As　a　consequence　of　the　rebound　in　steel　demand,　the　rises　in　bulk　commodity　prices　(e.g.,　coal,　oil　and　iron　ore)　and　uncertainties　of　global　supply　chains　in　the　post-pandemic　period,　there　is　a　great　opportunity　for　governments　to　implement　incentive　policies　in　the　iron　and　steel　industry　(ISI)　to　promote　green　production　and　realize　long-term　sustainable　development　goals.　In　response,　this　paper　introduces　innovative　dynamic　reward　and　penalty　policies　and　constructs　an　evolutionary　game　model　of　government　intervention　for　achieving　green　production　of　the　ISI.　The　decision-making　behaviours　of　game　participants　(i.e.,　local　governments　and　steel　companies)　are　then　examined.　To　evaluate　the　efficacy　of　the　proposed　model,　numerical　simulation　is　conducted　and　the　effects　of　four　different　policies　are　investigated.　Numerical　results　indicate　the　following　managerial　insights　for　improving　the　sustainable　development　in　the　ISI:　(i)　local　governments　must　eliminate　bureaucracy　and　cut　back　expenditure　on　unnecessary　items;　(ii)　local　governments　need　to　define　reasonable　bounds　on　the　imposed　reward　and　penalty;　(iii)　reward　and　penalty　policies　should　be　flexible　and　responsively　adapted　to　different　periods　of　the　pandemic　and　beyond;　and　(iv)　the　dynamic　reward　and　static　penalty　(DR–SP)　policy　is　preferable　to　promoting　green　production　in　the　ISI.　©　The　Author(s),　under　exclusive　licence　to　Springer　Science+Business　Media,　LLC,　part　of　Springer　Nature　2023.