Abstract
To promote low-carbon production, the government simultaneously provides some subsidies under carbon tax regulations. Two government subsidies are widely adopted: one is based on emissions reduction quantity and the other is based on emissions reduction investment cost. Additionally, consumer low-carbon awareness has also been enhanced. Considering the aforementioned circumstances, this paper investigates the effects of different government subsidies on production and emissions reduction decisions under a carbon tax regulation by formulating three decision-making optimization models. The results show that (1) although the carbon tax regulation cannot guarantee further improvement of emissions reduction levels, government subsidies could make the corresponding conditions of improving emissions reduction investments wider; (2) a heavy carbon tax or stronger consumer low-carbon awareness would make the positive effect of government subsidies more apparent; and (3) subsidy policies may also be selected by the government from different perspectives, such as manufacturer development, consumer surplus, environmental damage and social welfare. Especially, from the perspective of maximizing social welfare, investment cost (IC) subsidy is not always advantageous, while emissions reduction (ER) subsidy can always bring higher social welfare compared with the case under no government subsidy.
Highlights
Climate change has become a focus issue and has attracted extensive attention from the international community
To address the above issues in this paper, with consideration of carbon tax regulation and consumer low-carbon awareness, integrated optimization models of production and emissions reduction decisions are formulated under two government subsidy policies (e.g., ER subsidy and investment cost (IC) subsidy)
(2) IC subsidy based on emissions reduction investment cost: the government subsidizes manufacturers according to one-time emissions reduction investments, similar assumption can be found in Wang et al [41], Guo et al [42] and Wen et al [43]
Summary
Climate change has become a focus issue and has attracted extensive attention from the international community. According to manufacturers’ decision feedback, the government determines which subsidy policy should be implemented to better promote emissions reduction under a carbon tax regulation. In such a context, this study seeks to address the following questions:. To address the above issues in this paper, with consideration of carbon tax regulation and consumer low-carbon awareness, integrated optimization models of production and emissions reduction decisions are formulated under two government subsidy policies (e.g., ER subsidy and IC subsidy). Some theoretical analysis and numerical analysis has been conducted to analyze and illustrate effects of carbon tax regulation, consumer low-carbon awareness, emissions reduction cost coefficient and government subsidies on the manufacturer’s operational decisions.
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