Decarbonization decision of electricity supply chain under carbon cap-and-trade mechanism

Regarding the electricity decarbonization decision problem under the carbon cap-and-trade mechanism, this paper constructs a two-level electricity supply chain composed of an electricity generator and an electricity retailer. The electricity generator invests in renewable energy or low-carbon technologies to achieve decarbonization. This paper compares the equilibrium solutions of the models with only cap- and trade -mechanisms, renewable energy investment, and low-carbon technology investment. The main conclusions are: (1) Compared with renewable energy investment, the cost of investing in low-carbon technology and the decarbonization contribution rates are higher. (2) The investment in renewable energy increases with unit carbon emissions of traditional energy, but the investment in low-carbon technology decreases. (3) Low-carbon technology investment can provide the supply chain with the highest electricity demand and profits.