Motives beyond markets: state ownership, stranded assets, and decarbonisation in the power sector

Thesis

State-owned enterprises (SOEs) will play a central role in the decarbonisation of the global economy. They are also the dominant type of actor in the power sector by both installed power generation capacity and investment, with China accounting for the largest share. Despite their obvious prominence, SOEs remain an understudied element in climate policy analysis, design and implementation. The papers in this thesis begin to address this research gap, focusing on state- owned power companies (SPCs). The three papers employ, respectively, comparative case study analysis, a modified version of discounted cash flow analysis, and microsimulation techniques. Together, they make some initial progress towards more explicit integration of SOEs and government shareholders into climate policy research. Paper 1 develops a framework for analysing how SPCs’ characteristics and the context in which they operate affects their response to government interventions. It finds that SPCs can, under certain circumstances, be more effective conduits for climate policy than private companies, and that market-wide policies may have less effect on SPCs than on their privately-owned counterparts. Paper 2 adapts and extends traditional stranded asset analysis to consider cases in which the asset owners are SOEs, focusing on coal power in China. It concludes that new coal power investments by Chinese SOEs are unlikely to deliver positive economic returns, and that dispatchable renewable power will soon be economically competitive as an alternative even without accounting for the social cost of carbon. Paper 3 simulates the effect of thermal coal phase-out in China on employment and tax revenue in the thermal coal value chain. The results show that delaying coal phase-out cannot prevent losses in employment and tax revenue in China’s coal sector from being realised, and that these losses are both geographically concentrated and associated with a small number of large SPCs. Overall, this thesis demonstrates the importance of explicitly accounting for SOEs both in formulating climate policies and analysing their effects.

Authors: Clark, A

• DOI: 10.5287/ora-eyrp1xkqo
• Type of award: DPhil
• Level of award: Doctoral
• Awarding institution: University of Oxford
• Language: English
• Keywords: just transition; state-owned enteprise; carbon neutrality; climate policy; decarbonization; stranded assets; coal power; China; coal phase-out
• Subjects: Government business enterprises; Climate change mitigation