EURO 2024 Copenhagen
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1806. Green supply network design with carbon tariffs and location-specific carbon policies

Invited abstract in session MA-24: Sustainable Supply Chain Design, stream Sustainable Supply Chains.

Monday, 8:30-10:00
Room: 83 (building: 116)

Authors (first author is the speaker)

1. Jens Christian
Chair of Production Management, RPTU Kaiserslautern-Landau
2. Florian Sahling
Chair of Production Management, University of Kaiserslautern

Abstract

Carbon policies are often limited to specific regions. Therefore, carbon leakage leads to the relocation of production to regions without carbon policies. To prevent carbon leakage, the European Commission recently adopted the Carbon Border Adjustment Mechanism. It imposes carbon tariffs on carbon emissions imported into regulated regions.
We present a new mixed-integer model formulation for global and multi-period supply network design subject to carbon tariffs and location-specific carbon policies (SND-CT-CP). Consequently, locations differ in whether and how carbon policies are active at the respective location. Here, we include carbon tax, carbon cap-and-trade and carbon caps as location-specific carbon policies. In contrast, carbon tariffs are imposed on emissions imported from unregulated locations.
As we propose a strategic planning problem with a long-term planning horizon, we include uncertainties in the SND-CT-CP. These uncertainties focus on stochastic carbon caps, which have a particular influence on the supply network design.
Within the presented SND-CT-CP, we consider a four-layer supply network. Accordingly, the locations of manufacturing plants and distribution centers are planned. Suppliers are selected based on resilience considerations. In addition, the demand includes price-dependent levels. Thus, the objective of the SND-CT-CP is to generate a supply network configuration that maximizes the expected net present value.

Keywords

Status: accepted

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