Allocation of Greenhouse Gas Emissions in Supply Chains (original) (raw)
Related papers
Incentives and Emission Responsibility Allocation in Supply Chains
Management Science, 2021
Because greenhouse-gas (GHG) emissions from the supply chains of just the 2,500 largest global corporations account for more than 20% of global emissions, rationalizing emissions in supply chains could make an important contribution toward meeting the global CO2 emission-reduction targets agreed upon in the 2015 Paris Climate Agreement. Accordingly, in this paper, we consider supply chains with joint production of GHG emissions, operating under either a carbon-tax regime, wherein a regulator levies a penalty on the emissions generated by the firms in the supply chain, or an internal carbon-pricing scheme. Supply chain leaders, such as Walmart, are assumed to be environmentally motivated to induce their suppliers to abate their emissions. We adopt a cooperative game-theory methodology to derive a footprint-balanced scheme for reapportioning the total carbon emissions amongst the firms in the supply chain. This emission responsibility-allocation scheme, which is the Shapley value of a...
Annals of Operations Research
This paper provides a normative framework based on cooperative game theory aimed at studying the problem of pollution responsibility allocation across multi-tier supply chains. The model is further developed with reference to the case of a linear supply chain, by using three responsibility principles (namely: Upstream, Downstream and Local Responsibility). Allocation rules are derived; also, desirable properties in terms of fairness, efficiency and transparency are introduced, in order to characterize such rules. Furthermore, a stability concept for efficient allocations is formulated. An example of a possible application of the introduced cost allocation rules is provided.
Journal of Water and Climate Change, 2014
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.
From "Cooperator's Loss" to Cooperative Gain: Negotiating Greenhouse Gas Abatement
[as amended, Oct. 2017] Greenhouse gas abatement has proved to be among the most difficult environmental issues on which to negotiate global agreement... This [1993 Yale Law Journal] Note proposes that the international [agreements have to date] failed . . . because some nations have more to lose than to gain from an international abatement regime, though the benefit to the world from their participation in such a regime may exceed the costs. . . . [F]rom this premise, the Note advocates an efficiency-maximizing international tradeable emissions permit (ITEP) system that would distribute the costs and benefits of GHG abatement in order to motivate every nation to participate in an abatement agreement. Part I surveys the scientific and economic analyses of global warming's impact on the international community in order to establish that GHG abatement action is warranted. Economists and lawmakers disagree among themselves because of uncertain scientific data and differing assumptions built into the economic models. However, GHG emissions require an international policy response both because global warming could cause irreversible and catastrophic harm to humans and other species and because an international agreement could lower total abatement costs by increasing the marginal efficiency of abatement investment. Part II uses game theory to argue that GHG emissions reduction presents a unique problem for international negotiation. Certain nations, [hypothetically] including the U.S. and less developed countries (LDC's), may suffer a loss from cooperating in a GHG abatement regime, although the benefits to the world of their cooperation may exceed their costs. This problem is neither a Prisoner's Dilemma (in which the benefits of total cooperation outweigh the benefits of total noncooperation for each player) nor a Deadlock (in which the benefits of total noncooperation outweigh the benefits of total cooperation for each player), but what this Note dubs a "Cooperator's Loss" (in which the total benefits of cooperation outweigh the total benefits of noncooperation, but for one of the two players, total noncooperation nevertheless remains a more attractive alternative than total cooperation). Part Ill proposes that an international tradeable emissions permit (ITEP) system could allow transfers that would resolve the Cooperator's Loss, benefiting both developing and developed nations and maximizing the efficiency of international GHG emissions reduction. Industries in developed nations such as the U.S. could then purchase or lease permits at competitive international market rates or receive permits in exchange for relatively low-cost technology transfer. Developing nations would benefit from an infusion of technology and revenue from the sale, lease, or exchange of such permits. Finally, an analysis of the steepness of the marginal cost and marginal benefit curves in the GHG abatement context demonstrates that an ITEP system would be more efficient than a tax system in reducing GHG emissions.
Fair sharing of greenhouse gas burdens
1996
This paper describes an approach to determine the relative accountability that each region and individual nation should bear in reducing atmospheric greenhouse gas. The paper argues that accountability should be based on equity and that all measures of equity for which there are backers should be used in the decision making procedure. Each equity indicator defines a different accountability profile, leading to conflicting prescriptions. Multicriterion decision making methods are seen as having high potential to help design fair compromise profiles, and a methodology is proposed and numerous methods indicated for this purpose. The methodology is illustrated by defining ! 1 different equity indicators and then formulating and solving a multigoai programming model to determine a compromise accountability profile for I 1 multinational regions.
Greenhouse Gas Emissions: A mitigation approach through Game theory
National Seminar on Climate Change Impact and Adaptation
The triumph of any international climate change agreement depends on abatement targets and incentives for countries to participate. We demonstrate the effectiveness of game theory for achieving the global cooperation to reduce green house gas emission. Cooperative and non cooperative approaches to coalition formation are investigated in order to examine the behavior of alliances cooperating on climate change. The document starts with a review of the different approaches that have been proposed in the literature to represent in a game theoretic framework concept of self-enforcing and stable international environmental agreement. The paper then outlines the broad contours of a research programme to guide empirical investigations into the risks climate change poses to human security and peace. Understanding the behavior of participants is a combination of psychology and mathematics that may yet have a significant role to play in averting the worst effects of climate change. So developing an equitable international framework is another essential condition for dealing with the global climate change problem. The paper showed, via an analysis of the multi-player prisoner’s dilemma, that the solution to the tragedy of the global commons ultimately relies on trust, and our evolved ability to detect cheaters. In this paper, we analyze the necessity to enact Kyoto Protocol with game theory. In this way, we get the result that in the climate change issue, it is more economical to work together than to work alone, so that it is necessary to make a fair game rule to ensure all countries work with same standards.
Ecological Economics
In a world with diverging emission reduction targets, national climate policies might be ineffective in reducing consumption-based CO2 emissions (carbon footprints), i.e. emissions of final demand that are embodied in domestic and international supply chains. We analyse a set of different policies in three areas with particularly high consumption-based emissions in Austria: building construction, public health, and transport. To capture both, substitution possibilities triggered by these policies and the induced emission reductions along the full global supply chain, our analysis combines a Computable General Equilibrium with a Multi-Regional Input-Output model. For building construction we find that a carbon added tax is highly effective in reducing consumption-based emissions whereas an information obligation on vacant dwellings combined with a penalty payment when vacant buildings are not made available is ineffective because of reallocated investment capital. Mandatory energy efficiency improvements in public health and mobility are found equally effective in reducing consumption-and production-based emissions while a decarbonization of domestic logistics stronger reduces productionbased emissions. Overall, the effectiveness of policies, to mitigate consumption-based emissions, is therefore determined by the backward and forward linkages of the sector addressed by the policy as well as the substitution effects within final demand.
Equitable and Efficient International Schemes to Control Carbon Dioxide Emissions
Contributions to Economic Analysis
We examine three noncooperative "global warming games" where carbon dioxide emissions and transfers are determined. An international agency implements transfers from rich to poor nations. In each game, the transfer mechanism obeys a predetermined equity principlehorizontal, proportional or "green GNP." Participation in each transfer scheme is voluntary. We find that implementable horizontal and proportional equity schemes are Pareto efficient. The green equity scheme, however, is generally inefficient. Unlike the others, our proposed proportional equity scheme is necessarily implementable-all nations always choose to participate. We conclude that proportional equity transfer schemes may be powerful instruments in controlling global warming.
Cost allocation for the problem of pollution reduction: a dynamic cooperative game approach
Economic Research-Ekonomska Istraživanja
This paper studies CO 2 emissions at a global level. The authors use Dynamic Optimisation to derive the minimum penalty cost on countries every single time. They then use an Imputation Distribution Procedure to allocate the minimum penalty cost among countries. Their work provides the extension of the Shapley value cost allocation as a penalty to reduce CO 2 emissions. The paper has implications for how to provide initiatives to improve cooperation on reducing CO 2 emissions at an international level. Results show that a reduction in cost of only one country can be harmful for other countries. In this way, some countries can end up or worse off in a case where all countries experience a uniform decrease in their penalty cost. Therefore, the findings of this work suggest a low penalty-cost scenario that helps the countries fight for pollution reduction and provide fruitful links for policy-makers. They show that the Clean Development Mechanism (CDM) of the Kyoto Protocol could be implemented by the Shapley value cost allocation.