A. Suppose a nuclear power plant can provide electrical energy at a cost of 6.7

Question

A. Suppose a nuclear power plant can provide electrical energy at a cost of 6.7 cents/kWh. The corresponding cost for pulverized coal is 4.2 cents/kWh and the cost for natural gas is 4.7 cents/kWh. If a carbon tax of 2 cents/kWh is imposed, will the cost of nuclear energy be more expensive or less expensice than the cost of energy from pulverized coal or natural gas? Assume that production of nuclear energy does not emit any carbon into the atmosphere, and the cost of nuclear water disposal is accounted for.

B. Would the cost of nuclear energy increase or decrease if either of the assumptions in Part A is not true?

Explanation / Answer

we have given

a nuclear power plant can provide electrical energy at a cost of 6.7 cents/kWh

cost for pulverized coal is 4.2 cents/kWh

the cost for natural gas is 4.7 cents/kWh

(A)

it is given that a carbon tax of 2 cents/kWh is imposed

and we know that production of nuclear energy does not emit any carbon into the atmosphere, and the cost of nuclear water disposal is accounted for

so, this carbon tax will not be imposed on nuclear power plant

so, Nuclear energy cost =6.7 cents/Kwh

cost for pulverized coal is 4.2+2=6.2 cents/kWh

the cost for natural gas is 4.7+2=6.7 cents/kWh

since, nuclear cost is greater than cost for pulverized coal

So, nuclear energy is more expensive than pulverized coal...........ANswer

(B)

No, because production of nuclear energy does not emit any carbon into the atmosphere, and the cost of nuclear water disposal is accounted for

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