Maximizing efficiency in low-carbon sustainable supply chain under yield uncertainty and risk-averse flexibility

Abhijit Barman, Pinak Sarkar, Katarzyna Kalisz-Szwedzka and Gerhard-Wilhelm Weber

International Journal of Production Research, 2025, vol. 63, issue 22, 8521-8539

Abstract: Within the low-carbon supply chain network, variations in carbon emission reduction investment costs and product exhibition expenses among members at the same level can lead to distinct competitive behaviours. This study investigates the production decision of a supply chain operating within the framework of both green financing and a carbon cap-and-trade program. The manufacturer faces capital limitations and yield uncertainty. Green financing involves government subsidies on interest for low-carbon investment loans, while low-carbon subsidies are granted based on the manufacturer's carbon emission reductions. Our study investigates the effects of the green finance mechanism, carbon cap-and-trade scheme, and yield uncertainty on emission reduction decisions. This research illustrates the green finance subsidy with the low-carbon subsidy scheme. Additionally, we have analysed optimal production quantity and carbon emission levels in decentralised decision-making scenarios and extended our findings to joint supplier-manufacturer coalition contracts. Our findings demonstrate that both the green finance subsidy and the low-carbon subsidy contribute positively to reducing carbon emissions, while yield uncertainty exerts a negative influence. Additionally, risk-averse flexibility negatively impacts utility, while the joint coalition model guides decentralised decisions. Finally, managerial insights regarding supply chain profitability have been illustrated through green finance and the cap-and-trade system.

Date: 2025
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DOI: 10.1080/00207543.2025.2527956

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