Assessing the GDP Impact of Cost Reduction and Social Acceptance of Nuclear Power in Korea Using GCAM-Macro

Achieving 2050 net-zero emissions in Korea requires a rapid restructuring of its fossil-fuel dependent energy system, with potentially significant macroeconomic consequences because of Korea’s heavy reliance on imported fuels. This study examines how alternative levels of nuclear power generation impact Korea’s GDP under the net-zero transition. We use GCAM v8.8 coupled with the KLEM module to analyze scenarios with alternative nuclear deployment preferences and nuclear technology costs, with and without climate policy. We decompose GDP changes into labor income, capital income, energy services value, and net energy exports to identify the economic factors that affect GDP changes.

    Results show that nuclear assumptions have limited GDP impacts under the reference pathway. On the other hand, significant changes to the GDP are observed from alternative nuclear assumptions in the 2050 net-zero scenario. Under the net-zero pathway, greater nuclear preference and lower nuclear capital cost mitigate the GDP loss for Korea from 2.0% to 1.4% by 2050, relative to the reference pathway. This corresponds to a 29% savings in the GDP loss.

    The GDP savings is driven by a shift toward lower-cost firm low-carbon electricity. Under the net-zero pathway, greater nuclear preference and lower nuclear capital cost raise the nuclear generation share from 29% to 61% in 2050 and lowers electricity prices by 36% relative to the baseline with net-zero policy. Lower electricity prices reduce energy-service costs, which improves energy-service value and gross output, and raises labor and capital income in the KLEM production structure. The lower electricity costs from nuclear improves energy-trade balance, and reduces fuel import dependency for Korea. Overall, nuclear power expansion through increased nuclear preference and lower capital cost contributes to reducing GDP losses for Korea under net-zero emissions.