This paper studies carbon tax effectiveness in inducing a transition to cleaner production when a firm faces different technologies and demands over a planning horizon. To determine carbon tax effectiveness, we propose a model based on strategic capacity production planning under carbon taxes that considers proper performance measures. The model, which is formulated as a mixed integer linear problem (MILP), considers issues that previous works have not studied jointly, and that are relevant in a technological transition, such as machine replacement, workforce planning, and maintenance. The effectiveness measures consider levels of clean production and periods to reach a technological transition. Our computational experiments, based on a real case, have shown that in the absence of carbon taxes, a firm has no incentive to transition to clean technology. Still, the effectiveness of carbon taxes depends on the characteristics of the technology available for the production process and the magnitude of the demand. We include managerial insights aimed at both companies and the environmental authority.

This paper studies carbon taxes effectiveness to induce a transition to cleaner production when a firm faces different technologies and demands. To determine carbon taxes effectiveness, we propose a framework based on a strategic capacity planning under carbon taxes model, that consider proper perfomance measures.The model, which is formulated as a mixed integer linear problem (MILP), considers issues that previous work have not studied jointly, such as machine replacement, workforce planning, and maintenance. The effectiveness measures consider levels of clean production and periods to reach a technological transition.Our computational experiments, based on a real case, have shown that carbon taxes by themselves do not necessarily induce a transition to clean production, since their effectiveness depends on the available technology relationship and the demand magnitude.