Carbon tax-driven technological innovation may accelerate the directional recovery of waste cooking oil into bio-jet fuel: An evolutionary game approach

Biofuel production from waste cooking oil (WCO) offers an alternative to fossil fuels, especially for high-value bio-jet fuel. However, this industry is hindered by informal recyclers who covertly divert large amounts of WCO to illegal gutter oil production. Investigating the dynamic evolution of stakeholder behavior will help explore solutions. Thus, this study presents a tripartite evolutionary game model that includes the government, formal recyclers, and informal recyclers, aims to redesign the government intervention strategy to promote the directional flow of WCO from restaurant trash cans to bio-jet fuel production. We find that the evolutionary game model exists eight possible evolutionary stability strategies (ESSs), and the choice of each ESS depends mainly on the trade-off between costs and revenues for each stakeholder. The numerical study results reveal that formal recyclers are driven to carry out technological innovation by government support, profiting from bio-aviation kerosene products, and income from carbon emission reduction. These factors also have an indirect impact on the transformation of informal recyclers. Therefore, the government should provide adequate support for technological innovation to formal recyclers and increase their profitability of products to enable them to actively implement innovative strategies. This can be achieved by expanding the sales channels of bio-aviation kerosene products, implementing patent protection measures, improving the carbon reduction trading mechanism. Furthermore, the government's high tax rate on formal recyclers and the significant profits earned by informal recyclers through gutter oil production may dissuade them from transitioning their businesses. Above findings are in line with the actual issues of WCO recycling and provide a new dynamic decision-making method for enterprises and government managers.