Impact of carbon quota policy on clean energy investment strategies with financial constraints

Abstract

The actions of electricity enterprises investing in clean energy are mainly affected by national policies and financial constraints. However, their joint impact on corporate decision-making for clean energy investment (CEI) is unclear. This study develops a game model to study the impact of carbon quota policies on corporate decision-making under financial constraints, including the grandfathering quota policy and benchmarking quota policy. A series of interesting conclusions were obtained. (1) With the goal of CEI, irrespective of financial constraints, the benchmarking quota policy is the best option. (2) With total carbon emissions (TCEs), consumer surplus, or enterprise profit as the goal, financial constraints will have an impact on optimal carbon quota policies. (3) In addition to TCEs, an increase in the financial constraints cap will enhance CEI, consumer surplus, and enterprise profit. These conclusions provide new insights for government policy-making and business decision-making, requiring comprehensive consideration of financial constraints.