Compensating affected parties necessary for rapid coal phase-out but expensive if extended to major emitters

L. Nacke, V. Vinichenko, A. Cherp, A. Jakhmola & J. Jewell. (2024). Compensating affected parties necessary for rapid coal phase-out but expensive if extended to major emitters. Nature Communications 15, 3742. Open Access. DOI: https://doi.org/10.1038/s41467-024-47667-w

Coal power phase-out is critical for climate mitigation, yet it harms workers, companies, and coal-dependent regions. We find that more than half of countries that pledge coal phase-out have “just transition” policies which compensate these actors. Compensation is larger in countries with more ambitious coal phase-out pledges and most commonly directed to national and regional governments or companies, with a small share going directly to workers. Globally, compensation amounts to over $200 billion (uncertainty 163-258), about half of which is funded through international schemes, mostly through Just Energy Transition Partnerships and the European Union Just Transition Fund. If similar transfers are extended to China and India to phase out coal in line with the Paris temperature targets, compensation flows could become larger than current international climate financing. Our findings highlight that the socio-political acceptance of coal phase-out has a tangible economic component which should be factored into assessing the feasibility of achieving climate targets.

Phasing out coal for 2 °C target requires worldwide replication of most ambitious national plans despite security and fairness concerns

V. Vinichenko, M. Vetier, J. Jewell, L. Nacke  & A. Cherp.  (2023). Phasing out coal for 2 °C target requires worldwide replication of most ambitious national plans despite security and fairness concerns. Environmental Research Letters 18, 014031. Open Access. DOI: https://doi.org/10.1088/1748-9326/acadf6

Ending the use of unabated coal power is a key climate change mitigation measure. However, we do not know how fast it is feasible to phase-out coal on the global scale. Historical experience of individual countries indicates feasible coal phase-out rates, but can these be upscaled to the global level and accelerated by deliberate action? To answer this question, we analyse 72 national coal power phase-out pledges and show that these pledges have diffused to more challenging socio-economic contexts and now cover 17% of the global coal power fleet, but their impact on emissions (up to 4.8 Gt CO2 avoided by 2050) remains small compared to what is needed for achieving Paris climate targets. We also show that the ambition of pledges is similar across countries and broadly in line with historical precedents of coal power decline. While some pledges strengthen over time, up to 10% have been weakened by the energy crisis caused by the Russo-Ukrainian war. We construct scenarios of coal power decline based on empirically-grounded assumptions about future diffusion and ambition of coal phase-out policies. We show that under these assumptions unabated coal power generation in 2022–2050 would be between the median generation in 2 °C-consistent IPCC AR6 pathways and the third quartile in 2.5 °C-consistent pathways. More ambitious coal phase-out scenarios require much stronger effort in Asia than in OECD countries, which raises fairness and equity concerns. The majority of the 1.5 °C- and 2 °C-consistent IPCC pathways envision even more unequal distribution of effort and faster coal power decline in India and China than has ever been historically observed in individual countries or pledged by climate leaders.

Phases of fossil fuel decline: Diagnostic framework for policy sequencing and feasible transition pathways in resource dependent regions

L. Nacke, A. Cherp, J. Jewell. (2022). Phases of fossil fuel decline: Diagnostic framework for policy sequencing and feasible transition pathways in resource dependent regions. Oxford Open Energy 1. Open Access. DOI: https://doi.org/10.1093/ooenergy/oiac002

Phasing out fossil fuels requires destabilizing incumbent regimes while protecting vulnerable groups negatively affected by fossil fuel decline. We argue that sequencing destabilization and just transition policies addresses three policy problems: phasing out fossil fuels, transforming affected industries, and ensuring socio-economic recovery in fossil resource-dependent regions. We identify the key mechanisms shaping the evolution of the three systems associated with these policy problems: (i) transformations of technological systems addressed by the socio-technical transitions literature, (ii) responses of firms and industries addressed by the management and business literature and (iii) regional strategies for socio-economic recovery addressed by the regional geography and economics literatures. We then draw on Elinor Ostrom’s approach to synthesize these different bodies of knowledge into a diagnostic tool that enables scholars to identify the phase of decline for each system, within which the nature and importance of different risks to sustained fossil fuel decline varies. The main risk in the first phase is lock-in or persistence of status quo. In the second phase, the main risk is backlash from affected companies and workers. In the third phase, the main risk is regional despondence. We illustrate our diagnostic tool with three empirical cases of phases of coal decline: South Africa (Phase 1), the USA (Phase 2) and the Netherlands (Phase 3). Our review contributes to developing effective policy sequencing for phasing out fossil fuels.