Accelerating the green transition in public transportation: A game-theoretic analysis of government policy interventions for fuel cell electric bus adoption

Public transportation's heavy use of fossil fuels is a major source of carbon emissions. In contrast, fuel cell electric buses (FCEBs) offer a sustainable solution, emitting no pollutants and providing nearly twice the energy density of diesel buses (DBs). To evaluate the efficacy of decarbonization policies, this study develops a framework utilizing a Stackelberg game-theoretic approach to model the competition between FCEBs and DBs. The supply chain also includes a municipality, which both purchases and advertises FCEBs, and a government, which supports FCEB adoption through specific policies. Eight scenarios are analyzed, representing different combinations of research and development (R&D) subsidies, carbon taxes, diesel consumption taxes, and FCEB advertising. The results highlight the importance of government intervention, with Scenario S4—where the DB manufacturer acts as the Stackelberg leader and FCEB-specific advertising is implemented—emerging as the optimal configuration, yielding the highest FCEB demand share. Two policy packages—annual R&D subsidies combined with carbon taxes, and per-bus R&D subsidies combined with diesel taxes—achieve comparable demand increases. However, the former generates positive fiscal revenues for the government, while the latter entails substantial costs. Lower FCEB production costs, stronger municipality preferences, and higher taxes and subsidies further reinforce FCEB adoption. These findings provide clear, policy-relevant guidance for accelerating the decarbonization of public transportation systems.