Effective green supply-chain management technologies in the competitive economic environment with pollution emission trade system

Project Description

Our human living environment on this planet is being seriously threatened by rising global temperatures – the phenomenon known as global warming. Considerable evidence demonstrates that it is mainly caused by the emission of greenhouse gases (GHGs) such as carbon dioxide from the burning of fossil fuels; these gases trap the sun’s heat in the atmosphere and result in a general rise in temperatures. To mitigate global warming, it is necessary to reduce GHG emissions, for example through conservation, the introduction of cleaner technology, and the use of alternative energy sources. Emitters may, for example, set quotas of allowance or baselines, with progressive reductions over time. Since some parties reduce emission easier than others, it makes sense for the parties to be allowed to trade quotas among themselves. By allowing the trading of emissions quotas the process of reducing global emissions in economic terms is effective. Emissions’ trading requires a regulatory framework, which may be voluntary or imposed by governments. The Kyoto Protocol, which came into effect in February 2005, provides a framework under which developed country signatories allocate their major polluters emissions allowances which can then be traded. The major feature of the Kyoto Protocol is that it sets binding targets for 37 industrialized countries and the European community for reducing greenhouse gas (GHG) emissions. These amount to an average of five per cent against 1990 levels over the five-year period 2008-2012. However, developing countries such as China, India and others, have not yet committed to the emission reduction. Emission trading also provides a mechanism for developed countries within the trading scheme to sponsor carbon projects that lead to a reduction in greenhouse gas emissions in other countries, as a way of generating tradable carbon credits. The Kyoto Protocol allows this through the Clean Development Mechanism (CDM) and the Joint Implementation (JI) projects, which are flexible mechanisms that aid regulated entities to comply with their caps. The European Union Emission Trading System (EU ETS) is the largest multi-national, emissions trading scheme in the world and is a major pillar of EU climate policy. The ETS currently covers more than 10,000 installations in the energy and industrial sectors which are collectively responsible for close to half the EU's emissions of CO2 and 40% of its total greenhouse gas emissions. Under the EU ETS, large emitters of carbon dioxide within the EU must monitor and annually report their CO2 emissions, and they are obliged every year to return an amount of emission allowances to the government that is equivalent to their CO2 emissions for that year. Recently, the EU ETS was extended to the airline industry as well, but these changes will not take place until 2012.

This project will set up a scientific framework for the study of the economic and managerial impact of pollution emission trading systems. Its primary goal is to upgrade in innovate ways the decision-making technologies that enable emitters to identify risks and opportunities of versatile emission trading markets around the world, so as to maintain competitive edge and financial health. These technologies will enable emitters to efficiently plan their productions and considerably control cost of reducing extra pollution emission. They can be further utilized to develop financial valuation rules for emission credit swaps and risk management of investment in clean energy and new industrial projects, and contracting strategies and game analysis for firms to seal relevant bilateral or multilateral deals. In addition, the project can transfer consultable knowledge to the regulator to establish fair rule to distribute emission allowance under a given pollution cap.

Participating Organizations

• Zaragoza Logistics Center

"This project has received funding from the European Union’s Seventh Programme for research, technological development and demonstration under grant agreement No 253720."