Is the energy subsidy able to promote the transition of “Carbon Neutrality” in China?

Although China has gradually phased out explicit fiscal energy subsidies, implicit subsidies in the form of indirect support remain widespread. While these subsidy policies promote economic and environmental benefits, they have also sparked controversy due to their distortion of market behavior and suppression of technological innovation. Previous studies have failed to adequately explain these policies due to their neglect of institutional complexity and the interactions between market actors. This paper aims to simulate the direct and indirect impacts of energy subsidy policies, providing quantitative evidence to assess the rationality of subsidy objectives. An Agent-based Stock-flow consistent model is proposed, which integrates the characteristics of China's energy transition and intermediate power modules. The research findings indicate that China's energy subsidy policies increase market uncertainty and lead to short-term unfairness. Additionally, the economic benefits derived from subsidies have not effectively translated into improved environmental benefits. Core issues such as industrial structure adjustment and renewable energy consumption remain unresolved. Therefore, the government needs to design a clearer phasing-out path for energy subsidies and avoid market distortions caused by policy conflicts.