Strategic Approach to Addressing Climate Change through Third-Party Market Cooperation

Researchers at Wenzhou University have developed a dynamic emission reduction decision model involving Chinese-funded enterprises, foreign-funded enterprises, and host-country enterprises to achieve carbon neutrality. The study, supported by the National Office of Philosophy and Social Sciences, compares and analyzes the emission reduction trajectories of each participant under different third-party market cooperation modes. The results indicate that the integrated mode is the most effective in achieving carbon emission reduction and overall profit maximization.

Key Takeaways:

• The study constructs a dynamic emission reduction decision model involving Chinese-funded enterprises, foreign-funded enterprises, and host-country enterprises using differential game theory.
• The integrated mode is the most effective in achieving carbon emission reduction and overall profit maximization, surpassing the horizontal alliance mode.
• The vertical incentive mode can achieve Pareto improvement to a certain extent, but only the integrated mode can simultaneously maximize the emission reduction effort, the project's reduction volume, and the project's overall profit.
• The research provides a decision-making basis for improving third-party market cooperation modes in energy projects and promoting energy emission reduction.
• The study has been peer-reviewed and published in the journal Energy Policy.

Statistics:

• 4 different third-party market cooperation modes were analyzed: benchmark, vertical incentive, horizontal alliance, and integrated.
• The results indicate that the optimal trajectory of carbon emission reduction for energy projects dynamically increases over time before stabilizing under different scenarios.
• The carbon emission reduction volume achieved under the integrated mode is superior to that under the horizontal alliance mode.
• The host country's cost preferential ratio must exceed the maximum threshold for the emission reduction volume under the vertical incentive mode to surpass that of the integrated mode.

Sources:

• "Exploring Modes of Third-party Market Cooperation In Energy Projects: a Strategic Approach To Addressing Climate Change" published in Energy Policy, 2025;206.
• National Office of Philosophy and Social Sciences.
• Wenzhou University.
• Elsevier Sci Ltd.