Taxation of nuclear rents: Benefits, drawbacks, and alternatives

© 2015 Elsevier B.V. This paper studies the taxation of nuclear energy using a stylized model of the electricity sector, with one dominant nuclear producer and a competitive fringe of non-nuclear plants. First, we find that the optimal nuclear tax is different depending on the time horizon: the optimal short-run tax has the same order of magnitude as the nuclear taxes imposed in Belgium and Germany, while in the long run the optimal tax may be negative, i.e. a subsidy. Second, government credibility is important: when a government cannot credibly commit, the mere possibility of a short-run tax could severely harm incentives for future investments in lifetime-extending refurbishment or new plants. Third, when there is natural scarcity in nuclear potential, other policies like inviting multiple competitive bidders for lifetime extension franchises or for investments in new plants, may be more efficient ways to increase government revenue.

Jaar van publicatie:2015

BOF-keylabel:ja

IOF-keylabel:ja

BOF-publication weight:6

CSS-citation score:1

Authors from:Higher Education

Toegankelijkheid:Open