Open Access

ARTICLE

Carbon Abatement Cost-Sharing Strategy for Electric Power Sector Based on Incentive and Subsidy Mechanisms

by Hui Wang, Wen Wang^*, Wenhui Zhao

College of Economics and Management, Shanghai University of Electric Power, Shanghai, 200090, China

* Corresponding Author: Wen Wang. Email:

Energy Engineering 2024, 121(10), 2907-2935. https://doi.org/10.32604/ee.2024.052665

Received 10 April 2024; Accepted 12 July 2024; Issue published 11 September 2024

Abstract

The green and low carbon transition and development of the electricity industry is the most crucial task in realizing the “dual-carbon target”, and it is urgent to explore the incentive and subsidy mechanism to promote green electricity consumption and the cost-sharing strategy of carbon reduction, to alleviate the pressure of carbon abatement cost of each subject of the electricity supply chain. Against this background, this paper takes into account the low-carbon subsidies provided by the government and the incentive subsidies for users, and studies the optimal decision-making of each subject in the electricity supply chain, so that each of them can obtain the optimal profit and achieve carbon emission reduction at the same time. Firstly, taking into account the direct power purchase mode of large users and the electricity-selling companies emerging after the reform of the power sales side, we have established a cooperative mechanism for sharing the cost of carbon emission reduction in the electricity supply chain and clarified the relationship between the supply and demand of electricity among the main parties. Subsequently, considering government low-carbon subsidies and user incentive subsidies, the optimal decision-making model is established under two scenarios of decentralized and centralized cooperative games in the supply chain, respectively, with the objective of maximizing profits and carbon reduction rates. Solving for the optimal proportion of carbon abatement costs shared by each participant in the electricity supply chain in achieving game equilibrium. Finally, we analyze the role of the government’s low-carbon subsidies, users’ incentive subsidies, and other factors on the profit and carbon reduction effect of the electricity industry through the example analysis and further analyze the impact of carbon abatement cost-sharing measures to provide recommendations for the electricity industry to realize low-carbon abatement and make decisions.

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Keywords

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