Analysis of subsidy strategy for sustainable development of environmental protection policy

Abstract

In the face of severe climate change and serious air pollution, governments should actively protect the environment and innovation to develop low-carbon energy, and formulate relevant carbon emission policies for enterprises to solve global warming problems. According to the social welfare point of view, this paper calls for the international must maintain global warming within the controllable range. Its core work is to effectively reduce carbon emissions. Under the assumption that the corporate profit target remains unchanged, when the government formulates a carbon reduction policy to levy a carbon emission tax for enterprises, enterprises should avoid the transfer of taxation costs to consumers; on the other hand, the government should formulate subsidy policies to encourage enterprises to actively cooperate. Carbon reduction, subsidized for the increased production costs of the company’s innovative technology to reduce carbon emissions. This paper uses the real options approach of dynamic decision-making, assuming that the subsidy rate of subsidy policy follows the geometric Brownian movement, constructs the government’s optimal subsidy policy model, and provides the government with a reference policy for subsidy policy, in order to create a realm of win-win situation for enterprises, government and social environment.