Sensitive intervention points in China's coal phaseout

Abstract:

China's investment decisions will shape the global market for coal in the coming decades, putting substantial power over global climate change mitigation in the hands of few actors. We apply the Actor-Objective-Context (AOC) framework proposed by Jakob et al. (2020) to investigate the stakeholders and interests at play in China's managed coal phaseout, consistent with the country's 2060 ‘carbon neutrality’ target. We analyze the power dynamics between actors alongside the available policy toolkit for transitioning away from coal. This leads to several policy-relevant conclusions. First, China's central energy policy framework needs little adjustment – it is already suitable to facilitate a rapid curbing of coal market development. Instead, and secondly, the incentive structure for provincial governments and state-owned enterprises needs substantial improvement to comply with central policies. Thirdly, the most efficient and effective ways to change the incentive structure are to alter promotion criteria for Chinese provincial officials and to create compensation and investment schemes for provinces that shift away from coal.