A Spatial Equilibrium Problem for the European Pulp and Paper Industry Under the Emission Trading System

We propose a spatial equilibrium problem for a pulp and paper supply chain network under the Emission Trading System (ETS) and the circular economy principles. The developed closed-loop supply chain model, based on the variational inequality theory, accounts for the forest deployment and the product...

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Bibliographic Details
Published inJournal of optimization theory and applications Vol. 203; no. 2; pp. 1767 - 1793
Main Authors Allevi, Elisabetta, Gnudi, Adriana, Konnov, Igor V., Oggioni, Giorgia, Riccardi, Rossana
Format Journal Article
LanguageEnglish
Published New York Springer US 01.11.2024
Subjects
Applications of Mathematics
Calculus of Variations and Optimal Control; Optimization
Engineering
Mathematics
Mathematics and Statistics
Operations Research/Decision Theory
Optimization
Theory of Computation
Circular economy
Environmental regulations
91B76
49J40
Pulp and paper supply chain network
65K10
Spatial equilibrium problem
91B50
91B72
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Summary:We propose a spatial equilibrium problem for a pulp and paper supply chain network under the Emission Trading System (ETS) and the circular economy principles. The developed closed-loop supply chain model, based on the variational inequality theory, accounts for the forest deployment and the production of paper using both virgin pulp and recyclable paper waste in an area that is subject to the ETS. In addition, it considers the exchanges of virgin pulp, paper, recyclable and not-recyclable paper waste between this regulated area and geographical zones where no environmental policies apply. The aim of this paper is to investigate the ETS impacts on the pulp and paper industries located in an environmentally regulated area in terms of operating costs, production and trading volumes of the aforementioned commodities, and emissions generated. The case study focuses on the European pulp and paper companies, which are among the energy-intensive industries deemed to be exposed to the carbon leakage risk as a consequence of the ETS application. Sensitivity analyses on the carbon price value and on the trade flexibility are conducted. Our results show that the ETS implies additional costs for the European pulp and paper companies and induces them to resort more on imports of virgin pulp and paper from not-regulated zones.
ISSN:0022-3239
1573-2878
DOI:10.1007/s10957-023-02291-4