Climate change adaptation mechanisms and strategies of coal-fired power plants

Coal-fired power plants (CPPs) are important participants in the field of climate change. Many CPPs rely on large amounts of water, which makes them vulnerable to climate change. Through the theoretical modeling and case study, the paper investigated the climate change adaptation strategies of CPPs from both short-run and long-run perspectives. In the short-run, the role of increasing cooling water intake to adapt to the adverse climate conditions is limited by local water supply capacity, environmental regulations, and existing technology. In the long-run, the CPP operator’s adaptation retrofitting decisions are affected by multiple factors including the expected impacts of climate change, remaining lifespan, initial retrofit cost, and interest rate. But climate change information may not make difference to CPP operators’ adaptation decisions in some circumstances. No matter adaptation retrofit can bring “additional benefits,” the government’s incentive policies can induce the CPP operator to invest in adaptation retrofit no later than when the impacts of climate change appear. The incentive policies’ ability to promote adaptation strategies to break through the profit threshold is the key to achieve the government’s expected adaptation strategies.