Social welfare and equality equilibrium based carbon tax subsidy incentive approach for biomass-coal co-firing towards carbon emissions

Abstract

The lack of effective and scientifically supported policy measures has led to poor application of biomass-coal co-firing. A bi-level multi-objective model is developed to formulate a reasonable carbon tax subsidy policy and optimal biomass-coal co-firing plan, which considers the interactive relationship between authority and coal-fired power plants, and achieves a trade-off between social benefits, subsidy fairness, and environmental protection. A case study and scenarios demonstrate the feasibility and effectiveness of the proposed model. The ϵ-constraint method and Karush–Kuhn–Tucker conditions are employed to optimize the global equilibrium. The results indicate that model can achieve Stackelberg equilibrium between the hierarchical decision-makers with conflicting objectives, and the subsidy allocation is highly equitable. Sensitivity analyses show that the carbon tax subsidy policy can enhance biomass fuels utilization and encourage active participation of coal-fired power plants in achieving cleaner production. These findings provide a reference role for the authority to develop scientific subsidy mechanisms and coal-fired power plants to rationalize the planning of biomass-coal co-firing for power generation.