Game-Optimization Modeling of Shadow Carbon Pricing and Low-Carbon Transition in the Power Sector

Guangzeng Sun (), Bo Yuan, Han Zhang, Peng Xia, Cong Wu and Yichun Gong
Additional contact information
Guangzeng Sun: State Grid Energy Research Institute Co., Ltd., Beijing 102209, China
Bo Yuan: State Grid Energy Research Institute Co., Ltd., Beijing 102209, China
Han Zhang: State Grid Energy Research Institute Co., Ltd., Beijing 102209, China
Peng Xia: State Grid Energy Research Institute Co., Ltd., Beijing 102209, China
Cong Wu: State Grid Energy Research Institute Co., Ltd., Beijing 102209, China
Yichun Gong: State Grid Energy Research Institute Co., Ltd., Beijing 102209, China

Energies, 2025, vol. 18, issue 15, 1-15

Abstract: Under China’s ‘Dual Carbon’ strategy, the power sector plays a central role in achieving carbon neutrality. This study develops a bi-level game-optimization model involving the government, power producers, and technology suppliers to explore the dynamic coordination between shadow carbon pricing and emission trajectories. The upper-level model, guided by the government, focuses on minimizing total costs, including emission reduction costs, technological investments, and operational costs, by dynamically adjusting emission targets and shadow carbon prices. The lower-level model employs evolutionary game theory to simulate the adaptive behaviors and strategic interactions among power producers, regulatory authorities, and technology suppliers. Three representative uncertainty scenarios, disruptive technological breakthroughs, major policy interventions, and international geopolitical shifts, are incorporated to evaluate system robustness. Simulation results indicate that an optimistic scenario is characterized by rapid technological advancement and strong policy incentives. Conversely, under a pessimistic scenario with sluggish technology development and weak regulatory frameworks, there are substantially higher transition costs. This research uniquely contributes by explicitly modeling dynamic feedback between policy and stakeholder behavior under multiple uncertainties, highlighting the critical roles of innovation-driven strategies and proactive policy interventions in shaping effective, resilient, and cost-efficient carbon pricing and low-carbon transition pathways in the power sector.

Keywords: dual carbon; bi-level game-optimization model; shadow carbon pricing; emission trajectories; game theory (search for similar items in EconPapers)
JEL-codes: Q Q0 Q4 Q40 Q41 Q42 Q43 Q47 Q48 Q49 (search for similar items in EconPapers)
Date: 2025
References: Add references at CitEc
Citations:

Downloads: (external link)
https://www.mdpi.com/1996-1073/18/15/4173/pdf (application/pdf)
https://www.mdpi.com/1996-1073/18/15/4173/ (text/html)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:gam:jeners:v:18:y:2025:i:15:p:4173-:d:1718887

Access Statistics for this article

Energies is currently edited by Ms. Agatha Cao

More articles in Energies from MDPI
Bibliographic data for series maintained by MDPI Indexing Manager ().