Economic and environmental impacts of phasing out coal power generation in East Asia

This book chapter was published in Han Phoumin, Xunpeng Shi and Fukunari Kimura (eds.), Navigating the Complexities of Energy Transitions in East Asia, Singapore: Springer Nature, pp. 171–192. https://doi.org/10.1007/978-981-96-1754-8_8.

Abstract

The transition to carbon neutrality requires phasing out coal-fired power, a key contributor to global warming. This study quantifies the economic impacts of this shift in China, Japan, and South Korea using the GTAP-E model, focusing on East Asian and ASEAN economies. In cost-neutral scenarios where renewable energy (RE) costs are equal to coal, the phase-out results in slight GDP growth for these countries. However, if RE is 50 percent more expensive than coal, economic downturns are projected, impacting various regions except India and the EU. Globally, the transition is expected to reduce greenhouse gas emissions by 12–13 percent, depending on the cost scenario. Countries reliant on coal exports, like Mongolia, Australia, and Indonesia, face significant economic challenges and must diversify their economies to mitigate impacts. Key policy recommendations include developing frameworks to manage the economic effects of RE transitions, fostering international cooperation on RE innovation, and providing targeted support to coal-dependent regions. Carbon pricing mechanisms are essential to prevent carbon leakage and ensure a sustainable energy transition.

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