Can Nuclear Power Solve the Global Warming Problem?

Can nuclear power, which is carbon free, solve the global warming problem? It is a tough sell in the advanced countries, but many new nuclear power plants are under construction in the developing world. We develop an empirical Hotelling model that accounts for the limited stock of uranium, future efficiency improvements in nuclear technology and recycling of nuclear waste. We show that currently known stocks of uranium may be exhausted in a few decades. But advanced nuclear technology can provide clean energy for a longer time. The scarcity of uranium makes nuclear power costly in the future with modest technological change in fossil fuels and solar energy. Because of price-induced substitution, the current price of carbon under a Kyoto-type climate agreement may be much lower than what is generally expected