To Whom Should We Grant a Power Plant? Economic Effects Of
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energies Article To Whom Should We Grant a Power Plant? Economic Effects of Investment in Nuclear Energy in Poland Katarzyna Zawali ´nska 1,*, Jouko Kinnunen 2, Piotr Gradziuk 1 and Dorota Celi ´nska-Janowicz 3 1 Institute of Agricultural and Rural Development, Polish Academy of Sciences (IRWiR PAN), ul. Nowy Swiat´ 72, 00-330 Warsaw, Poland; [email protected] 2 Statistics and Research Åland (ÅSUB), Ålandsvägen 26, AX-22100 Mariehamn, Åland, Finland; [email protected] 3 Centre for European Regional and Local Studies (EUROREG), University of Warsaw, ul. Krakowskie Przedmie´scie30, 00-927 Warsaw, Poland; [email protected] * Correspondence: [email protected] Received: 7 May 2020; Accepted: 21 May 2020; Published: 26 May 2020 Abstract: Poland is the most coal-dependent economy and one of the biggest polluters in the EU. In order to alleviate this problem, meet CO2 emission requirements set by EU, and improve the country’s energy security, Poland decided to introduce nuclear power to its energy mix. So far, several potential locations for nuclear power plants have been officially proposed, mainly based on technical parameters, but no comparisons of the economic impact of such locations have been considered. Consequently, the main goal of this paper is to compare the national and regional economic effects of investments in nuclear power plants—for both the construction and exploitation phases—in the four most probable locations, which are similarly beneficial from a technical point of view. In order to simulate these effects, the spatial recursive dynamic Computable General Equilibrium model was calibrated until 2050 including agglomeration effects and featuring the regional economies of all Polish regions. The results show that although the construction phase is beneficial for economic development in all four regions, the exploitation phase is good for only one. The economies of the other regions suffer, to a greater or lesser extent, from the Dutch disease. The paper argues that the regional economic effects of such an investment differ significantly, due to differences in the regions’ economic structures; hence, they should always be taken into account in the final decisions on the power plants’ locations. Keywords: nuclear power station; location; national and regional economic effects; spatial Computable General Equilibrium (CGE) modelling; agglomeration effects; energy policy; Poland 1. Introduction The EU aims to be a climate-neutral economy with net-zero greenhouse gas emissions by 2050. This objective was established on 28 November 2018 in a document entitled “A Clean Planet for All—A European Strategic Long-Term Vision for a Prosperous, Modern, Competitive and Climate Neutral Economy” [1] and reinforced on 6 March 2020 in “Long-Term Low Greenhouse Gas Emission Development Strategy of the EU and Its Member States” [2]. It is also at the heart of the “European Green Deal” [3], which declares that by 2050 economic growth should be decoupled from resources, and in line with the EU’s commitment to the “Paris Agreement” [4] aiming to limit global warming to 1.5 ◦C. As part of the “European Green Deal”, on 4 March 2020, the Commission proposed the first European Climate Law [5] to legally enshrine the 2050 climate-neutrality target. The law aims to Energies 2020, 13, 2687; doi:10.3390/en13112687 www.mdpi.com/journal/energies Energies 2020, 13, 2687 2 of 26 ensure that all EU policies contribute to this goal, where all sectors of the economy and society play their part, and that the transition to climate neutrality is irreversible. This policy, however, is a huge and urgent challenge for countries in which economic growth is heavily dependent on natural resources and which generate a high level of greenhouse emissions. The most evident such case is Poland, which is the biggest polluter and the most coal-dependent economy in the EU. Since nuclear energy is the second largest source of low-carbon power in the world (i.e., 29% of the total in 2017) and provides ca. 10% of the world’s electricity coming from ca. 440 power reactors in 30 countries [6], the Polish government has also made an official statement on its willingness to launch nuclear energy plants in Poland. On the one hand, the decision was made due to increasing pressures stemming from tough EU energy policy requirements and an increased forecasted demand for energy in Poland in the face of depleting coal seams and limited capacities of gas-fired power plants. On the other hand, there are expected economic benefits from such an investment, both at the national and regional scales. Prognoses and analyses prepared by the Polish government were mainly presented in the Nuclear Power Programme for Poland in 2014 [7] and predicted that the main economic benefits of nuclear power plants would be related to increased energy security at the national level, human capital development as an answer to demand for the new nuclear sector, and economic development related with construction and operation of the power plant (also through growth in branches cooperating with the nuclear sector). At the regional and local levels, the main benefits are expected to be related to new jobs (with an estimated two new jobs per workplace in the power plant), infrastructure, and local tax revenues. According to the Ministry of Economy [7], the whole nuclear programme in Poland should generate over 12,000 new jobs. However, all those estimations are generic, i.e., not related to any specific location of the power plants. Implicitly, they assumed that the economic effects will be the same wherever in Poland the plants are located. The main motivation of our paper is to check if, and to what extent, the economic effects of building nuclear power plants depend on the specific location (region). Hence, the main goal of the paper is to compare the national and regional economic effects of constructing nuclear power stations in Poland in the four most probable sites (regions) selected by the government based on a mix of technical criteria. Although the locations are similarly good from a technical point of view, the question remains as to whether those locations are also similarly good from an economic point of view. Namely, does the investment create similar economic growth, employment, wage, and other economic effects in the entire economy and in the economies of the regions where the power plants are located? Our question from the title “To whom should we grant a power plant?” has the following answer—from economic point of view, to that region which brings the best economic effects both nationally and regionally from that investment. So, the problem is determining how to accurately assess the economic effects of the location of the nuclear power station. In order to address this problem, both the construction and exploitation phases of building the power stations are simulated in a spatial recursive dynamic Computable General Equilibrium (CGE) model named POLTERMDyn calibrated until 2050 for all 16 regions NUTS2 (level 2 units in Nomenclature of Territorial Units for Statistics) in Poland and all economy sectors aggregated to 19 sections (compatible with sections of NACE rev.2 (European Classification of Economic Activities revision 2). Our paper fills in a literature gap in the following ways. First, most of the studies analyse either one specific location of the nuclear power plant or a generic location (not particular but imaginary), while our study provides a comparative study of four real alternative locations. Second, our paper fills in a methodological gap, as it links the location of nuclear power stations with new economic geography by explicitly linking the model of demography (population cohorts) and the labour market thanks to extending a typical CGE model. Third, it is novel at the national level as it investigates the problem not yet explored for Poland—that of the regional economic effects of constructing nuclear power stations in a dynamic, consistent modelling framework with forecasts to the year 2050. Energies 2020, 13, 2687 3 of 26 The contribution of the paper to scientific literature lies in proving that the same investment may have totally different (sometimes even negative) effects depending on location due to agglomeration effects. There is also a contribution of the paper to policy-related literature, because economic effects Energies 2020, 13, x FOR PEER REVIEW 3 of 26 are underestimated in energy policy decisions where technical parameters prevail. 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