Dynamic Policy Effects in Early-Stage Low-Rank Coalbed Methane Development: A System Dynamics Analysis of Representative Blocks in Xinjiang

Against the backdrop of ongoing efforts to increase natural gas reserves and production and advance the low-carbon energy transition, the importance of developing low-rank coalbed methane is becoming increasingly evident. However, its early-stage development faces challenges such as phased production evolution, long investment payback periods, and uncertainty regarding the effectiveness of policy incentives. We calibrate a system dynamics model for four blocks in Xinjiang to link well commissioning and production with annual accounting outcomes over 15 years. Separate scenarios test changes in CBM price, incremental-output subsidies, and taxes; technological accumulation and carbon revenue are examined as extensions. Without reinvestment, Baicheng has the highest cumulative output but a CNY 138 million after-tax accounting loss. A 10% CBM price increase makes the accounting sum positive while annual losses persist late in decline. In the hypothetical case allocating all subsidy receipts to new wells, Baicheng adds 28 wells at the baseline subsidy rate under the one-year funding lag and whole-well investment rule, while retaining a cumulative accounting loss. In the tax scenarios with 3% profit reinvestment, halving corporate income tax raises Baicheng’s cumulative profit from CNY −143 million to CNY 14 million without changing its well count. These results distinguish immediate financial gains from subsequent investment responses and show why policy effects should be assessed by block and development stage.