The bright side of low-carbon technology sharing in a capital-constrained supply chain

Abstract

Low-carbon technology sharing (LTS) is often viewed as a positive factor for enterprise operations, which can not only encourage the spread of low carbon technologies but also serve as a source of financing for capital-constrained manufacturers. However, it is not clear how LTS works in a capital-constrained supply chain. This study incorporates LTS into the design of supply chain finance schemes, considering the manufacturer’s financial constraints. To this end, we compare LTS and two types of low-carbon technology licensing (LTL) schemes, namely, royalty fee licensing (LTL-V) and royalty fee portfolio fixed-fee licensing (LTL-V+F), to reveal the value of LTS to capital-constrained supply chain and the government. The conclusions indicate that boosting unit royalty rates with a high consumer’s low-carbon preference, as well as fixed fee are not conducive to the increase of manufacturers’ order quantity. Compared to manufacturer independent financing benchmark scenario and any LTL scheme, the LTS scheme can not only achieve higher unit carbon emission abatement, but also potentially lower total carbon emissions. Owing to the effective increase in expected environmental revenues, the government’s revenue under LTS may also increase significantly in some cases.