Strategies for applying carbon trading to the new energy vehicle market in China: An improved evolutionary game analysis for the bus industry

Application of carbon trading on the consumption-side to subsidize NEVs (called "carbon trading subsidy (CTS)") is expected to become the successor policy for the phasing-out purchase subsidy, but there is still a gap between practice and theory in how to apply. This study applies CTS to bus industry and addresses the interaction problem between purchase decision of bus operators and policy-implementation decision of the government, and improves evolutionary game theory by considering the incentive effects of strategies within the same group to discuss stable strategies of each parties. Simulation experiments are conducted to validate the correctness of the improved model and investigate the effects of key parameters on the evolution of decision behaviors. The results show that subsidy effect of different carbon prices varies significantly under different cost gaps of new energy buses (NEBs) and fuel buses (FBs), and there is an optimal carbon price range, i.e. 0.163-0.263 CNY/kg in this research. The initial carbon quota less than and close to the carbon emissions of FB can achieve the optimal subsidy effect. Maintaining high-frequency inspections on operators can ensure smooth proliferation of NEBs. Finally, policy recommendations to implement CTS are proposed for different stages of the cost reduction of NEBs.