Embedded Interests and the Managerial Local State: the political economy of methanol fuel-switching in China

This paper analyzes the determinants of Chinese government support for methanol automobile fuel development. At the national level, a preference for low carbon alternatives, ongoing bureaucratic restructuring, and profitability concerns of the national oil companies (NOCs) help to explain a lack of support for methanol fuel. At the local level, a short-term and localized view of industry development explains why some governments actively promote methanol fuel through local standardization, subsidies, and management of NOC opposition. The case of methanol fuel illustrates how local governments with strong, embedded interests have filled in the national-level policy vacuum on this issue. These findings contribute to the ongoing debate on the evolving central-local relations in China and hold lessons for alternative fuel adoption efforts underway in many parts of the world.