An evolutionary game approach to subsidy phase-out for biomass power generation in China: Analyzing central and total subsidy phase-out strategies

In the context of global energy sustainability and China's goals for carbon emission reduction, biomass power generation offers significant potential but faces challenges, especially fiscal burdens from prolonged subsidies. The motivation for this study arises from the need to design scientifically justified subsidy phase-out strategies that avoid energy abandonment and promote market self-sustainability. It is aimed to examine how differentiated subsidy phase-out mechanisms, i.e., the central phase-out and total phase-out, influence the evolutionary behavior of local governments and enterprises. An evolutionary game model was developed to analyze strategic interactions under bounded rationality and deterministic conditions. Computational and numerical simulations reveal that while the central subsidy phase-out slows convergence, the total subsidy phase-out eliminates cyclical instability and enhances system equilibrium, with the optimal occurrence of spontaneous enterprise adoption being highly sensitive to local burden-sharing and total subsidy levels. The study concludes that phasing out subsidies totally—rather than partially—proves more effective in avoiding the “subsidy dilemma”, and recommends tailoring phase-out pathways based on project economic viability and local fiscal capacity.