Optimal Reutilization Strategy for a Shipbuilder under the Carbon Quota Policy

Chonghao Zhang, Yuan Zhang and Zongsheng Huang ()
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Chonghao Zhang: School of Economics and Management, Shanghai Maritime University, Shanghai 201306, China
Yuan Zhang: School of Economics and Management, Shanghai Maritime University, Shanghai 201306, China
Zongsheng Huang: School of Economics and Management, Shanghai Maritime University, Shanghai 201306, China

Sustainability, 2023, vol. 15, issue 10, 1-13

Abstract: Reducing carbon emissions is crucial for humanity. Recently, the International Maritime Organization has set carbon emission quotas to limit the extensive carbon emissions from the marine industry. This paper examines how shipbuilders can adopt the rebuilding of decommissioned ships to reduce carbon emissions and also make more profits. Incorporating the carbon emission quota policy, we formulate the dynamic rebuilding model of decommissioned ships and derive the optimal rebuilding and pricing control strategies for the shipbuilder. We investigate the evolutionary dynamics as well as the impact of carbon quotas and carbon emission savings on shipbuilder’s strategies. The study’s findings suggest that shipbuilders have the potential to improve their profitability while also contributing to energy conservation and emission reduction. This can be achieved through the implementation of technological innovations aimed at reducing carbon emissions from their production activities. The government has a crucial role to play in regulating and managing shipbuilders. In cases where the cost per unit of carbon quota is deemed excessively high, it may be necessary to establish appropriate regulations that prevent shipbuilders from directly benefiting from the trade of carbon quotas. This approach can also help ensure the positive development of the carbon trading market.

Keywords: rebuilding; optimal control; shipbuilder; carbon quota (search for similar items in EconPapers)
JEL-codes: O13 Q Q0 Q2 Q3 Q5 Q56 (search for similar items in EconPapers)
Date: 2023
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