Green Procurement Decisions with Carbon Leakage by Global Suppliers and Order Quantities under Different Carbon Tax

Abstract

Manufactures have been pressed to reduce greenhouse gas (GHG) emissions by environmental regulations and policies. Towards to reduction of GHG emissions, a carbon tax has been already introduced in 40 countries. Owing to different carbon prices among countries, there are potential risks of carbon leakage, where manufacturers transfer production operations to the countries with lower taxes to pursue lower costs. Moreover, procurement costs and GHG emissions vary by country because of economic conditions and electric energy mixes. Therefore, total GHG emissions could be globally reduced if manufactures relocate their production bases or switch suppliers in the country with lower GHG emission levels. This study proposes a green procurement decision for the supplier selection and the order quantity for minimizing GHG emission and costs considering the different carbon taxes in different countries. First, a bill of materials for each part is constructed through the life cycle inventory database with the Asian international input/output tables for a case study. Second, a green procurement decision considering the different carbon prices is formulated using integer programming. Finally, the results, including carbon leakage, are analyzed from the viewpoint of manufacturers, governments, and global perspectives.

Decision support model for economical material carbon recovery and reduction by connecting supplier and disassembly part selections

“…Thus, the CO2 emissions on the material production and transportation are considered using an international LCI database (Horiguchi et al, 2012) though parts transportation were not treated because of the limitation of the database. In step 2, a multi-criteria of optimal order quantity and the supplier selection for each part are carried out to minimize both CO2 emissions at procurement stage and procurement costs based on Kondo et al (2019). After that, the disassembly part selection in stage 2 is conducted in three steps based on Igarashi et al (2014).…”

“…Stage 1: Asian supplier selection for parts procurement In stage 1, Asian supplier selection is formulated with ε constraint method. The problem has the bi-objectives to minimize CO2 emissions and procurement cost based on the method by Kondo et al (2019).…”

“…Therefore, it is also important to illustrate the effect by recycling the small home appliance such a vacuum cleaner. Table 3 shows the BOM of the vacuum cleaner (Kondo et al, 2019) (Igarashi et al, 2014) including part names, material types, weights, procurement costs, CO2 emissions, and recycling costs for each part. These parameters are estimated by using the 3D-CAD model, LCI database with Asian international I/O tables (Horiguchi et al, 2012) and REM (Hiroshige et al, 2002) (Hitachi Ltd.).…”

“…However, the total cost of case 8) was only 1,891 [US$], and it shows the total cost at case 8) was 5% lower than the cost at case 13). Therefore, it was observed that there was a case where the same CO2 emissions amount with a lower cost was achieved by connecting supplier and disassembly part selection compared to only selecting suppliers (Kondo et al, 2019).…”

Research on Intelligent Decision of Low Carbon Supply Chain Based on Carbon Tax Constraints in Human-Driven Edge Computing

“…From the perspective of economic and environmental benefits, it was found that, with the promotion of carbon tax and carbon trading systems, a higher input-output ratio can be achieved by investing in biogas projects [17]. What's easier to overlook is that Kondo R et al considered the carbon leakage caused by the different carbon prices of different countries [18].…”