Two-stage evolutionary dynamics of fiscal subsidy reforms: tripartite game analysis in China’s biomass energy transition

Since 2020, the Chinese government has transitioned its support policies for biomass power generation companies from a ”universal subsidy” model to a ”competitive allocation” model. To systematically examine how policy adjustments influence the strategic dynamics of biomass power producers, this study develops a two-stage evolutionary game model and incorporates real annual report data from Chinese listed companies for evolutionary simulation. The principal findings are as follows: (1) Alterations in government subsidy policies notably affect corporate strategies and broader industry development. While companies quickly recalibrate their strategies to subsidy cuts and attain new stable equilibria, an increase in subsidies leads to slower adaptation, suggesting that overreliance on subsidies may suppress innovation. (2) Corporate willingness to collaborate with both government and rural organizations is pivotal for fostering efficient coordination and expediting strategic adjustments. Robust cooperation can hasten industry transformation and refine resource allocation. (3) Adjustments to subsidy policies not only reshape government – company interactions but also transform the overall industry landscape, propelling the biomass energy sector towards greater market orientation. It is advised to adopt a phased subsidy strategy, dynamically balance punitive and supportive mechanisms, and implement performance-based innovation incentives to facilitate the sustainable transformation of the biomass energy industry.