Sustainable Decision Model for Circular Economy towards Net Zero Emissions under Industry 4.0

Abstract

The world produces more than 20 billion pairs of shoes every year, and the greenhouse gas emissions of the shoe industry account for 1.4% of the world. This research, taking the knitted footwear industry as an example, combines the concepts of mathematical programming and carbon emissions to discuss the impact of a circular economy sustainable decision-making model (including four carbon tax functions) to achieve net zero emissions under Industry 4.0 on company profits and product structure. The findings suggest that using activity-based costing to measure the attribution of various costs during process improvement allows companies to more accurately capture the carbon cost of producing each pair of shoes. In addition, under the trend of global efforts to reduce carbon emissions, if the price of carbon taxes or carbon rights is not enough to affect companies’ profits, companies will not pay attention to the impact of carbon emissions. To ensure a sustainable production model, the shoe industry should work with brand customers to reduce the effects of products on the environment, coordinate with brand customers’ sustainable development milestones, and formulate a carbon reduction path to achieve zero carbon emission growth goals. Future research can apply these research models, incorporating the carbon tax and carbon rights proposed by this paper to the other industries. In addition, the research also can be extended to explore the consumer behavior for the newly developed knitted footwear.

Production Decision Model for the Cement Industry in Pursuit of Carbon Neutrality: Analysis of the Impact of Carbon Tax and Carbon Credit Costs

“…A Carbon Tax transfers the external cost of carbon emissions to the emitters, effectively reducing emissions and helping achieve national carbon reduction goals [18,19]. Carbon trading, based on the Coase theorem, posits that with clearly defined property rights and minimal transaction costs, the market will allocate resources efficiently regardless of initial distribution [20].…”

“…By limiting national carbon emissions and assigning quotas to enterprises and organizations, those achieving carbon reduction can sell excess credits to others needing more. Over time, companies consistently buying credits will increase carbon reduction efforts due to high production costs, thereby decreasing their need and cost for additional credits, leading to overall emission reductions and achieving carbon reduction targets [18,20,21]. While the majority of existing literature focuses exclusively on the impact of carbon taxes, few studies have examined and compared the differential influences of various carbon tax systems along with carbon trading schemes in a holistic model tailored to specific industries.…”

“…Activity-Based Costing (ABC) involves breaking down each product or service into its fundamental activities and then using cost tracing and allocation methods to calculate accurate costs [18,19]. This approach attributes operational costs to cost objects to provide reliable cost distribution information [18,19,25,26].…”

“…Activity-Based Costing (ABC) involves breaking down each product or service into its fundamental activities and then using cost tracing and allocation methods to calculate accurate costs [18,19]. This approach attributes operational costs to cost objects to provide reliable cost distribution information [18,19,25,26]. Many industries now consider not only direct and indirect operational costs but also external costs, including those related to suppliers, environmental protection [27], carbon emissions, and internal carbon pricing [28], to make more precise production decisions.…”

“…The variables ω 1t , ω 2t and ω 3t are dummies (0 or 1), with only one being 1 in any given period (t = 1 to 3). If ω 1t is set to 1, the other two are zero, and in (20) and (21), υ 2t and υ 3t would be zero, while in (18) and (19), υ 0t and υ 1t are less than or equal to 1. In (22), the sum of υ 0t and υ 1t equals 1.…”