The Economics of Coal Phaseouts

Sugandha Srivastav and Michael Zaehringer

INET Oxford Working Papers from Institute for New Economic Thinking at the Oxford Martin School, University of Oxford

Abstract: Fossil fuels are the world's greatest source of greenhouse gas emissions and must be curtailed to achieve temperature targets. Technology-specific mitigation policies such as coal phaseouts may be required for reasons including limited success with carbon pricing, administrative ease, high salience, and ability to tackle a range of environmental and social externalities. Coal investors and communities that rely on mining may resist policies that increase costs such as direct taxation. Instead, compensation for early closure may be a more politically feasible route, especially given concerns around achieving a just transition. Compensation decided via a negotiated approach suffers from asymmetric information. Competitive auctions can help discover efficient compensation payments and order of closure. However, successful auctions require considering: 1. additionality and interaction with existing climate policies, 2. dynamic incentives, and 3. system-wide effects and security of supply. In the absence of being able to implement an auction, strengthened incentives for scrappage and repurposing of assets could be options.

Keywords: Coal phaseouts; auctions; asymmetric information; compensation; climate policy; net zero; Germany (search for similar items in EconPapers)
Pages: 10 pages
Date: 2023-09
New Economics Papers: this item is included in nep-ene, nep-env and nep-reg
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
https://www.inet.ox.ac.uk/files/Phaseout_Article_Authors.pdf (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:amz:wpaper:2023-17

Access Statistics for this paper

More papers in INET Oxford Working Papers from Institute for New Economic Thinking at the Oxford Martin School, University of Oxford Contact information at EDIRC.
Bibliographic data for series maintained by INET Oxford admin team ().