A network-based evolutionary analysis of the diffusion of cleaner energy substitution in enterprises: The roles of PEST factors

Abstract

In countries highly dependent on coal and oil, the substitution of relatively cleaner energy for fossil fuels in industrial and residential sectors (cleaner energy substitution, or CES) is conducive to technology advancement and pollution abatement. Since CES is a process met with resistance by a portion of enterprises in China, this study will investigate the roles of external factors by simulating CES diffusion in enterprise networks. The PEST (political, economic, social, and technological factors) analysis framework, referencing corporation strategy management, is employed to select potential external factors of CES diffusion. The results show that factors will affect the diffusion of CES by changing the payoffs of different enterprises. Reducing the costs of cleaner energy and related equipment will promote diffusion. Besides, improving consumer preferences for green products, consolidating responses to public complaints on pollution and promoting information exchange among enterprises are beneficial to diffusion. It is novel that this paper demonstrates that diffusion will be hindered by supply interruptions of cleaner energy, which means that stable supply after a wide range of adoption is important. Focusing on PEST factors, this study introduces a useful framework to investigate the potential factors of enterprises’ green decisions and behaviours and offers fresh insights into promoting CES adoption and energy transition in developing countries.