The impact of environmental policies on renewable energy investment decisions in the power supply chain

Chun-Yi Ji, Zi-Kai Tan, Bin-Jia Chen, Ding-Ce Zhou and Wu-Yong Qian

Energy Policy, 2024, vol. 186, issue C

Abstract: Environmental policy is one of the main factors affecting enterprises' investment in renewable energy, including carbon trading policy, subsidy policy and green certificate trading policy in China. To study the impact of policies on investment decisions in the power supply chain, this paper constructs an electricity supply chain and compares the equilibrium results under eight investment scenarios based on the Stackelberg game theory. The research reveals that electricity sellers are more enthusiastic about investing in renewable energy than power generators. The increase of carbon price has a positive impact on the investment level of investors, and the electricity price and wholesale electricity price increase with the increase of carbon trading cost. After the implementation of the subsidy policy, the level of renewable energy investment in the power supply chain has increased. The green certificate trading policy can only promote the renewable energy investment of electricity selling enterprises. From the perspective of carbon emissions, subsidy policy and green certificate trading policy are both conducive to reducing the total carbon emissions. When the subsidy amount is reduced and the green certificate price is higher than a certain threshold, the green certificate trading policy will be superior to the subsidy policy.

Keywords: Carbon trading policy; Subsidy; Green certificate policy; Power supply chain; Renewable energy investment (search for similar items in EconPapers)
Date: 2024
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (4)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:enepol:v:186:y:2024:i:c:s0301421524000077

DOI: 10.1016/j.enpol.2024.113987

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