Exploring modes of third-party market cooperation in energy projects: A strategic approach to addressing climate change

Yinyin Zhao and Benhong Peng

Energy Policy, 2025, vol. 206, issue C

Abstract: Choosing the right third-party market cooperation mode to achieve carbon neutrality is essential for ensuring sustainable energy development. Based on differential game theory, this study constructs a dynamic emission reduction decision model involving Chinese-funded enterprises, foreign-funded enterprises, and host-country enterprises. It compares and analyzes the emission reduction trajectories of each participant under the benchmark mode, vertical incentive mode, horizontal alliance mode, and integrated mode. The results indicate that the optimal trajectory of carbon emission reduction for energy projects dynamically increases over time before stabilizing under different scenarios. The carbon emission reduction volume achieved under the integrated mode is superior to that under the horizontal alliance mode. Only when the host country's cost preferential ratio exceeds the maximum threshold can the emission reduction volume under the vertical incentive mode surpass that of the integrated mode. The vertical incentive mode can achieve Pareto improvement to a certain extent, but only the integrated mode can simultaneously maximize the emission reduction effort, the project's reduction volume, and the project's overall profit, achieving a perfect Pareto optimal solution. This study provides a decision-making basis for improving third-party market cooperation modes in energy projects and promoting energy emission reduction.

Keywords: Energy projects; Third-party market cooperation mode; Carbon reduction; Differential game theory (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:eee:enepol:v:206:y:2025:i:c:s0301421525002861

DOI: 10.1016/j.enpol.2025.114779

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