Coordination of bioenergy supply chains under government incentive policies: a game-theoretic analysis

Biomass as an abundant renewable energy source can play a vital role in controlling the greenhouse gas emissions. The distributed nature of biomass and its low energy density have complicated the utilization of this cheap and available source of energy. Governments can stimulate the bioenergy industry and remove barriers for adoption of bioenergy by implementing supporting regulations and incentives. In this paper, two types of government incentives, representing direct and indirect incentives, are analyzed and their efficiencies in fostering bioenergy generation are compared. A Stackelberg (leader–follower) game is proposed to formulate the integration of incentives as a bi-level problem in coordination of biomass supply chains. We further illustrate the applicability of the proposed approach through an empirical case study of three Canadian remote communities. The case study demonstrates the effects of incentives on coordination of biomass suppliers and end-user communities and promoting bioenergy share in electricity generation mix of communities. The findings of this study highlight the importance of government’s support, in form of indirect incentives, for provisioning of infrastructure needed for biomass supply and conversion, with a significant impact on increasing the share of bioenergy generation. Graphical abstract