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1 June 2023

Decarbonisation in state-owned power companies

Briefing from the workshop on 28–29 September 2022


The power sector currently accounts for approximately one-third of the world’s carbon emissions. Its rapid transition from fossil fuels to renewables is fundamental to fast-tracking deep emissions reduction across all sectors, as decarbonisation of heating, industry, and transport will primarily be accomplished through electrification.

In the power sector, although state-owned power companies (SPC) own the majority of fossil fuel assets in many of the world’s top emitting countries, they also have advantages in investing in renewables and related infrastructure due to more accessible funds and resources. Consequently, engaging SPCs is crucial if we are to decarbonise the power sector and ultimately achieve net zero emissions. However, the nature of SPCs and their corresponding priorities have meant, to a certain extent, that they face more complicated decarbonisation chal-lenges than the private sector, in terms of governance and change management, for example.

Against this background, Agora Energiewende organised a workshop on SPC decarbonisation on 28–29 September 2022. Under the Chatham House Rule, experts who have started tackling these challenges for significant emitters discussed pressing issues relating to SPC governance, financing, just transition, incentives, and tools for decarbonisation.

This briefing report aims to raise awareness of the importance of SPCs for climate advocacy and explore politically feasible solutions for accelerating SPC decarbonisation at the international level. It also highlights potential areas for further research and multilateral collaboration on this topic.

Key findings

  1. SPCs are crucial to the success of the global energy transition.

    SPCs operate substantial fossil fuel assets in many of the world’s top emitting countries, and also confront a wide range of critical socioeconomic issues.

  2. A detailed understanding of how SPCs operate and the coordinated support they need is a prerequisite for ensuring the role of SPCs as change agents.

    The design of operating mandates, transition targets, and incentives depends on in-depth knowledge of decarbonisation drivers, the complex challenges SPCs face, and the local contexts within which SPCs operate.

  3. Political leadership is crucial for a rapid and smooth transition of SPCs.

    To support SPCs in decarbonising, governments should ensure consistent policies and coordinate often conflicting requirements.

  4. International multilateral engagement can play a significant role in promoting SPC decarbonisation through knowledge exchange and financing.

    Energy transition progress depends on partnering with SPCs rather than marginalising them. Sharing experience and lessons learned can minimise unnecessary detours and spark new ideas for decarbonisation efforts from all stakeholders.

Bibliographical data

Run Zhang-Class, Philipp Godron, Lixue Lin-Siedler
Publication number
Version number
Publication date

1 June 2023

Suggested Citation
Agora Energiewende (2023): Decarbonisation in state-owned power companies. Briefing from the workshop on 28–29 September 2022.


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