『Abstract
As part of ongoing efforts to reduce CO2
emissions by increasing the proportion of the energy mix relying
on nuclear power, it may be useful to substitute nuclear power
for thermal power wherever possible, thereby substantially reducing
the need to use fossil fuels. In order to evaluate the contribution
of nuclear power to potential CO2 reduction,
this study examines the substitutability of thermal capital and
nuclear capital in the Korean electric power industry by utilizing
the input distance function. Additionally, the unit costs of thermal
capital and nuclear capital are compared in terms of their shadow
prices, which are defined as the opportunity costs inherent to
one additional unit of capital increase deriving from a reduction
in labor. The empirical results presented herein indicate that
nuclear capital is readily substituted for thermal capital, but
the substitutability of thermal capital for nuclear capital is
relatively low. The shadow price ratio of nuclear capital to thermal
capital is estimated to be 15.9, on average, showing an upward
trend over the years from 1982 to 2010.
Keywords: Nuclear capital; Substitutability; Shadow price』
1. Introduction
2. Electricity generation by energy sources in Korea
3. The elasticity of substitution and shadow price
4. Empirical results
5. Reflections on Korean nuclear energy policy
6. Conclusions
Acknowledgment
References