Myopic Versus Farsighted Behaviors in a Low-Carbon Supply Chain with Reference Emission Effects

The increased carbon emissions cause relatively climate deterioration and attract more attention of governments, consumers, and enterprises to the low-carbon manufacturing. This paper considers a dynamic supply chain, which is composed of a manufacturer and a retailer, in the presence of the cap-and-trade regulation and the consumers’ reference emission effects. To investigate the manufacturer’s behavior choice and its impacts on the emission reduction and pricing strategies together with the profits of both the channel members, we develop a Stackelberg differential game model in which the manufacturer acts in both myopic and farsighted manners. By comparing the equilibrium strategies, it can be found that the farsighted manufacturer always prefers to keep a lower level of emission reduction. When the emission permit price is relatively high, the wholesale/retail price is lower if the manufacturer is myopic and hence benefits consumers. In addition, there exists a dilemma that the manufacturer is willing to act in a farsighted manner but the retailer looks forward to a partnership with the myopic manufacturer. For a relatively high price of emission permit, adopting myopic strategies results in a better performance of the whole supply chain

The design of green supply chains under carbon policies: A literature review of quantitative models

Carbon footprinting of products and services is getting increasing attention due to the growing emphasis on carbon related policies in many countries. As a result, many enterprises are focusing on the design of green supply chains (GSCs) with research on supply chains (SCs) focused not only on cost efficiency, but also on its environmental consequences. The review presented in this paper focuses on the implications of carbon policies on SCs. The concept of content analysis is used to retrieve and analyze the information regarding drivers (carbon policies), actors (for example, manufacturers and retailers), methodologies (mathematical modeling techniques), decision-making contexts (such as, facility location and order quantity), and emission reduction opportunities. The review shows a lack of emissions analysis of SCs that face carbon policies in different countries. The research also focuses on the design of carbon policies for emissions reduction in different operating situations. Some possible research directions are also discussed at the end of this review.A NPRP award NPRP No.5-1284-5-198 from the Qatar National Research Fund (a member of The Qatar Foundation).Scopu

Design of a Cooperative Sustainable Three-Echelon Supply Chain under Uncertainty in CO2 Allowance

Driven by the growing concern regarding greenhouse gas emissions, in this work, we provide a robust stochastic model for the design of a cooperative supply chain (SC) under uncertainty in CO2 allowance prices from the European Union Emissions Trading System (EU ETS). During the last years, CO2 allowance prices have undergone unexpected changes, having strong impact on the design and management of optimal SC. The consideration of uncertainty in the allowance prices has therefore become more important. We use an autoregressive integrated moving average (ARIMA) model to predict future allowance prices. A full discretization of the underlying probability space leads to a number of scenarios far too large to be handled, so we compare two approaches to reduce the number of scenarios to a feasible maximum, the ScenRed algorithm and K-means clustering. The obtained results are compared with a deterministic approach that is widely studied in the literature, showing an increase in the benefits and a reduction of emissions.The authors gratefully acknowledge financial support to the Conselleria de Innovacion, Universidades, Ciencia y Sociedad Digital of the Generalitat Valenciana, Spain, under project PROMETEO/2020/064

Game Theoretic Analysis of Carbon Emission Reduction and Sales Promotion in Dyadic Supply Chain in Presence of Consumers’ Low-Carbon Awareness

The paper studies how the combination of the manufacturer’s carbon emission reduction and the retailer’s emission reduction relevant promotion impacts the performances of a dyadic supply chain in low-carbon environment. We consider three typical scenarios, that is, centralized and decentralized without or with side-payment. We compare measures of supply chain performances, such as profitabilities, emission reduction efficiencies, and effectiveness, in these scenarios. To improve chain-wide performances, a new side-payment contract is designed to coordinate the supply chain and numerical experiments are also conducted. We find the following. (1) In decentralized setting, the retailer will provide emission cutting allowance to the manufacturer only if their unit product profit margin is higher enough than the manufacturer’s, and the emission reduction level of per unit product is a monotonically increasing function with respect to the cost pooling proportion provided by the retailer; (2) the new side-payment contract can coordinate the dyadic supply chain successfully due to its integrating sales promotion effort and emission reduction input, which results in system pareto optimality under decentralized individual rationality but achieves a collective rationality effect in the centralized setting; (3) when without external force’s regulation, consumers’ low-carbon awareness is to enhance consumers’ utility and decrease profits of supply chain firms

Analyzing the Impacts of Policy Supports and Incentive Programs on Resource Management

Feedstock-based renewable fuels, and ecosystem restoration practices such as afforestation are long-term solutions to mitigating greenhouse gas (GHG) emissions. This dissertation aligns with assessing the effects of policy supports and voluntary incentive programs on renewable fuel production and forest-based carbon sequestration.Higher investment risks and novelty of the feedstock-based conversion technologies hinder large-scale deployment of renewable fuels at present. In the first essay, a two-stage stochastic model is employed to evaluate the impact of federal subsidies in designing a switchgrass-based bioethanol supply chain in west Tennessee wherein decisions driven by minimized expected and Conditional Value-at-Risk of system cost reflected the risk-neutral and risk-averse perspective of the biofuel sector, respectively. Major contribution of this study is the impact assessment of Biomass Crop Assistance Program (BCAP) on investment decisions (including land allocation) of a risk-sensitive biofuel industry under feedstock supply uncertainty.In the second essay, impacts of renewable jet fuel (RJF) production from switchgrass on farmland allocation, processing facility configuration, and GHG emissions are estimated in response to fulfilling the RJF demand at the Memphis International Airport in Tennessee. Importantly, a potential carbon market is used to explore the impact of hypothetical carbon credits on the GHG emissions reduction and net supply-chain welfare while addressing the economic motives of the supply-chain participants. Considering the attention paid by the Unites States aviation sector with respect to GHG emissions, this study highlights the importance of Renewable Identification Number (RIN) credits and tradable carbon credits in achieving the desired economic viability and emission abatement goals through a Stackelberg interaction between the feedstock suppliers and the feedstock processor.In the third essay, discriminatory-price auction and agent-based model are used to examine the cost-efficiency of cost-ranked and cost-benefit-ranked auction-based payment designs for forest-based carbon sequestration with varying degree of correlation between opportunity costs of afforestation and carbon sequestration capacities, when bidders learn in multi-round procurement auctions. Simulation outcomes are expected to guide decision makers in choosing an optimal payment design that ensures efficiency gains for auction-based payments compared to fixed-rate payments, and more importantly ensures minimal loss in cost-efficiency in a dynamic setting

Fair design of CCS infrastructure for power plants in Qatar under carbon trading scheme

Qatar is currently the highest emitter per capita and targets emission reduction by exercising tight controls on gas flaring. In order to limit the emission under allowances, the power plants have two options: investing in carbon capture and storage (CCS) systems or buying carbon credits for the excess emissions above their allowances. However, CCS systems are expensive for installation and operation. In this paper, a mixed integer linear programming (MILP) model is developed for the design of integrated carbon capture, transport and storage infrastructure in Qatar under carbon trading scheme. We first investigate the critical carbon credit prices to decide under which price it is more beneficial to invest on CCS systems or to buy carbon credits via carbon trading. Then the fair design of the CCS infrastructure is obtained under two fairness scenarios: the same saving ratio and the game theory Nash approach. Fair cost distribution among power plants in Qatar is obtained by selecting the CO2 resources (power plants) to be captured with available capture technologies and materials, designing the transportation pipeline network to connect the resources with the sequestration and/or utilisation sites and determining the carbon trading price and amount among power plants. Under different fairness scenarios, the total costs are slightly higher than that from minimising the total cost to obtain the fair cost distribution. Power plants with higher CO2 emissions determine to install CCS system, while other power plants buy the carbon credits from domestic or international market to fulfil their carbon allowance requirements. The future work includes extending the current model by considering power generation distribution and designing the pipeline network with the selection of pump locations and pipe diameters

Supply Chain Coordination with Carbon Trading Price and Consumers’ Environmental Awareness Dependent Demand

Carbon emissions reduction in supply chain is an effective method to reduce the greenhouse effect. The paper investigates the impacts of carbon trading price and consumers’ environmental awareness on carbon emissions in supply chain under the cap-and-trade system. Firstly, it analyzes the centralized decision structure and obtains the requirements to coordinate carbon emissions reduction and order quantity in supply chain. Secondly, it proposes the supply chain coordination mechanism with revenue-sharing contract based on quantity discount policy, and the requirements that the contract parameters need to satisfy are also given. Thirdly, assuming the market demand is affected by consumer’s environmental awareness in addition form, the paper proposes the methods to determine the optimal order quantity and the optimal level of carbon emissions through model optimization. Finally, it investigates the impacts of carbon trading price on carbon emissions in supply chain. The results show that clean manufacturer’s optimal per-unit carbon emissions increase as the carbon trading price increases, while nongreen manufacturer’s optimal per-unit carbon emissions decrease as the carbon trading price increases. For the middle emissions manufacturer, the optimal per-unit carbon emissions depend on the relationship between the carbon trading price and the carbon reduction coefficient

Manufacture’s Optimal Pricing Policy and Retailer’s Optimal Ordering Policy Under Different Carbon Emission Policies

The implementation of carbon reduction policy is an important method for the firms to reduce carbon emissions. So it is of great significance to research on the firms’s trategies under different carbon reduction policies. In this paper, we study the manufacturer’s wholesale price strategy and the retailer’s ordering strategy, as well as carbon emissions policy’s impact on the production and profit, under mandatory carbon emissions capacity policy, carbon emissions tax policy and cap-and-trade policy respectively. In addition, the government’s decision-making about carbon emissions policy parameters is also discussed. The conclusion builds a microeconomic foundation for the carbon emissions policy’s design and development, and also verified the policy’s effectiveness and scientificity, at last achieved the “win-win” ofthe government and enterprises