Recycling mode selection and carbon emission reduction decisions for a multi-channel closed-loop supply chain of electric vehicle power battery under cap-and-trade policy

Abstract

In recent years, the rapid growth of electric vehicle (EV) ownership in China has led to the large-scale retirement of power batteries. Establishing an effective recycling system for spent power batteries is a critical task. Therefore, we investigate the recycling mode selection and the carbon abatement decision in a closed-loop supply chain (CLSC) of EV power batteries under the carbon cap-and-trade policy. We propose four mixed-channel recycling modes in which two or three parties from a retailer, a third-party recycler and an echelon utilization enterprise participate in the recycling business. In the reverse chain, the collected spent power batteries are classified, wherein the echelon-utilizable batteries are processed into echelon utilization products for sale by the echelon utilization enterprise, while both the non-echelon-utilizable batteries and the post-echelon-utilized batteries are transferred to the manufacturer for extracting raw materials to produce new power batteries. We obtain equilibrium results by solving Stackelberg game models. The results reveal that when the competition intensity among recycling channels is below a certain threshold and the recycling price sensitivity is above a certain threshold, the optimal mode is the simultaneous participation of the retailer, the third-party recycler, and the echelon utilization enterprise. Otherwise, the optimal mode is the echelon utilization enterprise recycling with the retailer or third-party recycler. Higher recycling channel competition and lower recycling price sensitivity reduce the total recycling quantity. Higher carbon trading price, a lower investment cost coefficient for carbon abatement and increased consumers' low-carbon awareness will encourage the manufacturer to implement carbon reduction activities, thus reducing total carbon emissions. In addition, the engagement of the echelon utilization enterprise in the recycling business has a positive effect on relieving the recycling pressure and improving the manufacturer's profit.