Abstract
Emissions trading schemes have been widely implemented by many countries to enforce the “cap and trade” concept for mitigating CO2 emissions. Thus, the carbon price influences the manufacturing costs in all stages of production, recycling, and disposal. Consideration of the carbon price is especially important for the economic efficiency of the downstream manufacturing sectors, such as in plastic product manufacturing, to substantially reduce their costs through the design and management of networked supply chains, which results in purchasing feedstocks from different technological routes, as well as choosing plants, warehouses and various transportation modes with diverse CO2 emission intensities. Supporting the decision-making in such situations requires the integration of life cycle analysis and networked supply chain management methodologies with an analysis of the carbon-market uncertainties. Such approaches have not been sufficiently quantified in the existing literature. This study presents a stochastic mixed-integer linear programming model developed for polyvinyl chloride pipe manufacturing in China, which is used to evaluate the effects of the life cycle emissions of procurement on the whole supply chain under carbon market uncertainty. Our results illustrate that the carbon market uncertainty would not only significantly influence the carbon-intensive production sectors but also the downstream manufacturing sectors. The five scenarios with carbon price variation exhibit distinctively different choices in procurement and supply chain configurations, as well as in their performances regarding total emissions and associated costs.
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Notes
For certain goods, the costs of the CO2 emissions in the production process are already incorporated in the market price. However, to better illustrate the effects from carbon market uncertainty, we separate this part out of the goods price. Hence, the parameter of the raw material price, prs, is essentially the net price or the carbon-free price without the CO2 emissions costs. Moreover, the costs calculated for life-cycle emissions ensure that the impacts from all the upstream sectors beyond the boundary of the proposed supply chain have been accounted for.
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Acknowledgements
This research was funded by the National Natural Science Foundation of China (71961137012, 71571069, 71704055, 71471063, 71874055), the Humanities and Social Sciences Youth Foundation of Ministry of Education of China (15YJC790136), and the National Science Centre, Poland (2018/30/Q/HS4/00764).
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Ren, H., Zhou, W., Makowski, M. et al. Incorporation of life cycle emissions and carbon price uncertainty into the supply chain network management of PVC production. Ann Oper Res 300, 601–620 (2021). https://doi.org/10.1007/s10479-019-03365-1
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DOI: https://doi.org/10.1007/s10479-019-03365-1