Can carbon asset pledge financing be beneficial for carbon emission-dependent engineering machinery remanufacturing?

Abstract

Under the carbon trading mechanism, carbon asset has become an important resource and new production factor for enterprises, and are one of the key factors for production operations. As an emerging mortgage-loan model, carbon asset pledge financing (CAPF) can not only revitalize the carbon assets, but also address insufficient capital for enterprises. For carbon emission-dependent engineering machinery enterprises, this paper examines the impacts of CAPF on the performances of an emission-dependent and capital-constrained remanufacturer. Based on the benchmark without financing, the pure carbon asset pledge financing (PCAPF) strategy and the hybrid carbon asset pledge financing (HCAPF) strategy, are explored. The results show that: (i) Whether the remanufacturer chooses CAPF depends on initial capital, only when its initial capital is below a threshold, it can benefit from the CAPF loan. (ii) The choice of PCAPF and HCAPF for a remanufacturer depends on the quantity of carbon assets, compared with no capital constraint, the PCAPF and HCAPF are all conducive to increasing the quantity of remanufactured products and reducing carbon emissions. (iii) The HCAPF always has a higher contribution rate to the remanufactured quantity and consumer surplus than PCAPF, while the former strategy contributes less than the latter in terms of reducing carbon emission and gaining profit. (iv) Due to the relatively high interest, the HCAPF strategy can realize higher environmental performances and consumer welfare than the strategy of PCAPF.

KEYWORDS:

• Remanufacturing
• pure carbon asset pledge financing
• hybrid carbon asset pledge financing
• production operations

Disclosure statement

No potential conflict of interest was reported by the author(s).

Data availability statement

Data sharing is not applicable to this article as no data were created or analyzed in this study.

Additional information

Funding

This work was supported by the National Natural Science Foundation of China [grant number 71971058]; The Postgraduate Research & Practice Innovation Programme of Jiangsu Province [grant number KYCX21_0170]; The China Scholarship Council [grant number 202206090058].

Notes on contributors

Shuaishuai Fu

Shuaishuai Fu is currently a PhD candidate in management science and engineering from Southeast University, China. His research interests include remanufacturing operations management and supply chain management.

Weida Chen

Weida Chen is a full professor in the School of Economics and Management at Southeast University, China. He received his PhD degree in management science and engineering from Southeast University in 2002. His research interests include low-carbon operations management and remanufacturing operations management.

Junfei Ding

Junfei Ding is currently a PhD candidate in management science and engineering from Southeast University, China. His research interests include sustainable operations management and supply chain management.