The impact of carbon pricing on a closed-loop supply chain: an Australian case study

Abstract

Concerns about industrial and supply chain implications on our natural environment have existed for decades. Climate change and greenhouse gas emissions have caused countries to implement various instruments ranging from taxes, permits and voluntary incentives to required regulatory policies. Given this environment, we develop a unified optimization model for a closed-loop supply chain in which the carbon emission is expressed in terms of dollar carbon cost. This study is one of the first to evaluate the forward and reverse supply chain influences on the carbon footprint. A comparative analysis is completed with a decomposition of cost and environmental influences across supply chain functions. We utilize data from a company located in Australia, where the government is currently introducing a carbon pricing scheme. We find that variations in cost and environmental impacts occur over ranges of carbon pricing. Characteristics and patterns of the numerical results over these ranges provide insights for corporate key strategies and potential additional government policies. These results and implications are analyzed along with limitations and directions for future research.