How to alter redshift column encoding in place?

Ketan is correct. AWS does provide a utility, https://github.com/awslabs/amazon-redshift-utils/tree/master/src/ColumnEncodingUtility, that can take care of it for you though.

Yes - this is now a supported option as of 20th Oct 2020, see AWS docs :

ALTER TABLE table_name 
{
| ALTER COLUMN column_name ENCODE new_encode_type 

https://aws.amazon.com/about-aws/whats-new/2020/10/amazon-redshift-supports-modifying-column-comprression-encodings-to-optimize-storage-utilization-query-performance/

https://docs.aws.amazon.com/redshift/latest/dg/r_ALTER_TABLE.html

Update: as pointed out by @gelin: since Oct 2020, altering column encodings in place is now supported: ALTER TABLE tablename ALTER COLUMN columnname ENCODE newencode. More info here.

No, this is not supported.

From the documentation, the options that you have:

• apply a compression type, or encoding, to the columns in a table manually when you create the table
• use the COPY command to analyze and apply compression automatically (on an empty table)
• specify the encoding for a column when it is added to a table using the ALTER TABLE command

From the same documentation,

You cannot change the compression encoding for a column after the table is created.