Choice of technology for emission control in port areas: A supply chain perspective

Abstract

Abstract This study explores choice of technology for sustainable operations in a port supply chain that consists of one port and one shipping company under a cap-and-trade scheme. To control emissions, the port supply chain can implement either shore power (SP) or low sulfur fuel oil (LSFO). The performances of the port supply chain when either SP or LSFO is adopted are compared in this paper. More specifically, according to relative bargaining power between the port and the shipping company, three different game models are constructed to analyze the effects of channel power on equilibrium results when either SP or LSFO is implemented. Results show that both profits and carbon emissions of supply chain using SP are lower than those using LSFO when carbon price is low, but are higher when carbon price is high. However, from the perspective of the social welfare, when both the carbon price and environmental concern are low, or both the carbon price and environmental concern are high, LSFO should be adopted. Otherwise, SP may be more attractive. Compared with the two Stackelberg games, the Nash game leads to higher profits and less emissions. The Nash game also leads to higher social welfare when environmental concern is small, but lower social welfare when environmental concern is large. These findings can provide insights for governments in formulating emission reduction strategies in port supply chain under different scenarios.