change in nuclear power. We then use the results of the expert elicitations as inputs to the MiniCAM integrated assessment model, to derive probabilistic information about the impacts of R&D investments on the costs of emissions abatement. We find that nuclear R&D appears to be a risk-complement with R&D into Carbon Capture, providing large benefits at lower levels of abatement; and that investments in improving Light Water Reactors have the greatest expected return.

Keywords: Climate change, Technology R&D, Uncertainty, Environmental policy

JEL Classification: D81, O32, Q54, Q55, Q58