scholarly journals Optimal MTS and MTO Hybrid Production System for a Single Product Under the Cap-And-Trade Environment

2020 ◽  
Vol 12 (6) ◽  
pp. 2426
Author(s):  
Shouyao Xiong ◽  
Yuanyuan Feng ◽  
Kai Huang
Keyword(s):  
Production System ◽  
Optimal Solution ◽  
Cap And Trade ◽  
Single Product ◽  
Optimal Production ◽  
Production Mode ◽  
Hybrid Production ◽  
Allowance Trading ◽  
Production Strategy ◽  
Production Decision

This paper studies the optimal production planning in a hybrid Make-To-Stock (MTS) and Make-To-Order (MTO) production system for a single product under the cap-and-trade environment. The manufacturer aims to minimize the total cost in production, inventory and emissions allowances trading. The decisions include the selection of production mode (pure MTS, pure MTO or hybrid MTS/MTO), the inventory and emissions trading quantity. We derive the optimal solution analytically. We show that the cost of optimal MTO/MTS hybrid production strategy is remarkably less than that of either pure MTO or pure MTS production strategy alone. Compared with the no initial carbon quota and trading environment, there are significant differences in the optimal production decisions under trading environment. When the emissions cost is a source of costs, the manufacturer has to face more costs pressure even if there is no emissions allowance trading. In particular, the results show that the initial emissions allowance determines the optimal production decision and emissions allowance trading decision in cases where the difference between the inventory cost for per unit product and the delayed delivery cost for per unit order is between the minimum and the maximum emissions cost and has no effect on production mode and emissions allowances trading decision in other cases. These conclusions will provide optimal production decision and carbon trading decision for the manufacture under a cap-and-trade environment.

Emission Allowances for Renewable Energy and Energy Efficiency Projects

Solar Energy ◽  
2004 ◽  
Author(s):  
Steven R. Schiller ◽  
Ellen Franconi ◽  
Satish Kumar ◽  
Edgar Mercado
Keyword(s):  
Energy Efficiency ◽  
Renewable Energy ◽  
Performance Measurement ◽  
Evaluation Process ◽  
Environmental Benefits ◽  
Federal State ◽  
International Programs ◽  
Measurement And Verification ◽  
Allowance Trading ◽  
Trading Program

Allowance trading programs represent an opportunity for the renewable and energy-efficiency industry to capitalize on the environmental benefits associated with their projects. By reducing or preventing emissions, renewable and energy-efficiency projects may qualify for emission allowances that can help sponsors justify their projects. Several federal, state, and international programs are venues for emissions documentation and trading. One program, an energy efficiency/renewable energy set-aside program, is described in this paper. A crucial element of an allowance trading program is the documentation and verification, or evaluation, of actual emission reductions. Thus, this paper also reviews the evaluation process that has been developed for an energy-efficiency and renewable-energy set-aside program and puts the process in context with methods outlined in the International Performance Measurement and Verification Protocol (IPMVP).

scholarly journals What Can We Learn from the Grand Policy Experiment? Lessons from SO2 Allowance Trading

1998 ◽  
Vol 12 (3) ◽  
pp. 69-88 ◽  
Author(s):  
Robert N Stavins
Keyword(s):  
Political Economy ◽  
Sulfur Dioxide ◽  
Acid Rain ◽  
Clean Air Act ◽  
Design And Implementation ◽  
Allowance Trading ◽  
Clean Air ◽  
Policy Experiment ◽  
And Performance ◽  
Trading Program

The most ambitious application ever attempted of a market-based approach to environmental protection has been for the control of acid rain under the Clean Air Act amendments of 1990, which established a sulfur dioxide allowance trading program. This essay identifies lessons that can be learned from this grand experiment in economically oriented environmental policy. The author examines positive political economy lessons, asking why this system was adopted from acid-rain control in 1990, and he considers normative lessons that can be learned from the program's structure and performance, focusing on lessons for the design and implementation of future systems.

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