Optimising Decarbonisation Investment for Firms towards Environmental Sustainability

Trung-Hieu Tran, Yong Mao and Peer-Olaf Siebers
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Trung-Hieu Tran: Laboratory for Urban Complexity and Sustainability, University of Nottingham, Nottingham NG7 2RB, UK
Yong Mao: School of Physics & Astronomy, University of Nottingham, Nottingham NG7 2RD, UK
Peer-Olaf Siebers: School of Computer Science, University of Nottingham, Nottingham NG8 1BB, UK

Sustainability, 2019, vol. 11, issue 20, 1-19

Abstract: We develop a mixed-integer non-linear programming model for firms’ decarbonisation investment decision-making towards a sustainable environment. Our model seeks the optimal investment for a firm to achieve maximum profit under constraints derived from its environmental protection awareness and the government’s taxation policy. We use an uncertainty theory to formulate the relationship of a firm’s environmental protection awareness and its investment budget levels. Governments’ taxation policy is modelled by a step-wise linear function, where reduced carbon dioxide emission can help the firm reduce taxation. A linearisation is proposed to solve the non-linear problem efficiently. A case study for a sector of electronic component manufacturers in Nottingham, the United Kingdom, demonstrates the practical implementation of the proposed model. Several large-sized instances, which were randomly generated, were utilised to evaluate the the efficiency of model in terms of computational time. Our model can be used to explore budget options to obtain higher profits under a particular taxation policy.

Keywords: mixed-integer non-linear programming; linearised model; decarbonisation investment; environmental protection awareness; taxation policy (search for similar items in EconPapers)
JEL-codes: O13 Q Q0 Q2 Q3 Q5 Q56 (search for similar items in EconPapers)
Date: 2019
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (5)

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