Optimizing mechanisms for promoting low-carbon manufacturing industries towards carbon neutrality

Many governments have implemented subsidy policies to promote low-carbon manufacturing for achieving carbon neutrality. Whereas carrying out an appropriate subsidy policy and subsidy rate is challenging when the supply chain members collaborate on low carbon technologies. Therefore, this research constructs a game model that is comprised of a government, a low carbon manufacturer and a retailer. The government can subsidize the manufacturer's production or innovation costs. The retailer can collaborate with manufacturer through a revenue-sharing contract or cost-sharing contract. This research investigates the interaction between the government subsidies and supply chain collaborative innovation. The impact of government subsidies and supply chain collaborative innovation on the carbon emission reduction and economic performance is further studied. The results reveal that the supply chain collaborative innovation is a factor that should be taken into account when the government decides the subsidy mode and subsidy rate. Under certain conditions, the combinations of subsidy policies and collaboration contracts can simultaneously achieve the highest economic performance and carbon emission reduction level. This research suggests that the government should timely adjust the subsidy rate in accordance with the collaborative innovation modes of the supply chain. The government should investigate the status of low carbon technology innovation before choosing a subsidy mode. Through choosing the suitable subsidy mode, the government can bear more fruit in reducing carbon emissions, thereby benefiting the carbon neutrality.