Phasing out carbon not coal? Identifying coal lock-in sources in Japan’s power utilities

Abstract

ABSTRACT Lock-in to existing assets and business practices is a major obstacle to the global objective of phasing out coal-fired power to accelerate decarbonization towards Paris Agreement goals. Japan has attracted attention in previous literature, with several studies demonstrating how market and political conditions have propelled investments in new coal-fired power plants while raising barriers to achieving a phase-out. But in addition to market-level conditions, firm-level characteristics – including assets, commitments, investment behaviour and future-oriented innovation activities – are also critical determinants of lock-in vulnerability. To deepen understanding of how such firm-level dynamics might affect the power industry, this empirical study takes the case of ten incumbent utilities in Japan to identify and compare potential sources of coal lock-in. We leverage diverse quantitative and qualitative data to assess the state of: (1) management, assets and operational factors; and (2) the development and deployment of next-generation coal technologies. Through this two-fold approach, we demonstrate how current conditions and future-oriented activities are likely to reinforce tendencies to continue using coal in coming decades, thereby hampering the emergence of phase-out ambitions. These findings harbour important implications for climate policy and the urgent need to end coal burning in the power sector.