Japan's cleaner coal technology transfer to China: The implementation of MITI's Green Aid Plan

As China struggles with the environmental problems of economic development, particularly air pollution resulting from the country's reliance on coal, the transfer of less polluting and more energy-efficient technologies offers one possible solution. This research examines the performance of the world's largest bilateral effort on cleaner coal technology (CCT) transfer: Japan's Green Aid Plan (GAP) CCT program in China, led by the Japanese Ministry of International Trade and Industry (MITI) in cooperation with the Chinese State Development and Planning Commission (SDPC). During the 1990s, the program had a total budget of over {dollar}100 million and demonstrated technologies ranging from coal washing control systems to flue gas desulfurization.; I analyze program performance based on the program's three stated goals. I find that the GAP CCT program achieved its first goal of supporting China's environmental and energy policies, and it successfully achieved its second goal by demonstrating the technical feasibility of Japanese CCT retrofits at Chinese industrial enterprises in 10 out of 11 demonstration projects. But only three of the projects continued operating, and the program's third goal of wider diffusion of demonstrated technologies in China has not yet been realized.; Using tools from organizational theory, political economy, and environmental engineering, I explain program performance by examining participating organizations and the underlying incentive structures that shaped program outcomes. I argue that the GAP CCT program's mixed performance resulted from a convergence of interests, but a lack of incentives. Interests converged around technology demonstration, enabling the leveraging of necessary resources from government organizations, industry associations, and Japanese manufacturers. However, neither the program nor Chinese policies offered sufficient incentives to coax other Chinese enterprises into purchasing and operating the demonstrated technologies. The program gave limited attention to economic and operational feasibility, and Chinese government policies for CCT diffusion lacked consideration of enterprise interests and mechanisms for local implementation. In addition, weak enforcement of environmental regulations and economic reform pressures generally discouraged enterprises from adopting CCT. To better promote diffusion, technology selection needs to consider market potential, financial incentives should be created, and environmental regulatory enforcement must be strengthened.