Enterprise Scenario Analysis: A Systematic Framework for Monetizing CO 2 Compliance

Wei Long, Zhenfei Zhan (), Cheng Hong and Liuzhu Qian
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Wei Long: School of Electromechanical and Vehicle Engineering, Chongqing Jiaotong University, Chongqing 400064, China
Zhenfei Zhan: School of Electromechanical and Vehicle Engineering, Chongqing Jiaotong University, Chongqing 400064, China
Cheng Hong: School of Electromechanical and Vehicle Engineering, Chongqing Jiaotong University, Chongqing 400064, China
Liuzhu Qian: School of Electromechanical and Vehicle Engineering, Chongqing Jiaotong University, Chongqing 400064, China

Sustainability, 2025, vol. 17, issue 3, 1-20

Abstract: The global automotive industry is currently undergoing a period of radical transformation as a result of the ongoing electrification of automobiles. China has established rigorous energy-saving and emission-reduction targets and regulations. Consequently, the automotive industry must take into account the limitations of carbon emission reduction and carbon trading when formulating major business strategies. A related question is how “internal incentives” should be set to maximize the variable profitability of automotive companies while meeting compliance constraints. In response, in this study, a unified and mutually consistent modeling framework for enterprise scenario analysis is proposed to align the product portfolio within an enterprise. Firstly, a game model of the new energy vehicle market is proposed to forecast general trends and provide forward-looking inputs for firms to develop business plans. Next, this paper proposes a framework for monetizing CO 2 compliance using the Pigovian tax/subsidy concept. The equilibrium is achieved through the imposition of a tax or subsidy by the company on each of its internal models. Utilizing historical data from A Motors, we clearly illustrate how our approach works and demonstrate its consistency with observations of the new energy vehicle market.

Keywords: game theory; carbon credits; monetizing CO 2 compliance; design and planning (search for similar items in EconPapers)
JEL-codes: O13 Q Q0 Q2 Q3 Q5 Q56 (search for similar items in EconPapers)
Date: 2025
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