Allocating the cost of the carbon footprint produced along a supply chain, among the stakeholders involved (original) (raw)

Greenhouse Gases emissions are widely considered nowadays, one of the main causes for global climate change. Every product's supply chain consists of several energy usage processes. Three new approaches of the CFproduced cost allocation (end-user pays; production based; profit based), among producers and users are presented. These approaches vary according to the "blame" put to each stakeholder involved, during the several phases of the "product's" life cycle. According to the first approach, CO 2 emissions occur as the need for the product/service exists. The second approach allocates the CF production-related cost in each step of the supply chain according to not only how much of this CF is produced in each step, but considering also the CF produced in the previous steps. The allocation follows the profit rate (profit/selling price) of each step of the supply chain. At the third approach, the profit rate used has to do with the profit of each step compared to the total profit of the entire supply chain. The only way towards a socially just "product's" pricing is that: "every stakeholder involved should pay a fair price, in order to fully recover the costs related to all phases of the supply chain". Key words: carbon footprint, full water cost recovery, water supply chain EU has adopted specific targets regarding greenhouse gas emissions, due to the growing concern on global climate change and impacts related to carbon emissions. These targets include 20% reduction of greenhouse gas (GHG) emissions comparing to 1990 levels and 20% reduction of energy consumption, until 2020 (EU 2010). Many organizations have already adopted the "Carbon Footprint-CF" concept in order to estimate their own contribution to global climate change environmental impacts.