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This study explores the factors that influence consumer choices on whether to invest in renewable
energy sources versus fossil fuels, focusing on solar and wind energy. Motivated by the current climate
crisis, highlighted by the IPCC’s projection of a critical global temperature rise by 2030, and the fluctuating
costs of fossil fuels exacerbated by military conflicts, this research underscores the economic
and environmental benefits of transitioning to renewable energy. Using an evolutionary game theory
approach, we model consumer behavior and tax incentives in the Texan renewable energy market based
on the Public Goods game. The model takes into account how varied levels of multiple factors, such as
tax rebates and personal environmental concern, impact consumer decisions, assuming a fixed income.
Our results show that the level of tax incentives needed to incentivize people to adopt renewable energy
varies widely by level of environmental concern. For those with low and medium concern, the evolutionary
stable strategy (ESS) becomes wind energy at a 55% and 35% tax incentive, respectively. However,
for those with a high level of environmental concern, the ESS is also wind energy but without any tax
incentive. These findings imply that government interventions are necessary to encourage people that
are not as environmentally conscious to adopt renewable energy sources and limit the climate crisis.
While comprehending the evolving dynamics between fossil fuels and wind energy, there is a unique relationship
in regard to tax incentives and external concern scenarios. Particularly when tax incentives shift
from 30% to 35%, and similarly from 50% to 55%, the ternary plots illustrate a shift between fossil fuels
and wind as a dominating Evolutionary Stable Strategy (ESS). Moreover, in cases with high concern and
a tax rate of 0%, wind energy outperforms the other energy sources indicating the interaction where wind
emerges as an ESS. When considering the stability of these interactions, we can see that the nodal points of
both strategies signify an unstable equilibrium shifting from fossil fuels to wind energy.
Based on these implications, it can also be stated that wind energy acting as an ESS at low tax incentives
and high concern, signifies a dominant and sustainable position within the energy market. It is with this
benefit that we can see how a major transition to wind energy could lead to a significant reduction in greenhouse
gas emissions and other beneficial long term implications. Additionally, due to the fact that the costs
associated with wind energy have also trended downwards, due to incentives provided by the government,
wind acting as an ESS is anticipated because it also aids in mitigating effects of climate change by generating
clean energy and not releasing any carbon emissions [12]. This in turn potentially keeps us within the 1.5○C
threshold till the year 2030 as it is essential that CO2 emissions are reduced by at least 43% before 2030,
according to the IPCC [1, 2].
While wind energy reduces potential effects of climate change, to expand our scope of analysis for future studies, we could include additional renewable energy sources such as hydroelectric, geothermal, and biomass to provide a more comprehensive view of the renewable energy market. Overall, our project highlights the critical importance of understanding consumer behavior and the role of government incentives in shaping energy market dynamics, especially in an era where policymakers are focused on transitioning to cleaner energy sources. Additionally, our research explored the minimum level of government intervention required to persuade individuals with varying degrees of environmental concern to adopt renewable energy systems. In future studies, it may be reliable to examine regional variations in consumer preferences and government incentives to understand localized trends and impacts while also identifying the most influential factors driving the adoption of renewable energy sources. By delving into the intricacies of consumers’ energy allocation, however, we unveiled profound insights that empower governments to refine their tax incentives, fostering a shift towards renewable energy adoption among citizens. In essence, these renewable resources like wind will have profound and far-reaching implications, driving the global energy market towards a more sustainable, secure, and prosperous future.
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