Defects of the financial incentive policy for global zero carbon buildings: A game analysis of policy insights

Abstract

In the promotion of the zero carbon building (ZCB), financial incentives are essential measures. However, the flaws of financial incentives are often overlooked. This paper constructs a three-subject evolutionary game model of the ZCB market to analyze the invalidation, damage, and perfection of financial incentives. By analysing the interactions and decisions among governments, developers and consumers in the ZCB market, a policy flaw is raised—financial incentives cannot be effective when developers’ or consumers’ preference for ZCB is below a certain threshold (with a corresponding calculation formula). The paper also finds that the government's response to failure by increasing financial incentives has had little effect. A reasonable response could be to break the threshold constraint through non-economic means such as low carbon promotion. A policy simulation based on US national case is provided along with theoretical results to explain their practical use and offer a better understanding of their implications. Through theoretical analysis and case simulation, the unique findings obtained in this paper provide effective support for designing and improving ZCB incentives, helping to drive climate-neutral global building stock.