Study on Carbon Emission Reduction Strategy of CCUS Technology in Natural Gas Supply Chain Considering Government Subsidies

Climate change urgently requires reducing carbon emissions in the energy sector. Natural gas is a cleaner fossil fuel and important for the global shift to sustainable energy. However, its supply chain still produces significant carbon emissions. Carbon capture, utilization, and storage (CCUS) technologies are key to lowering these emissions, but their use is limited by high costs and technical challenges. Despite prior research examining CCUS technologies and government subsidies, few studies have systematically analyzed the differential impacts of various subsidy mechanisms on CCUS adoption in the natural gas supply chain, especially considering consumers’ low-carbon preferences. We compare two types of subsidies: one that helps cover the costs of investing in carbon reduction, and another that reduces the cost of natural gas. Using the Stackelberg game theory model, where the gas supplier leads and the buyer follows, we analyze how these subsidies influence the decisions of both parties, the level of carbon reduction, the amount of natural gas purchased, and their overall profits. Our results show that government subsidies significantly boost carbon reduction, increase natural gas purchases, and enhance profits for both suppliers and buyers compared to no subsidies. Higher subsidies lead to greater carbon reductions and larger market sizes. Specifically, subsidies for carbon reduction investments are more effective in encouraging suppliers to reduce emissions, while subsidies on natural gas costs benefit buyers by increasing their ability to reduce carbon and improve profitability. This research offers important guidance for policymakers in creating effective subsidy programs that promote the adoption of CCUS technologies and support a low-carbon transition in the natural gas supply chain.