Reducing CO2 emissions in OECD countries: Do renewable and nuclear energy matter?

https://doi.org/10.1016/j.pnucene.2020.103425Get rights and content

Highlights

  • Investment in nuclear energy and renewable energy reduced CO2 emissions in Belgium, Canada, France, Germany, Sweden, UK, US, Japan, Switzerland, Finland, Czech Republic; however, it increases CO2 emissions in Netherlands and South Korea.

  • Both nuclear and renewable energy consumption reduces carbon emissions for the panel estimations.

  • The best option to reduce CO2 emissions is to aim for a mix of nuclear and renewable energy.

Abstract

This study contributes to the existing environmental economics literature by examining the short- and long-run impacts of renewable and nuclear energy consumption on CO2 emissions in the case of 15OECD countries over the period 1990–2018 using both the Fully Modified OLS (FMOLS) and the vector error correction model approach (VECM) estimation methods. The results of the FMOLS show that: (i) investment in nuclear energy reduces CO2 emissions in Canada, Netherlands, Japan, Switzerland, Czech Republic and UK, (ii) investment in renewable energy reduces CO2 emissions in Belgium, Canada, France, Germany, Sweden, UK, US, Japan, Switzerland, Finland, Czech Republic; however, it increases CO2 emissions in Netherlands and South Korea, and (iii) both nuclear and renewable energy consumption reduces carbon emissions for the panel estimations. Moreover, the results of the VECM method show that nuclear and renewable energies reduce CO2 emissions in the long-term. Our results suggest that the best option to reduce CO2 emissions is to aim for a mix of nuclear and renewable energy. No need to choose. On the contrary: the two sources of energy are complementary. Policy implications are also discussed.

Introduction

The need to reduce carbon dioxide (CO2) emissions from the production of energy and other industrial activities has received increased global attention in recent years. The same is true for the important role of renewable and nuclear energies — that are free of carbon emissions — to produce electricity, increasing components of the global energy production systems. Renewable and nuclear energies are part of the energy sources that have contributed, and could participate even more in the future, to reducing carbon emissions. In this context, the main objective of this study is to examine the potential roles of nuclear and renewable energy in reducing carbon emissions in the case of 15 OECD countries. Specifically, we would like to know, What is better between nuclear and renewable energy for mitigating CO2 emissions in OECD countries? The positioning of this study is motivated by at least three strands of literature: (i) the role of nuclear energy in reducing carbon emissions, (ii)the role of renewable energy in mitigating carbon emissions, and (iii)why focusing on OECD countries?

First, after two years of increase, CO2 emissions linked to energy use stabilized worldwide in 2019. An evolution explained by the development of nuclear and renewable energies in developed economies (IEA, 2020). CO2 emissions worldwide, linked to energy production, reached 33 gigatonnes (Gt) in 2019. A level similar to that of the previous year, despite a global economic growth of 2.9%, according to the data from the IEA, which previously forecast an increase. IEA cites as reasons for this stabilization the development of renewable energies (mainly wind and solar), the transition from coal to natural gas, and more production from nuclear power in developed economies. Specialists have concluded that to reach the profound decarbonization necessary to maintain the average increase in worldwide temperatures under 1.5 °C, mitigating climatic change would be much more difficult without a growing role for nuclear energy. Because nuclear is part of energy sources and technologies energy sources that could help solve the problem climate-energy. Nuclear energy plants emit a negligible amount of CO2, and nuclear power, like hydroelectricity and wind power, is one of the technologies with the lowest CO2 emissions when taking into account entire life cycle (less than 15 g of CO2 equivalent (g CO2-eq) per kilowatt-hour (kWh). It can help solve other energy supply problems and has environmental benefits, which are not climate related. The significant increase in the price of fossil fuels observed in recent years, the fear that these prices will remain persistently high in the future and concerns about the reliability of supply in politically unstable regions are fundamental elements of current energy strategies.

Second, the growing preoccupations about climate change have made renewable energy an important research topic, like nuclear energy. According to the EIA (2013), OECD European countries are engaged in lessening CO2 emissions to 20 percent by 2020 and between 80 and 95 percent by 2050. To achieve these objectives, the incorporation of renewable energy in the energy matrix has been cited as fundamental (Jäger-Waldau et al., 2011) because it is cleaner than traditional energy sources in terms of CO2 emissions (Jin and Kim, 2018). According to report published by the International Renewable Energy Agency (IRENA) in 2017, increasing energy efficiency and renewable energy production worldwide can reach the required emissions' level to keep the global temperature below 2 °C, thereby escaping the most severe effects of climate change. The report also argues that CO2 emissions should be reduced continuously to 9.5 Gt by 2050 to limit global warming under 2 °C. To achieve this goal, IRENA documents that 90 percent of this reduction can be attained through improving energy efficiency and increasing renewable energy. Currently, renewable energy accounts for 16 percent of the primary energy supply and 24 percent of the world's electricity production. To reach this decarbonization scale, the report states that renewable energy should represent 80 percent of the world's electricity production and 65 percent of the total primary energy supply.

Third, we choose the OECD countries as a context of study because their characteristics are very well adapted to the objective of this inquiry. These economies enjoy energy-led growth and stay the highest energy-consuming economies with 41 percent of the world's energy use (Duffour, 2012). The large part of this energy supply arrives from traditional sources, such as natural gas, oil, and coal, which are the principal source of CO2 emissions that conduct to environmental degradation. According to the IEA (2011), most of these economies signed the Kyoto Protocol to lower their global emissions at least 5.2 percent under their 1990's levels during the five years after 2008. Therefore, interest in renewable energy has recently increased in OECD countries. This growing interest has been supported by various government incentive policies, which lead to an increase in the percentage of renewable energy in the total power generation (Duffour, 2012). Like renewable energy, nuclear energy emits a negligible amount of CO2, and it plays an important role in mitigating climate change. So, we concentrate on OECD economies that seventeen of them have nuclear energy capacity, which generate 85 percent of world's total nuclear energy production (Nazlioglu et al., 2011).

In light of these three strands of literature, this contributes to the existing literature in the following ways. Several empirical studies have interested in examining the relationship between energy consumption and carbon emissions using different modeling approaches, methods, and findings. However, few of them have examined the relationships among nuclear energy, renewable energy, and CO2 emissions, especially for the OECD countries. Hence, the focus of this inquiry is to fill this gap by answering the following questions: What is better between nuclear and renewable energy for mitigating CO2 emissions in OECD countries? The relationship between renewable energy and nuclear energy in reducing CO2 emissions is complementary or substitutional? To answer these questions, various estimation methods are used in order to identify the short and long-run relationships. The analysis is also made for all the fifteen countries and also by country. The rest of the paper is as follows: the second section presents the review of the literature; the third presents the data and the specifications of the model. The fourth discusses the obtained results and offers some policy implications, and finally the fifth concludes.

Section snippets

Nuclear energy and CO2 emissions

Nuclear energy has been cites as one of the means of reducing carbon emissions (Lee et al., 2017). The IEA (2015) suggests nuclear energy, renewable energy, energy efficiency improvement as tools to reduce global temperature below 2 °C above the pre-industrial level. It predicts that the use of nuclear energy will increase to account for 15 percent of all annual CO2 emissions reductions by 2050. The International Atomic Energy Agency (2000) also highlights the importance of nuclear energy in

Data and descriptive statistics

Our sample of countries consists of the following 15 OECD countries, namelyBelgium, Canada, France, Germany, Netherlands, Spain, Sweden, UK, US, Japan, Switzerland, Finland, South Korea, Czech Republic, and Mexico. The selection of time period differs over the period 1990 to 2018 for each country based on data availability, obtained from the database of the World Bank Data (2019) and the World energy Petroleum (BP 2019). Table 1 presents the sources and the measures of the used variables. Table

Results and discussions

We begin our analysis bytesting the stationarity of the variables. Table 4 below reports the results for the four tests. We can see that CO2 emissions, NE, RE, EG, FD and TO variables are not stationary at the 5% threshold. Indeed for these series, the statistics of the LLC, IPS, ADF and PP tests have probabilities greater than 5% and therefore authorize not to reject the null hypothesis of unit root (non stationarity). The test carried out on the first difference series rejects the null

Conclusion

The role of alternative energies in mitigating carbon emissions is becoming a significant subject of some debates in the current literature. Accordingly, the main purpose of this article is to empirically examine the short- and long-term relationships among nuclear energy, renewable energy and CO2 emissions in a sample of 15 OECD countries during the period 1990–2018. Hence, the main focus is to answer the following questions: What is better between nuclear and renewable energy for mitigating CO

Credit author statement

Kais Saidi: Conceptualization, Methodology, Funding acquisition, Formal analysis, Data curation, Writing - original draft, Writing – review & editing. Anis Omri: Formal analysis, Investigation, Methodology, Writing - original draft, Writing - review & editing.

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