On Carbon Tax Effectiveness in Inducing a Clean Technology Transition: An Evaluation Based on Optimal Strategic Capacity Planning

Nathalia Wolf, Pablo Escalona, Mónica López-Campos (), Alejandro Angulo and Jorge Weston
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Nathalia Wolf: INOCS Integrated Optimization with Complex Structure Team, INRIA Institut National de Recherche en Informatique et en Automatique Lille-Nord Europe, 40 Avenue Halley, 59650 Villeneuve d’Ascq, France
Pablo Escalona: Department of Industrial Engineering, Universidad Técnica Federico Santa María, Avenida España 1680, Valparaíso 2390123, Chile
Mónica López-Campos: Department of Industrial Engineering, Universidad Técnica Federico Santa María, Avenida España 1680, Valparaíso 2390123, Chile
Alejandro Angulo: Department of Electrical Engineering, Universidad Técnica Federico Santa María, Avenida España 1680, Valparaíso 2390123, Chile
Jorge Weston: Department Mathematik, Friedrich-Alexander-Universität Erlangen-Nürnberg, Cauerstraße 11, 91058 Erlangen, Germany

Sustainability, 2023, vol. 15, issue 15, 1-23

Abstract: This paper studies carbon tax effectiveness in inducing a transition to cleaner production when a firm faces different technologies and demands over a planning horizon. To determine carbon tax effectiveness, we propose a model based on strategic capacity production planning under carbon taxes that considers proper performance measures. The model, which is formulated as a mixed integer linear problem (MILP), considers issues that previous works have not studied jointly, and that are relevant in a technological transition, such as machine replacement, workforce planning, and maintenance. The effectiveness measures consider levels of clean production and periods to reach a technological transition. Our computational experiments, based on a real case, have shown that in the absence of carbon taxes, a firm has no incentive to transition to clean technology. Still, the effectiveness of carbon taxes depends on the characteristics of the technology available for the production process and the magnitude of the demand. We include managerial insights aimed at both companies and the environmental authority.

Keywords: carbon tax effectiveness; strategic capacity planning; clean technology transition; MILP (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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Persistent link: https://EconPapers.repec.org/RePEc:gam:jsusta:v:15:y:2023:i:15:p:11663-:d:1204960

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