CLEAN COAL TECHNOLOGY INVESTMENT STRATEGY IN THE COAL-ELECTRICITY SUPPLY CHAIN UNDER THE CAP-AND-TRADE MECHANISM

Coal-electricity generation is still the main resource of energy generation. However, given China's active pursuit of carbon neutrality and net zero, cleaner energy resources are crucial. One potential technology is clean coal, which realizes the carbon reduction during the coal combustion process while improving combustion efficiency, thereby helping fulfil national energy demand and supporting low-carb on development. This examines the influence of China's cap-and-trade program on clean coal technology investment in the coal-electricity supply chain by constructing a Stackelberg game model with clean coal technology and power generation as the main decision variables. The research shows that the cap-and-trade mechanism inhibits the clean coal technology investments by coal companies only when the fairly market price of clean coal is sensitive to its supply quantity and the carbon trading price is low. Under the cap-and-trade mechanism, the level of investment in clean coal technology, wholesale price of coal sold by coal companies, amount of coal ordered by electricity companies, and profits are negatively correlated with the cost of clean coal technology. Clearly, the cost of clean coal technology should be reduced, such as via government subsidies or the marketization of clean coal technology to promote clean coal technology investments by coal companies and increase the profit of coal and electricity companies. For electricity companies, a higher carbon quota price encourages coal companies to invest in clean coal technology. However, for polluting electricity companies, a higher carbon quota price discourages coal companies from investing in clean coal technology.