Abstract: In order to curb global climate change caused by carbon emission, an increasing amount of governments have launched carbon emission cap-and-trade systems to motivate emission reduction in their countries. The different carbon emission cap-and-trade systems in different countries or regions bring both challenge and opportunity to multinational corporations. The challenge lies on carbon emission reduction because emission causes extra operational cost. While corporations can take the opportunity to reduce operational cost by reallocating production in different regions. Therefore, under the background of international supply chain, traditional supply chain production planning model is extended and two cap-and-trade systems, one with fixed carbon emission price and another with variable carbon emission price are considered. After solving the international supply chain production planning model under different carbon cap-and-trade systems, the influence of different carbon emission price mechanisms and synchronous adjustment of carbon cap and trading price is analyzed. The influence analysis is made from perspectives of regions, the manufacturer, and the whole supply chain. It is shown that the production planning model established in our paper provides decision support for international supply chains on production allocation and factory location, and also brings suggestions to international and regional carbon policy-makers to reduce carbon emission.

Key words: international supply chain, carbon emission cap-and-trade system, production planning, low carbon