Government-Owned Power Plants Emit Most, Respond Least to Climate Policy

• Carbon pricing — carbon taxes charging companies for emissions, and emissions trading systems with limits that tighten over time
• Fossil fuel subsidy reform that cut federal support for fossil fuel use
• Regulation — air pollution standards, plus bans and phase-outs of coal plants
• Renewable portfolio standards requiring utilities to expand renewable energy
• Renewable energy subsidies

For government-owned plants, only one tool moved the needle: renewable portfolio standards. The other policies had little measurable effect on their emissions. The pattern held even when the researchers accounted for how demanding each policy was and how long utilities had to adjust.

That doesn't mean state plants were breaking the law. The study measured policy responses, not compliance, and the slow-mover finding stands regardless.

Why do state utilities lag?

Government ownership creates competing pressures that private plants largely escape. State-owned utilities may be expected to keep electricity affordable, support job growth and generate tax revenue. In countries dependent on fossil fuel extraction payments, utilities also face political pressure to keep coal and gas facilities running.

South Africa's Eskom shows how these forces collide. The state-owned utility runs a fleet of aging coal plants that make it the country's biggest polluter, yet it also supplies about 90% of South Africa's power. During power shortages, it has at times violated emissions standards. Despite years of climate talks, Eskom's emissions fell little through the 2010s; they have dropped about 16% since 2019, partly due to outages and households switching to home solar.

There's also a built-in conflict when the same government both regulates and owns a utility. Officials may balk at imposing costs that could raise electricity prices or require public subsidies. The study did not measure enforcement, so the researchers could not establish whether publicly owned facilities get special treatment or simply move slowly.

Private utilities, accountable to fewer stakeholders, can respond more directly to financial incentives to clean up.

What can governments do?

The researchers suggest three approaches.

Set targets for state utilities, and enforce them. Ireland added emissions-reduction targets specifically for publicly owned utilities and tied managers' performance reviews, investment approvals and public reporting to measurable progress. Its electricity-sector emissions fell by more than a quarter from 2019 to 2025.

Address the financial and political constraints. In Morocco, international financing helped a state-owned agency expand solar power while limiting costs to consumers. Similar measures, combined with support for communities hit by coal-plant closures, could make cuts feasible elsewhere.

Track plant-level emissions, not just sector totals. Publishing comparable annual emissions for individual plants and flagging persistent heavy polluters would reveal whether sector-wide gains mask stagnation at specific facilities.

None of this argues for privatization, the authors caution. Government-owned plants offer real advantages, including coordinated long-term investment and reliable electricity in underserved areas.

The plain lesson: governments that write climate laws must also make sure the plants they own actually deliver the cuts.