Reducing carbon emissions in prefabricated buildings supply chains: a focus on component manufacturing processes

The construction sector accounts for 23% of $$ emissions from global economic activity, with China responsible for nearly 41%. Although China has vigorously promoted the development of prefabricated buildings (PBS) in pursuit of cleaner production, the carbon emissions from prefabricated component factories (PCF) should not be underestimated. So, the focus of this research was on how to promote the decarbonization of PCF. Based on the carbon trading market mechanism, the carbon emissions trading tax and revenue tax collection, the authors established a differential game model consisting of the local government and the PCF, studied the equilibrium solutions under different decision models, and analyzed the roles of the two tax systems, carbon trading revenue, and market preferences. The results are as follows: (1) The PCF's low-carbon technology (LCT) innovation efforts can be directly affected by the carbon price, component price, and tax rate and indirectly affected by influencing the local government's efforts. Besides, the local government and the PCF strategies can be changed through the central government's regulation of carbon prices and tax rates. (2) PCF should set reasonable prices for components, improving economic efficiency and the LCT stocks. (3) Cost-sharing contracts can encourage PCF to increase their LCT innovation, which is conducive to increasing the optimal benefits of the PCF. (4) The local government cannot be motivated by cost-sharing contracts. They can increase their optimal benefits only if the cost-sharing coefficient is below a threshold or if the environmental benefits from low-carbon production are above a specific value.