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In this paper, we model a firm that can reduce its carbon footprint in the presence of a segment of eco-conscious consumers, who consider the product's carbon footprint when making purchasing decisions. The firm can reduce its controllable emissions at increased fixed and variable costs. The firm can also buy carbon offsets, at the price set by a nongovernmental organization (NGO), for both its controllable and uncontrollable emissions in the supply chain. We find that the firm should not use these two emission reduction methods as simple substitutes. In particular, as the offset price decreases, the firm may spend more efforts reducing its controllable emissions. Also, a firm's decision to buy carbon offsets depends on the correlation between consumers' preferences for the product function and for its environmental attributes, and this has implications for NGOs selling offsets. Specifically, although NGOs should price offsets as low as possible in most cases, we find some instances where a premium pricing strategy may be more effective in promoting lower-carbon footprint products, especially when eco-conscious consumers have a significantly higher valuation for the product than those who do not care about the environment, on average. This paper was accepted by Jayashankar Swaminathan, operations management. Supplemental Material: The data files and online appendix are available at https://doi.org/10.1287/mnsc.2021.4293. [ABSTRACT FROM AUTHOR]

There is a need to achieve sustainable agricultural production to secure food, fiber, and fuel for a growing global population. Climate-smart (CS) actions (no-till and cover crops) can reduce carbon emissions and promote soil organic carbon (SOC) storage. Contemporary voluntary carbon markets provide producers with a monetary incentive to adopt CS actions. However, SOC–yield dynamics under CS actions are not well known, making it difficult for producers to judge whether additional income from carbon credits will offset potential losses to yield income. We designed a SOC–yield framework that captures SOC–yield–income dynamics under traditional (reduced tillage, no cover crops) and CS actions. Using a modified structured decision-making approach, we applied the framework to a case study in which producers aim to increase income by selling carbon credits after adopting CS actions. Specifically, we demonstrated how to balance tradeoffs between yield and carbon credit income that arise from tillage and winter cover crop actions (cereal rye, Secale cereale L. and crimson clover, Trifolium incarnatum L.) in a soybean (Glycine max L.) production system in Mississippi. Results indicated that a producer could minimize losses to net yield income by adopting no-till if already using cover crops. There was also evidence that carbon credit income could offset losses to yield income when adopting CS in place of traditional actions. Identifying risks to yield income and SOC storage can help design carbon neutrality policies that have minimum impact on a producer's income. History: This paper has been accepted for the Decision Analysis Special Issue on Decision Analysis to Advance Environmental Sustainability. Funding: This work was supported by the USDA-ARS [Grants 58-0200-0-002 (Advancing Agricultural Research) and 58-6001-8-003] and the USDA National Institute of Food and Agriculture [McIntire Stennis Project 1020959]. Supplemental Material: The online appendix is available at https://doi.org/10.1287/deca.2023.0478. [ABSTRACT FROM AUTHOR]

The transport sector is the second-largest carbon emissions contributor in Europe, and its emissions continue to increase. Many producers are committing themselves to reducing transport emissions voluntarily, possibly in anticipation of increasing transport prices. In this paper we study a producer that has outsourced transport and has decided to cap its carbon emissions from outbound logistics for a group of customers. Setting an emission constraint for a group of customers allows for taking advantage of the portfolio effect. We focus on reducing emissions by switching transport modes within an existing network, because this has a large impact on emissions. In addition, the company sets the sales prices, which influence demand. The problem is solved by decomposing the multiproduct problem into several single-product problems, which we then analyze separately. Using the single-product solutions, we create an efficient frontier that reflects the trade-off between total carbon emissions and the total profit. It is observed that a diminishing rate of return applies in reducing emissions by switching transport modes. In a case study, we apply our method to a producer of bulk liquids and find that emissions can be reduced by 10% at only a 0.7% increase in total logistics cost. [ABSTRACT FROM AUTHOR]

This study presents mathematical models that capture the impact of different carbon-emission-related policies on the design of the biodiesel supply chain. These mathematical models identify locations and production capacities for biocrude production plants by exploring the trade-offs that exist between transportation costs, facility investments costs, and emissions. The mathematical models capture the dynamics of biomass supply and transportation costs during a predefined time horizon. We analyze the behavior of the chain under different regulatory policies such as carbon cap, carbon tax, carbon cap and trade, and carbon offset mechanisms. A number of observations are made about the impact of each policy on the supply chain performance. The models we developed are solved by using a commercial software GAMS/CPLEX. We use the state of Mississippi as the testing grounds for these models, and employ ArcGIS to visualize and validate the results from the optimization models. [ABSTRACT FROM AUTHOR]

In response to the growing need to reduce greenhouse gas (GHG) emissions worldwide, the emission trading scheme (ETS) has become one of the most efficient instruments to reduce GHG emissions. For example, the European Union (EU) now charges a carbon emission fee to airlines flying into or out of EU airports. This work investigates the effect of carbon permits (CPs) under the cap-and-trade scheme on competition and green transportation strategies of global airlines using a behavioral economics approach. One feature of the proposed model is that passenger attitudes toward green transportation service with perceived uncertainties are conceptualized into airline response functions to characterize how airlines respond to the CP instrument via pricing and investments in green transportation. Qualitative analyses and a numerical study of the ETS-CP instrument provide important managerial insights into airline repricing and green transportation investment strategies. Most importantly, this work generates a relationship between the green transportation and consumer behavior fields via behavioral economics theory. [ABSTRACT FROM AUTHOR]

Carbon dioxide allowance trading systems for electricity generators are in place in the European Union and in several U.S. states. An important question in the design of such systems is how allowances are to be initially allocated: by auction, by giving away fixed amounts (grandfathering), or by allocating based on present or recent output, investment, or other decisions. The latter system can bias investment, operations, and product pricing decisions and increase costs relative to the other systems. A nonlinear complementarity model is proposed for investigating the long-run equilibria that would result under alternative systems for power markets characterized by time-varying demand and multiple technology types. Existence of equilibria is shown under mild conditions. Solutions for simple systems show that allocating allowances to new capacity based on fuel use or generator type can yield large distortions in capacity investment, invert the operating order of power plants, and inflate consumer costs. The distortions can be smaller for tighter CO2 restrictions and are somewhat mitigated if there is also a market for electricity capacity or minimum-run restrictions on coal plants. Distortions are also less if allowances are allocated to plants in proportion to sales rather than capacity. [ABSTRACT FROM AUTHOR]