Abstract
This paper proposes a novel supply chain joint-financing pattern for SMEs with limited funds and financing difficulties. The proposed pattern was designed for green investment under cap-and-trade systems and to promote low-carbon economies characterized by bilateral capital restricted supply chains. The basic conditions for supply chain coordination of low-carbon buy-back contracts are derived through a basic model with no funding support. The joint-financing decisions model is analyzed according to the decision-making behavior of all parties and coordination among components of the supply chain system. The risk to which the bank is subjected under low-carbon transactions is also discussed. The proposed model not only reduces the carbon emissions of unit products, but also expands the scale of production. There are negative correlations between unit emissions reduction with the sharing coefficient of reduction costs, the loan rate, and the wholesale price. To minimize environmental effects while maximizing societal benefits, the government is recommended to ensure a reasonable trade-off between green-innovation subsidies and penalties.
Highlights
Cap-and-trade regulation is generally accepted as one of the most effective market-based mechanisms to curb corporate carbon emissions [1] and is currently widely implemented across the globe [2, 3]
Under a cap-and-trade system, a government agency allocates a predetermined amount of carbon emissions (i.e., “carbon cap”) to a company; the company is free to buy or sell carbon credit according to its actual amount of carbon emissions on a carbon trading market such as the European Emissions Trading System [4]
The Shenzhen Carbon Emissions Exchange was officially put into use on June 18, 2013, which marked the official start of carbon trading in China
Summary
Cap-and-trade regulation is generally accepted as one of the most effective market-based mechanisms to curb corporate carbon emissions [1] and is currently widely implemented across the globe [2, 3]. SMEs account for over 90% of Chinese enterprise They are inherently capital-limited and may struggle financially to implement carbon-cutting initiatives. There is substantial research significance in designing new financing mechanisms to help Chinese SMEs obtain the start-up capital necessary for emissions reduction while giving consideration to the benefits and risks of the banks supporting them. Industrial Bank launched China’s first low-carbon credit card as a financial channel for carbon management in SMEs, such as energy-saving service providers financing models, energy-saving emissions reduction technology loans, emissions pledge financing projects, and other low-carbon financing models. China Merchants Bank sets up a special low-carbon product research and development (R&D) center which supports green equipment buyer’s credits and other low-carbon and emissions reduction financing products. Providing a new type of financing for SMEs based on carbon assets is an important research subject in the carbon trading field. A combination of penalties and incentives is a suitable choice for the Chinese government to control carbon emissions rather than a simple regimen of harsh punishment under the joint-financing pattern; such a combination will effectively promote emissions reduction in SMEs
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