Nuclear energy as a path towards coping with energy consumption risk in 29 nuclear energy-producing countries: The quantile regression approach

There is a debate on whether nuclear energy mitigates or increases energy consumption risk. In this context, the current study uses annual data to assess the effect of nuclear energy on energy consumption risk in the case of 29 nuclear energy-producing countries over the period 2000-2023. For the empirical estimations, various regression models such as System GMM, instrumental variable (IV) technique, fixed effects quantile regression and IV quantile regression are employed. It should be noted that, in general, the development of nuclear energy reduces energy consumption risk when controlling for outliers, reverse causality (system GMM), and endogeneity. Moreover, the main estimations performed by fixed effects quantile regression show that nuclear energy has a negative and significant effect on energy consumption risk across all the quantiles from 10% to 90%, validating the theoretical linkage. Robustness check for endogeneity run by IV quantile regression shows that the impact of nuclear energy, instrumented by uranium, on energy risk is positive in lower quantiles, and the effect is negative in higher quantiles. Policymakers should pay attention to promoting nuclear energy production as part of their strategies to mitigate energy consumption risk, whereas dependence on uranium in mitigating risk at lower quantiles requires careful consideration.

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