Authority–enterprise equilibrium based mixed subsidy mechanism for carbon reduction and energy utilization in the coalbed methane industry

Abstract

As coalbed methane, the natural gas adsorbed in coal seams, is a greenhouse gas that is 21 times stronger than CO2, coalbed methane extraction significantly influences carbon reduction and energy conservation efforts. While the injection of CO2 into coal seams is known to effectively enhance coalbed methane recovery, this process has been limited because of high investment and production costs. Therefore, to promote the application of CO2 injection techniques in coalbed methane industry, this paper proposes an authority–enterprise equilibrium based mixed subsidy mechanism which combines direct subsidies with indirect tax-incentives. Specifically, a multi-objective bi-level programming model is established under uncertainty to assign a practical constraint and achieve a trade-off between the local authority and the coalbed methane plants. A practical case validates the feasibility and efficiency of the proposed method, proving that an authority–enterprise equilibrium based mixed subsidy mechanism is able to achieve carbon emissions reductions and conserve energy. Further analysis indicated that the marginal energy efficiency gains were greater than the authority costs under a strict energy utilization policy and that the environmental protection target had larger impacts on the coalbed methane plant performances.