Comparison of production decision-making models under carbon tax and carbon rights trading

Abstract

Tesla, the leader in the electric vehicle industry, as of fiscal 2021, the company's intangible revenue (carbon rights trading) was $1.46 billion, of which tires are an important part of electric vehicles. Reducing carbon emissions in the production process is a direct way to protect the environment. The tire industry is under increasing pressure to reduce carbon emissions and formulate sustainable development plans. It is even more necessary to trade carbon rights to offset emissions that cannot be eliminated in operations. This study considers carbon emission mechanisms and carbon offsets and uses green mathematical programming models combined with activity-based cost and constraint theory to develop three scenarios. The tire company recycles the defective tires in the production process, in addition to adding additional income, and can reduce the cost and expense of the process. The results of the study show that the recycling of defective tires by tire companies in the production process can reduce the cost and expense of the process in addition to adding additional revenue, carbon credits can be used as a deduction for production emission control, and have a significant impact on the company's sustainable competitiveness. In addition, this study also conducted a sensitivity analysis of environmentally sustainable carbon emission reduction targets, which can provide a reference for the company's internal carbon management decision-making.