Emission Reduction Investment Research Articles

Comparative Study of Different Alternative Fuel Options for Shipowners Based on Carbon Intensity Index Model Under the Background of Green Shipping Development

The International Maritime Organization (IMO)’s annual operational carbon intensity index (CII) rating requires that from 1 January 2023, all applicable ships meet both technical and operational energy efficiency requirements. In this paper, we conduct a comparative study of different alternative fuel options based on a CII model from the perspective of shipowners. The advantages and disadvantages of alternative fuel options, such as liquefied natural gas (LNG), methanol, ammonia, and hydrogen, are presented. A numerical example using data from three China Ocean Shipping (Group) shipping lines is analyzed. It was found that the overall attained CII of different ship types showed a decreasing trend with the increase of the ship’s deadweight tonnage. A larger ship size choice can obtain better carbon emission reduction for the carbon emission reduction investment program using alternative fuels. The recommended options of using LNG fuel and zero-carbon fuel (ammonia and hydrogen) on Route 1 and Route 3 during the study period were analyzed for the shipowners. Carbon reduction scenarios using low-carbon fuels (LNG and methanol) and zero-carbon fuels (ammonia and hydrogen) on Route 2 are in line with IMO requirements for CII.

Optimal financing strategies for low‐carbon supply chains: A Stackelberg game perspective

AbstractThis study constructs a Stackelberg game model between low‐carbon manufacturers and capital‐constrained retailers. Considering the manufacturer's financing model, the manufacturer's investment model, and the internal blended financing model, it studies the optimal wholesale price of manufacturers. This paper investigates the impact of consumers' low‐carbon preference, the financing interest rate of manufacturers, investment ratio, investment return on carbon emission reduction investment, and supply chain pricing. The conditions for low‐carbon supply chain participants to choose the best financing mode and the impact of different financing models on the performance of low‐carbon supply chains were obtained.

Does improved credit access promote pollution reduction? The role of bank proximity

The impact of the spatial proximity between banks and enterprises on industrial pollution reduction remains underexplored, particularly in areas with limited credit access. Previous studies have focused on the influence of environmental regulations and green credit initiatives; however, the significance of the financial sector's spatial distribution remains uninvestigated. Our research develops a model illustrating that improved credit access facilitates greater investment in emission reduction, leading to more effective pollution control as financing becomes more accessible. Using data from China's bank branch expansion, we empirically show that closer proximity between banks and enterprises significantly enhances pollution mitigation efforts. Our findings reveal that a more accessible banking network eases credit constraints and promotes eco-friendly practices without impeding economic growth, particularly by aiding less efficient and more polluting enterprises. This study sheds light on the crucial role of financial accessibility in advancing environmental performance and provides valuable insights for policymakers and financial strategists.

Complexity Analysis of the Interaction between Government Carbon Quota Mechanism and Manufacturers’ Emission Reduction Strategies under Carbon Cap-and-Trade Mechanism

Based on different carbon quota trading mechanisms, the price and emission reduction strategies of oligopoly manufacturers in the low-carbon market and the government carbon quota mechanism are considered. A dynamic game evolution model of the two oligopoly manufacturers with competitive relations is established. The stability of the equilibrium point of the game model, the price adjustment speed of the decision variable, the impact of carbon emission reduction investment, and the government carbon quota on the system are discussed. Through nonlinear dynamics research, it is found that the advantage of the grandfathering method is that it is conducive to maintaining market stability when the government’s carbon quota decision changes; the advantage of the benchmarking method is that when manufacturers formulate price adjustment strategies, the benchmarking method carbon quota mechanism has a stronger stability range for the market, the manufacturer’s profit price adjustment speed is positively correlated, and the government carbon quota decision and emission reduction investment are also positively correlated. Decision makers need to choose appropriate carbon quota mechanisms and manufacturers’ emission reduction strategies according to actual market changes to maintain supply chain stability.

Party Branch Embeddedness and Urban–Rural Environmental Inequality: Self-Regulation or Pollution Shelter?

With the deepening of environmental governance, the overall environmental quality of the region has been improved. However, internal environmental inequality, especially urban–rural environmental inequality, has continued to come to the fore. Nevertheless, there are still few studies on how to mitigate the increasing urban–rural environmental inequality. On the basis of examining the urban–rural environmental inequality in China’s environmental emission reduction investment dimension, this research verified the impact and mechanism of informal regulatory forces (grassroots party organizations) in alleviating urban–rural environmental inequality. In particular, based on an empirical analysis of data from the Chinese Private Enterprise Survey (CPES) 2006–2014, this study found that (1) investment in environmental management of polluting enterprises in rural areas is significantly lower than in urban areas, and the trend of urban–rural environmental inequality is intensifying; (2) urban–rural environmental inequality is more pronounced at the enterprise level in areas with larger enterprises and greater environmental enforcement and that urban-centered environmental regulatory policies continue to exacerbate urban–rural environmental inequality; and (3) the embeddedness of regional party organizations can narrow the gap between urban and rural environmental protection investment by private enterprises and alleviate urban–rural environmental inequality. The specific pathway is to improve rural enterprises’ social responsibility awareness and policy implementation. Based on the above findings, this paper argues that a gradual break with “urban-centered environmentalism” is the fundamental solution to urban–rural environmental inequality. However, in the current context of limited resources for formal environmental regulation, the power of informal environmental regulation can still mitigate these effects.

Bank-tax-interaction, carbon emission reduction investment and financing decisions for SMEs

In this paper, we integrate bank-tax interaction (BTI) into a dynamic model in which the small- and micro-sized enterprises (SMEs) face debt issuance constraints and the challenge of low-carbon transformation. We analyze the interplay between investments in carbon emission reduction and financing decisions. The model generates the following implications: Firstly, BTI effectively removes the debt issuance constraints for the SMEs. Additionally, an increased credit multiple not only accelerates investment in carbon emission reduction but also reduces the bank’s credit line, lowers the optimal coupon, and simultaneously increases the probability of bankruptcy, leading to higher credit spreads for the SMEs.

A study on supply chain information sharing strategy for emission reduction investment in electronic products based on game theory

By analyzing the competition between electronic product manufacturers and retailers in pricing, a dynamic game model is constructed. Using backward induction, the optimal choices and maximum profits under equilibrium conditions are determined. Finally, the constructed model is subjected to data simulation by setting numerical values for relevant parameters to analyze the effects of environmental emission reduction value on the supply chain and the information sharing value of each member. The following conclusions are drawn: when the emission reduction efficiency of manufacturers or the sensitivity of the market to environmental protection is high, the improvement effect of information sharing will outweigh its bilateral marginal effect. Retailers will voluntarily share all demand information and achieve a win-win situation in the supply chain.

Emission reduction investment for green products of a manufacturing system via optimal control theory and artificial hummingbird algorithm

Now, due to the global industrialization, carbon emission from the industrial section imposes a severe impact on the current environment. Due to the increasing awareness of environmental and sustainability issues, green products, also known as eco-friendly, include a considerable impact on the today’s market economy. Keeping mind of these two important issues of the current scenario, a production inventory model is developed in which time-dependent production rate is considered. In this work, the level of greenness of the products, selling price and time, influences the customers’ demand rate. Again, two different cases are considered due to the business assimilation of defectively manufactured items: rework and salvage policies. Additionally, the company uses pollution reduction technologies to lower emissions from the manufacturing firms in order to lower emission taxes. The Euler-Lagrange equation is used to solve an optimal control problem that arises in the model as time-dependent production rate is taken into the account. The optimisation problem corresponding to the proposed model is solved with the help of artificial hummingbird algorithm (AHA) as the system's average profit functions for both of the considered scenarios are highly nonlinear in nature w. r. to its decision variables. Further, the results obtained from AHA are compared with the help of other well-known metaheuristics. Finally, sensitivity analysis is conducted to arrive at meaningful conclusions and implications for the competent manager of the manufacturing firm.

Impacts of dual carbon emission reduction technology and technology spillovers of deterioration reduction on supply chain system's performances considering government incentives and contract design

Investments in carbon emission reduction and deterioration reduction are important aspects for the firms to construct a low-carbon supply chain systems of deteriorating products with the increasing preferences of customers for environmentally friendly and fresh products. In this study we develop a two-echelon supply chain system consists of one manufacturer and one retailer. The manufacturer implements dual carbon emission reduction technology to strengthen the carbon emission reduction efficiency under cap-and-trade regulation and both manufacturer and the retailer invest in deterioration reduction technology to reduce the deterioration and increase the stock level of the fresh items. To increase the demand, the retailer takes the responsibility of promoting the low-carbon and fresh products among the customers. Deterioration reduction technology spills over from the manufacturer to the retailer. Then a differential game model is formulated and the equilibrium strategies are analysed by Stackelberg differential game approach in long term scenario. Numerical analysis has been done to analyse the theoretical results more rigorously by MATLAB software and sensitivity of some major parameters on the demand and profits of the manufacturer and the retailer have also been done to obtain some managerial insights. The impacts of implementing dual carbon emissions reduction technology and the effects technology spillovers are discussed. The results show that when the manufacturer invests in dual carbon emission reduction technology over single reduction technology, it increases the emission reduction level and hence the environmental performance and also the demand and hence economic profits of the both the supply chain members. If the deterioration reduction technology spills over from the manufacturer to retailer, it increases the profit of the manufacturer but the retailer will be beneficial when his/her marginal profit will be high. In addition, we have incorporated government subsidy on manufacturer's emission reduction investment and a cost-sharing contract on the promotional effort of the retailer in our work and then found that joint impacts of them on the supply chain system. We have shown that these two incentives provide the pareto improved solution for the supply chain system and take the supply chain members to a win-win situation as economically and environmentally. The discussions of the results of this study can be beneficial for the industries which produced deteriorating products and emits high carbon during the production process in terms of taking optimal decisions. It also gives a lesson to the government how to inspired the practitioners towards developing a sustainable system.

Effects of manufacturer fairness concerns and carbon emission reduction investment on pricing decisions under countervailing power

Government policies have focused on carbon emissions from the green supply chain (GSC). To discuss how price decision-making in GSC is affected by the manufacturer's fairness concerns, retailer's countervailing power, and carbon emissions reduction, the Stackelberg model assumes that consumers are environmentally sensitive. To explore this problem considering the type of manufacturer's behavior preferences, we built four models that pertain to the following two situations: the retailer has countervailing power, and the retailer has no countervailing power. The results show that (1) the manufacturer's disadvantageous fairness concerns reduce the overall supply chain profits and utility; influenced by countervailing power, the members witness a win-win situation; (2) moderate advantageous fairness concerns benefit GSC members; furthermore, under advantageous fairness concerns, the manufacturer can “give profits” to the retailer; (3) affected by the retailer's countervailing power, no bargaining agreement is made in the GSC under advantageous fairness concerns. Finally, the interplay between member decisions and consumer sensitivity is explored. This study can help manufacturers achieve emission reduction targets in response to consumer environmental awareness and government regulation.

The complexity analysis of decision-making for horizontal fresh supply chains under a trade-off between fresh-keeping and carbon emission reduction

This study primarily focuses on the impact of carbon emissions generated during the fresh product fresh-keeping process on the traditional fresh supply chain (FSC1) and the low-carbon fresh supply chain with emission reduction behavior (FSC2). Its objective is to investigate how these supply chains dynamically adjust the production quantity, fresh-keeping level, and emission reduction level of fresh products when constrained by the dual-carbon policy. The decision competition model between the two supply chains was explored under two scenarios: the horizontal Nash (HN) game and the long-term Stackelberg (LS) game, wherein FSC1 assumes the role of the leader. The findings indicate that as the carbon tax and carbon trading price increase, the fresh supply chain tends to decrease fresh-keeping intensity while increasing investment in emission reduction. Carbon emissions generated during the fresh product fresh-keeping process have a smaller impact on FSC2's profit than on FSC1, and FSC2 exhibits stronger adaptability under the dual-carbon policy. Irrespective of the game structure, if the adjustment speed of FSC1's production decision exceeds the stable range, its own profit will decrease while the other party's profit will increase. However, if the adjustment speed of FSC2's production decision surpasses the stable range, it will lead to a decrease in profits for both sides. Interestingly, in the LS game, when the adjustment speed of FSC1's production decision exceeds the stable range, FSC1 demonstrates a leader advantage and experiences a rapid increase in profit as the adjustment speed of FSC2's production decision increases, this phenomenon suggests that in the LS game, the leader prevails amidst market chaos.

Production and carbon emission reduction decisions of remanufacturing firms with low‐carbon credit financing under uncertain demand

AbstractThis paper investigates the optimal production and carbon reduction strategy for a capital‐constrained remanufacturing firm considering demand uncertainty. The remanufacturing firm can accept low‐carbon credit financing. We construct optimization models with no financing and low‐carbon credit financing and analyze the impacts of capital, carbon emission caps, and other factors on the remanufacturer's decision and profit. The results show that (i) the output of remanufactured products and overall profit are higher when using low‐carbon credit financing, regardless of strict carbon emission conditions; (ii) low‐carbon credit can help remanufacturers withstand the impact of carbon price fluctuations; (iii) the demand uncertainty of new and remanufactured products has opposite effects on carbon emission reduction investment; (iv) increasing the carbon cap can enhance the remanufacturing level while a high carbon cap reduce incentives to remanufacture.

Impact of Green Credit Incentives on Operational Decisions of Green Supply Chain

Financial incentives have been introduced to guide financial institutions to increase green credit allocation, strengthen environmental risk management, and enhance support for green and low-carbon development. This paper investigated the government’s support for the carbon-emission supply chain by implementing green credit incentives. Two financial incentives are explored: performance-based incentives and interest subsidies. We conduct game-theoretic models to examine the characteristics and effects of two financial incentives on the supply chain. Our results reveal that: (1) both incentives are effective in scaling up supply chain performance and stimulate investment in emission reduction, while the mechanism differs according to the direct beneficiaries; (2) performance-based incentives are more sensitive to environmental damage, while the optimal subsidy ratio is more sensitive to consumer green awareness, indicating that the bank has an instinctive aversion to the risks inherent in abatement investments; (3) it is optimal for the government to intervene in green credit financing activities when environmental advantages and costs and consumer green consciousness are recognized. Our conclusions suggest the government can determine financial incentives for green credit based on the stage of green transition development and the real, demanding requirements of transition goals.

Complex dynamics of dual oligopoly demand uncertainty under carbon emission trading mechanism

The international community's growing focus on energy conservation and emission reduction has led businesses to prioritize low-carbon operations and the marketing of environmentally friendly products during their production processes. On the one hand, with the reform of carbon emissions trading, carbon emission trading has become a potential profit point for enterprises. On the contrary, the consumer market is influenced by the uncertain external environment. And consumers' environmental awareness increases the uncertainty of product demand. Therefore, the intricate dynamics of dual oligopoly demand uncertainty within the framework of a carbon emission trading mechanism are explored in this scholarly analysis. The best market Porter's generic strategies, including emission reduction investment and product pricing how can carbon quotas, uncertainty in market demand, and consumer environmental preferences improve expected profits? The results show that technology emission reduction costs, carbon emission trading prices and consumer preferences for low-carbon products. It is an important factor that affects the competitive strategy of the two enterprises. The different values of the above factors will change the relative intensity of emission reduction investment and the relative profitability of the two. Complete company statement in a balanced state. This article also investigates the complexity of adjusting the dynamic evolution path of competitive strategies between two organizations. Feedback controllers can effectively suppress unstable equilibrium states and provide effective references for their stable operation.

Joint decisions on selling mode choice and emission reduction investment under cap-and-trade regulation

Consumers' growing awareness of environmental protection and carbon regulations enacted by the government based on strengthened environmental pressure are forcing manufacturers to curb carbon emissions. This paper considers a manufacturer investing in green technology to reduce carbon emissions under the cap-and-trade regulation, selling products to consumers through a direct channel and an online retail platform. The platform could choose to operate either in an agency mode or a reselling mode. A three-stage game is constructed to examine the interactions between the manufacturer's investment and the platform's operation mode under the cap-and-trade regulation, as well as the influences of the regulation on the interactions, and the supply chain coordination. The findings suggest that green technology investment in either operation mode leads to Pareto improvement in profits of both the platform and the manufacturer, and the investment induces the platform to prefer the reselling mode. Besides, the cap-and-trade regulation encourages the platform to opt for the agency mode, while the investment could mitigate the influence of the regulation on the platform's mode choice, with greater investment efficiency resulting in better mitigation. Furthermore, the investment could induce supply chain coordination under two modes through two different contracts.

How to Induce Multinational Firms’ Local Sourcing to Break Carbon Lock-in?

Carbon lock-in poses a significant challenge in developing countries such as India and China. To mitigate this issue, these countries can leverage mandatory carbon emission reduction mandates imposed by multinational firms (MNFs) on their domestic manufacturers, thereby spurring the latter's investment in carbon emission reduction. However, facing eco-conscious customers, MNFs might opt to source from carbon-neutral overseas manufacturers even at high import tariff costs. We therefore explore how a local government can adjust the tariff rate and/or the domestic manufacturer's carbon emission reduction efficiency to induce an MNF local sourcing. Our findings indicate that even if the MNF has sourced locally, the overall emissions can be effectively reduced only when the domestic manufacturer's efficiency in reducing carbon emissions surpasses a unique threshold. Regarding social welfare, our results demonstrate a hump-shaped relationship with import tariff rates when an overseas sourcing strategy is adopted. We identify a triple-win situation where the MNF's local sourcing harmonizes the MNF's profit-maximization goal, the local government's environment protection goal, and the social welfare maximization goal. This paper sheds light on the value of MNFs’ sustainability requirements and local sourcing strategy in curbing emissions and tackling the pervasive issue of carbon lock-in that plagues many developing countries.

Empirical analysis of the relationship between carbon trading price and stock price of high carbon emitting firms based on VAR model - evidence from Chinese listed companies.

At the United Nations General Assembly, the Chinese government promised to reach the peak of carbon dioxide emissions by 2030 and achieve a relative balance between carbon dioxide production and offsetting by 2060. The research aims to explore the relationship between carbon trading prices and stock prices in various high emission industries in China and analyze the attitudes and behaviors of enterprises towards carbon trading. From a market perspective, this topic has important theoretical significance and practical value for promoting energy transformation, encouraging enterprises to reduce emissions, and controlling greenhouse gas emissions. In addition, understanding the behavior and attitude of enterprises in the carbon market is also of great significance for formulating policies and measures to develop the carbon trading market. The study used the VAR model to empirically analyze the relationship between carbon trading prices and stock prices. Granger causality test, impulse response analysis, and variance decomposition analysis are used for analysis. The research results indicate that the contribution rate of carbon trading prices in the first phase is 100%, which gradually decreases to the lowest value of 98.27% in the eighth phase. The stock price contribution rates of the water, electricity, and gas supply industries reach a peak of 0.74% in the second period and gradually decrease to 5.2% in the eighth period. The contribution rate of stock prices in other industries has gradually increased. At present, the carbon trading market in China is still in the development stage, and it is necessary for the government to adopt various policies to regulate it, including encouraging enterprises in high emission industries to increase investment in emission reduction, strengthening the supervision of the carbon trading market, providing technical support and green innovation incentives, strengthening enterprise emission reduction awareness and information disclosure.

Sustainability enablers with price-based preservation technology and carbon reduction investment in an inventory system to regulate emissions

PurposeWith the pressing need for environmental conservation, regulatory authorities are actively looking for measures to prevent global warming. In the proposed inventory model for deteriorating items, demand is dependent on the selling price and green technology investment (or carbon reduction investment) for the green product (GP), as well as an investment in price-based preservation technology to slow down the pace of deterioration. Furthermore, emission reduction measures are put in place to reduce carbon emissions (CEs).Design/methodology/approachThe current study executed a thorough literature review to determine how to improve supply chain management performance. Furthermore, assumptions are made to fill research gaps, and a mathematical model is created to address the problem mentioned above. To collect the data, the available inventory literature was reviewed. Additionally, numerical illustrations and sensitivity analyses are presented to emphasize the model's robustness.FindingsThe research indicates that it is more prudent to invest in preservation technology based on its selling price in order to control the rate of deterioration. In addition, the proposed model facilitates the management of deteriorated waste through salvage trading and emission reduction investment. The findings validate sustainable practices with a 20.86% increase in profit and a 21.4% decrease in CEs, thereby signifying environmental and economic benefits.Originality/valueThe proposed model enhances understanding of the impact of investments in price-based preservation technology and carbon reduction efforts on consumer perceptions of their intention to purchase GPs. Moreover, the study provides valuable insights by identifying important recommendations for policymakers regarding areas that require further investigation. This guideline can help identify both current and unexplored gaps, enabling researchers to direct future research efforts toward producing new products.

Optimization model for low-carbon supply chain considering multi-level backup strategy under hybrid uncertainty

When constructing a supply chain, the profit, environmental impact, and hybrid uncertainties the supply chain faces should be considered. This research investigates the problem of low-carbon supply chain design under hybrid uncertainty, where demand is regarded as a stochastic variable, supply and transportation disruptions are regarded as uncertain events, and the coefficient of emission reduction capacity of suppliers is regarded as an uncertain variable. Based on the probability theory and uncertainty theory, a mixed-integer optimization model is constructed to handle the disruption risk by utilizing a multi-level backup strategy and to reduce carbon emissions by investing in suppliers. This model guarantees that manufacturers’ demand is satisfied to a given confidence level, manufacturers prefer to construct a supply chain within the acceptable supply chain risk, the emission reduction investment scheme and the supply decision to manufacturers are determined to maximize the profit of the supply chain. To facilitate the solution, we perform deterministic equivalent transformation of stochastic and uncertainty constraints, linearize the nonlinear constraints, and analyze the mathematical properties of the model. Finally, the validity of the proposed model is verified by case studies. The results show that although the larger the supply levels, that is, the more priority levels of suppliers, the more beneficial it is to improve the reliability, too large supply levels will reduce profits. The reasonable setting of the supply levels can optimize the emission reduction investment scheme. In addition, the confidence level of carbon emission should be set within a certain range to avoid the disparity between profit growth and emission reduction. Finally, the greater the belief degree of disruption or the lower the emission reduction capacity of suppliers, the more significant the effect of a multi-level backup strategy.

Using a price floor on carbon allowances to achieve emission reductions under uncertainty

We build a real options investment model for carbon-allowance trading markets with a price-floor mechanism. A power plant faces a choice between undertaking an irreversible investment in carbon emission reduction or holding the option to invest later. The government encourages firms to invest immediately by guaranteeing a minimum value of the allowances. We use the Least Squares Monte Carlo method to find the value of the option and derive the firm’s threshold condition of whether to invest or to wait. The model allows us to compare the government’s costs of alternative policies for encouraging the investment. Using the newly established Chinese carbon emission trading scheme as an example to calibrate the model, simulations show that the expected cost to the government of the price-floor policy is lower compared with using a lump-sum subsidy or a preferential tax-rate policy designed to achieve the same level of reduction in emissions.