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A Stackelberg game approach for power generators' policy preferences to meet emission reduction and development goals

Author

Listed:
  • Zhang, Rui
  • Hu, Yu-Jie
  • Tang, Bao-Jun

Abstract

As key players in emission reduction, strategies that fully account for power generators in a multidimensional policy are essential for emission reduction and development. Previous research has often overlooked the influences of multiple policies on the micro-entities. Therefore, this study innovatively constructs a Stackelberg-based generator model that considers multidimensional policies, such as the carbon emissions trading system (ETS), coal consumption control, and green finance policy, to determine the development strategies and policy preferences of generators. This paper aims to clarify the impacts of multidimensional policies on the production decisions of power generators and, thus, obtain policy design solutions that consider both emission reduction and enterprise development. Research results show that the output of thermal power generators is always proportional to the unit carbon quota. So, lowering the carbon quota is more conducive to curbing thermal power generation. Based on the current carbon quota and carbon trading price, there is no need for clean energy power generation enterprises to trade CCER. Only the carbon quota benchmark value of the power generators is controlled at least within 0.782 t/MWh, power generation enterprises will participate in CCER trading to make the CCER mechanism effective. The lowest carbon emissions and optimal power generation structure in the power generation sector will be achieved when the ETS and coal consumption control policy are combined. The lowest carbon emissions will be reduced by about 33.63 % compared to the situation without the policy. Power generators’ carbon emission reduction effect and output will be jeopardized under the superimposed implementation of green finance policies. Therefore, it is necessary for power generation enterprises to improve energy efficiency further and reduce power generation costs. This is to adapt to the current situation of simultaneous implementation of the three policies to achieve better emission reduction and promote the transformation of the power generation structure. The study concludes by suggesting how to optimize policies to achieve the different development goals of the companies involved.

Suggested Citation

  • Zhang, Rui & Hu, Yu-Jie & Tang, Bao-Jun, 2025. "A Stackelberg game approach for power generators' policy preferences to meet emission reduction and development goals," Renewable Energy, Elsevier, vol. 250(C).
    • Handle: RePEc:eee:renene:v:250:y:2025:i:c:s096014812500833x
    DOI: 10.1016/j.renene.2025.123171
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