An authority-enterprise equilibrium differentiated subsidy mechanism for promoting coalbed methane extraction in multiple coal seams

Abstract

Because of strict technical requirements and high operational costs, exploiting deep coal seam resources is generally uneconomic under traditional uniform subsidy policies, which has resulted in an inadequate extraction of coalbed methane (CBM) and many safety risks or potential emission problems. To deal with these problems, an authority-enterprise equilibrium differentiated subsidy mechanism is proposed to promote CBM extraction in multiple coal seams. Specifically, the differentiated subsidy mechanism ensures that deep resources get more unit subsidies than shallow resources. A bi-level multi-objective optimization model is developed to resolve the interactive relationships between the authority and CBM enterprises, which also seeks a comprehensive balance between increased energy extraction and fiscal expenditure. A case application indicates that implementing differentiated subsidies could effectively promote multiple coal seam CBM extraction. The further discussion showed that a low energy output target and a moderate subsidy can accelerate deep coal seam extraction. Our proposed differentiated subsidy mechanism can be applied to the CBM industry in regions that own abundant deep coal seam resources. Our confirmed appropriate subsidy policy can be used as a reference for the government to promote energy extraction in multiple coal seams.