Open Access

ARTICLE

Energy Policy, Market Environment and Renewable Energy Development: Quantitative Evaluation Based on CGE Model

Yurong Zhao, Daozhi Chen^*, Yu Yin^*
School of Applied Science and Technology, Beijing Union University, Beijing, China
* Corresponding Author: Daozhi Chen. Email: ; Yu Yin. Email:

Energy Engineering https://doi.org/10.32604/ee.2026.075847

Received 10 November 2025; Accepted 28 January 2026; Published online 04 March 2026

Abstract

In order to investigate the impacts of government policy and market environment on the development of renewable energy, this paper constructs a computable general equilibrium (CGE) model to simulate the impacts of policy scenarios, market scenarios and policy-market scenarios on renewable energy output and investment, energy structure, economy and environment based on China’s input-output extension table in 2020. The results show that: the subsidy can optimize the energy structure and power structure, and non-hydropower renewable energy represented by wind power and solar power will become a new force of energy supply in China; the market environment of traditional energy price rising will increase the output and investment of renewable energy, and the energy policy can offset the negative impacts of traditional energy price downward on renewable energy; the impacts of subsidy on GDP, employment and emission reduction is positive; the GDP and employment is benefit from the market environment of traditional energy price downward, but the environment is damaged due to stimulating energy consumption. Finally, the government should support the renewable energy through energy policy, and monitor the market risk of the price fluctuation of traditional energy, so as to make the renewable energy become the key force of the transition of economic development mode and the focus of the breakthrough of energy environment dilemma. The novelty of this paper lies in simultaneously constructing policy scenarios, market scenarios, and integrated policy-market scenarios to examine the development of renewable energy and its corresponding economic and environmental impacts under each type of scenario, while also validating the effectiveness of energy policies in mitigating market risks.

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Keywords

Renewable energy; subsidy; emission reduction; CGE model

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