Multi-Period Production Optimization Decision Models under Net-Zero Transformation

Abstract

Facing the goal of net-zero emissions in 2050, the EU will pilot the European Carbon Boundary Adjustment Mechanism (CBAM) in 2023 and formally implement it in 2026. The scope of control includes cement, electricity, fertilizer, steel, aluminum, and five high-carbon emission industries. In response to global net-zero emissions and CBAM trends, net-zero transformation is not only an environmental issue but also a major economic issue related to Taiwan’s aluminum wheel frame industry. This study aims to bridge this gap by developing novel decision-making models that consider the unique requirements and constraints of net-zero transition, leading to more efficient and sustainable production optimization strategies based on activity-based costing (ABC). This study proposes four possible multi-period production optimization decision-making models (carbon tax and credit combination models) under the net-zero emission transformation of the aluminum wheel frame industry, and it compares the models to test their differences. The results of the study point out that, due to the different roles of carbon tax and carbon credit, the profit and product structure under the net-zero transformation will be very different. Enterprises should formulate carbon emission reduction targets and carbon inventories as soon as possible.