Conference Agenda

Achieving the 2050 net-zero target requires fundamental technology transitions in energy-intensive, hard-to-abate industrial sectors. However, high upfront costs and insufficient market incentives have delayed the diffusion of low-carbon technologies. Despite these real-world constraints, existing climate policy models often treat technology transition as an exogenous and automatic process, oversimplifying industrial and economic dynamics. This study adopts Evolutionary Game Theory (EGT) to bridge this gap between policy design and modeling practice. Focusing on the global steel industry, where hydrogen-based direct reduction (H2-DRI-EAF) represents a promising but costly alternative to conventional blast furnace processes, the study analyzes strategic behavioral changes among agents facing a public goods dilemma in adopting high-cost abatement technologies and identifies policy conditions under which cooperation can be sustained over the long term. The model formalizes strategy dynamics using replicator dynamics and evaluates whether cooperative outcomes are evolutionarily stable (ESS). The results indicate that while high-cost technology adoption faces initial resistance, appropriately designed incentive structures can lead to long-term sustainable cooperation. Major steel-producing countries with large global production shares, such as China, are found to play a systemic role: their early cooperation amplifies learning-by-doing effects and environmental benefits across the system, accelerating transitions in other countries. In contrast, countries with low Social Cost of Carbon (SCC), such as Korea and Germany, lack intrinsic motivation for environmental benefits, and their cooperation levels tend to stagnate without strong policy interventions.