Abstract
Meeting climate goals is a particular challenge for countries that combine extensive use of coal as a fuel for power generation with a significant history of coal mining. We argue that these countries are prone to institutional carbon lock-in processes that significantly affect the phase-out of the use of coal. We use the analytical framework of Varieties of Capitalism to compare degrees of carbon lock-in in Coordinated Market Economies (CMEs) with Liberal Market Economies (LMEs). In CMEs “strategic interaction”, “employment protection” and “government ownership” translate into protection of uncompetitive domestic coal activities and assets through (cross) subsidies and veto play. In LMEs the use of coal will be more dependent upon its market price in the international energy market. Through a qualitative comparison of the development of coal-mining and coal-fired electricity generation in three CMEs (Germany, Spain, Poland) and one LME (the UK) over the period between 1990 and 2017 we show that the UK's liberal market economy facilitated a relatively swift phasing out of coal mining and the use of coal, compared to a much more reluctant transition in the other three countries.
Highlights
To prevent the damages resulting from climate change, governments around the world have committed themselves to an energy transition that will require them to significantly limit the amount of greenhouse gases in the years to come (UNFCCC, 2015)
We argue that institutional carbon lock-in tends to be much higher in so-called co-ordinated market economies (CMEs)
For this paper, we focus on the effects of Liberal Market Economies (LMEs)-institutions supporting “arms-length” market coordination, low employment protection and high stock market capitalization and majoritarian decision making, as opposed to all the “less liberal market economies” listed by Schneider and Paunescu (2012), a set we refer to as “Coordinated Market Economies (CMEs)”
Summary
To prevent the damages resulting from climate change, governments around the world have committed themselves to an energy transition that will require them to significantly limit the amount of greenhouse gases in the years to come (UNFCCC, 2015). This energy transition necessitates the deployment of two related policies: the adoption of new, less carbon-based technologies that replace the old technologies as well as phasing out the use of fossil fuels for generating electricity. Many countries have policies increasing the share of less carbon-based technology in electricity generation This does not automatically imply that the amount of carbon-based electricity generation has decreased to the corresponding extent. This was not accompanied by a concomitant decrease in the use of coal; the use of coal only went down with an amount of 38 TWh annually between 1990 and 2017 (EC, 2019).
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