Exploring Enablers for an Ambitious Coal Phaseout

Abstract

To reach the mitigation goals of the Paris Agreement, many countries will have to phase out their coal power plants prematurely, i.e., before the end of their normal lifetimes, which will lead quite possibly to significant stranded assets. This could present a major challenge, particularly for many of the rapidly developing countries whose electricity demand is growing and which are currently expanding their coal fleets. Recent research shows that countries with aging power plants and decreasing coal consumption are more inclined to phase out coal, but little is known about where, why, and how coal power plants are being prematurely retired. In the context of the hybrid Paris Agreement, attention is increasingly shifting to domestic mitigation capacities and, alongside this—given the vested interests involved in different sectors—to state capacity to implement the transformations required to achieve deep decarbonization. In this article, we aim to study those capacities in the context of coal phaseout. We use a recent and comprehensive global dataset on coal power plants and employ a mixed-methods research design to (a) identify general emerging patterns with respect to premature coal fleet retirement, and (b) derive stylized types of political strategies to prematurely retire coal power plants. We find state capacity to be a robust predictor of general and premature coal retirement, and we identify three main strategies that countries have used to date to prematurely retire coal: (a) <em>rein-in</em> using top-down regulatory enforcement of environmental, climate, or other regulations that affect the operating licenses of coal plants; (b) <em>buy-out</em> or provision of compensation to companies and regions to appease vested interests; and (c) <em>crowd out</em> where accelerating market and price dynamics in the power sector crowd out coal. We propose that future research should explore more systematically the kinds of strategy that might be most promising in the regions and countries needing to rapidly phase out coal, taking into account their political structures, and also the implications that such strategies might have for global mitigation efforts.