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Chinese Journal of Management Science ›› 2025, Vol. 33 ›› Issue (6): 335-345.doi: 10.16381/j.cnki.issn1003-207x.2022.1558

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Decision of Electricity Supply Chain for Considering Emission Reduction Strategy of Electricity Generator under Carbon Cap-and-Trade Policy

Wenbin Wang(), Jie Guan   

  1. School of Economics and Management,China University of Mining and Technology,Xuzhou 221116,China
  • Received:2022-07-16 Revised:2023-05-16 Online:2025-06-25 Published:2025-07-04
  • Contact: Wenbin Wang E-mail:wangwenbin818@126.com

Abstract:

Global warming restricts the sustainable development of human economy and society. The control of greenhouse gas emissions has become an important issue facing all mankind. Therefore, the government has introduced emission reduction policies one after another, among which the carbon cap-and-trade policy has been adopted mostly and widely studied by scholars. The electricity sector is currently one of the biggest sources of carbon emissions. Research and development of emission reduction technology to reduce the carbon emissions of electricity units is an important issue facing the low-carbon transformation of the electricity industry. The existing literature discussed the factors affecting the emission reduction of the electricity supply chain, the marginal conditions for the investment of electricity generators in carbon emission reduction technology, and the distribution of the responsibility for carbon emission reduction, rarely considering the selection of different emission reduction methods in the electricity supply chain under the carbon cap-and-trade policy. In practice, some firms, such as Shanghai Waigaoqiao Third Electricity Plant, choose to independently develop carbon emission reduction technologies, while others, such as Yueyang Comprehensive Energy Company, choose to cooperate with third-party energy saving service providers for carbon emission reduction. Various emission reduction methods bring different emission reduction benefits. Thus, it is necessary to explore and analyze how electricity supply chain firms choose emission reduction methods to obtain better emission reduction effects and higher profits.Motivated by enterprise practice and theoretical research, under the carbon cap-and-trade policy, an electricity supply chain composed of a coal-fired electricity generator (referred to as electricity generator), an electricity retailer and consumers is considered. Based on the electricity generator independently develops carbon emission reduction technologies or cooperates with an energy saving service provider in carbon emission reduction, four models of integrated sale and separated sale are developed respectively. The influences of consumer’s low-carbon preference, carbon trading price, the difficulty of carbon emission reduction technology developed by the electricity generator and the cost coefficient of the electricity generator’s production facilities renovation on the optimal emission reduction decision of electricity supply chain firms are explored. The results indicate that: i) the electricity generator tends to cooperate with the energy saving service provider to reduce emission under the integrated sale mode if the cost paid to the energy saving service provider is small; ii) if the electricity generator choose cooperative emission reduction mode, he is willing to pay higher costs to the energy saving service provider in the case of integration of generation and selling; iii) the carbon emission reduction strategies of electricity generator are different due to various consumer preference coefficients and carbon trading price combinations; iv) the carbon trading price raised by government or environmental awareness strengthened by consumers will help the electricity supply chain to increase carbon emission reduction and improve firm’s profits.Additionally, some management implications are obtained for the firms of electricity supply chain and the government: i) for the electricity generator, the selection of emission reduction methods and distribution modes requires comprehensive consideration of consumers’ preference for low carbon and carbon trading prices in the market; ii) for the electricity retailer, no matter which emission reduction method the electricity generator adopt, their profits will be maximum under the distribution integration mode. Therefore, it is suggested that they share the emission reduction costs of the electricity generator and cooperate with the electricity generator to improve consumers’ preference for low carbon and maximize their profits; iii) for the government, in order to strengthen the emission reduction efforts of firms, on the one hand, he can take measures to increase the market price of carbon trading; on the other hand, he can cooperate with the partners of the electricity supply chain to increase consumers’ awareness of green environmental protection through advertising, gift exchange points and other forms.

Key words: carbon cap-and-trade policy, electricity supply chain, carbon emission reduction, energy saving service provider, low carbon preference

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