Work

Carbon reduction decision-making in the supply chain considering carbon allowances and bidirectional option trading mode of carbon emission rights

Year: 2025

Type: article

Abstract: This paper delves into the decision-making problem of carbon emission reduction based on the bidirectional option trading mode of carbon emission rights against the backdrop of carbon quota. Firstly, it clarifies the carbon emission reduction model based on the bidirectional option trading mode of carbon emission rights and defines the application of the reverse solution method in the supply chain . This paper explores the interrelationships between the decision-making parameters of the bidirectional option exercise price of carbon emission rights, the number of carbon allowances, and the carbon emission level by establishing the optimal decision-making models of the subjects in the decentralized and centralized supply chains. From simulation analysis, the optimal decision-making changes of each subject are comparatively investigated with and without adopting the bidirectional option trading mode of carbon emission rights. Moreover, it analyzes the effects of consumer's low-carbon preference, revenue-sharing coefficient and cost-sharing coefficient on carbon emission reduction in the supply chain. The results illustrate that the level of carbon emission reduction in the supply chain positively correlates with consumer's low-carbon preferences and revenue-sharing coefficients. It negatively correlates with the exercise price of the bidirectional option of carbon emission rights and carbon quotas' price. The carbon emission reduction level under a centralized supply chain is higher than that under a decentralized supply chain. The manufacturer guarantees a certain level of investment in carbon emission reduction technology, a centralized supply chain with the bidirectional option trading mode of carbon emission rights is more effective in promoting the enhancement of carbon emission reduction levels.

Source: Energy Reports

DOI: 10.1016/j.egyr.2025.01.077

Authors: Liang Wang, Xinxin Su

Institution: Xi'an University of Technology

Language: English

Topic: Sustainable Supply Chain Management

Subfield: Strategy and Management

Field: Business, Management and Accounting

Domain: Social Sciences

SDGs: Climate action, Responsible consumption and production

Open Access status: gold

Estimated APC paid: $3,040