Selection of emission reduction modes for energy-intensive enterprises under the dynamic carbon cap-and-trade...

Energy-intensive enterprises have two main options for reducing their carbon emissions: design and implement carbon reduction projects on their own, or enter into cooperate contracts with energy service companies (ESCOs). In this paper, we discuss an energy-intensive enterprise facing independent and cooperative carbon emission reduction options and how the manufacturer chooses the optimal mode under the two-stage dynamic carbon cap-and-trade regulation. We construct a basic supply chain consisting of an energy-intensive manufacturer and a retailer and compare the equilibrium results under four scenarios of carbon reduction modes based on the Stackelberg game theory. The research results show that under each of the dynamic carbon allowance trading stages, the choice of emission reduction modes depends on the emission reduction level of ESCOs. Under the second stage of the dynamic carbon allowance trading regulation, energy-intensive manufactures can ensure profits by increasing their own emission reduction level, regardless of the emission reduction modes they choose. To appropriately increase the initial carbon allowance in the first stage, and increase the carbon allowance constraint coefficient in the second stage, can effectively improve the carbon emission reduction rate of enterprises, which proves that the dynamic carbon allowance trading regulation is beneficial to manufacturers with higher levels of emission reductions and can facilitate manufacturers to increase their carbon emission reduction rates.