Decisions on Technologies for Emissions Control in Port Areas under Subsidy and Low-Carbon Preferences of Customers

Abstract

The emission control technologies decisions of port and shipping enterprises under subsidy and customers’ low-carbon preferences are discussed from a supply chain perspective. The game models are established under three game models (port-leader Stackelberg game, ship-leader Stackelberg game, and Nash game). The obtained results show that the impact of subsidy and low-carbon preference on demand in its pricing always is considered by the leader in the port supply chain. The profits and emissions in the Nash game are higher than that in the Stackelberg game. When subsidies and customers’ low-carbon preferences are low, the supply chain’s overall profits of using low sulfur oil are higher than that of using shore power. But the supply chain’s carbon emissions of adopting low sulfur oil are also higher than that of adopting shore power. When subsidies and low-carbon preferences of customers are high, the supply chain’s overall profits of using shore power are higher than that of using low sulfur oil. But the supply chain’s carbon emissions of adopting shore power are also higher than that of adopting low sulfur oil. When subsidy and low-carbon preference of customers are in the appropriate(medial) range, the supply chain would choose shore power to reduce emissions from the perspective of profits, and the whole carbon emissions of using shore power are lower than that of using low sulfur oil, so the regulator(government) and enterprises can achieve a win-win situation. Hence for a regulator who has to balance emission control and enterprises’ profits, implementing moderate subsidy within the appropriate range is the better strategy.

An Analysis of the Impact of Government Subsidies on Emission Reduction Technology Investment Strategies in Low-Carbon Port Operations

“…Our analysis reveals the profound sensitivity of pricing decisions, investment levels, and profits of ports and shipping companies to government subsidies and marketdriven low-carbon preferences. This aligns with the existing literature exploring the nexus between government incentives and low-carbon considerations in the maritime sector [14,[16][17][18]28,29]. Notably, we extend this understanding by scrutinizing the repercussions of government subsidies under different investment strategies, revealing nuanced effects contingent on the adopted approach.…”

“…Chen et al (2020) [19] proposed an optimisation model for a coastal transportation system, concluding that government subsidies and reasonable tax plans for highway and waterway transportation can significantly reduce carbon emissions without increasing freight rates. Zhou (2022) [16] analysed the interactive effects of government subsidies and low-carbon preferences on emission control technology decisions in low-carbon port operations. Hu and Wang (2022) [34] analysed the impact of government subsidies and low-carbon preferences on low-carbon production technology adoption in the manufacturing industry.…”

“…The authors developed two Stackelberg game models and a Nash game model to analyse the optimal investment strategies for sustainable operations [37]. Zhou and Zhang (2022) [14] expanded this research by also considering low-carbon preferences in their analysis [16]. Particularly, some research has applied traditional game theories to consider the impact of government subsidies in the analysis of low-carbon port operations [26,38].…”

“…Assumption 3. The port and shipping company incur investment costs of 1 2 ηe 2 when investing in emission-reduction technology [16,32,53,54]. Assumption 4.…”

“…On the other hand, the development of green technologies, such as tail gas scrubbers, liquefied natural gas (LNG), and shore power technology, offers opportunities for port operations to reduce emissions [12][13][14]. However, the heavy investment and retrofitting costs associated with these technologies make it challenging for ports and shipping companies to implement such technologies [15,16]. Consequently, understanding different parties' behaviour of investing in emission reduction technology in low-carbon port operations has become a hot topic for academic research in recent years.…”