Promoting continuous emissions monitoring systems to curb rent-seeking: Evolutionary game insights

Rent-seeking behavior (RSB), particularly in the form of carbon data fraud, undermines the effectiveness and fairness of Monitoring, Reporting, and Verification (MRV), threatening the integrity of the Emissions Trading Scheme (ETS). Continuous Emissions Monitoring Systems (CEMS) provide a robust technical solution to combat this challenge. This study investigates optimal regulatory measures for promoting CEMS adoption and curbing RSB (PCaCR), thereby enhancing MRV reliability and ETS efficacy. A tripartite evolutionary game model was developed to simulate strategic interactions among thermal power enterprises (TPEs), third-party verifiers (3PVs), and the government. Evolutionarily stable strategies (ESS) were analyzed to reveal strategic determinants and underlying mechanisms affecting stakeholders' decision-making. Results show: (1) the optimal ESS scenario occurs when TPEs voluntarily adopt CEMS, 3PVs conduct impartial verifications, and the government enforces strict supervision; (2) initial strategy choices among TPEs, 3PVs, and the government significantly influence each other's evolutionary paths; (3) strategic factors demonstrate varying degrees of sensitivity in the evolution of PCaCR, indicating that pilot policies, standard refinement, information disclosure, and reward–penalty mechanisms effectively regulate stakeholders' behaviors. This study thus provides an evolutionary game framework to analyze decision-making dynamics around CEMS adoption in the presence of rent-seeking, offering insights for robust regulatory policymaking.