Top

Operations Management Research

02-03-2024

Governance intervention policies in the production competition of biofuels and fossil fuels: a pathway to sustainable development

Authors: Elaheh Jafarnejad, Ahmad Makui, Ashkan Hafezalkotob, Amir Aghsami

Published in: Operations Management Research

Activate our intelligent search to find suitable subject content or patents.

search-config

AI-assisted search

Off

Abstract

Environmental pollution and social welfare have become significant issues for governments and policy-makers in both developed and developing countries. That’s why there is an essential need to develop a comprehensive model for investigating the impact of government interventions on the production quantities of refineries considering competition between bio and oil fuels. Although some papers have focused on the tariff policy as a subsidy or a tax scheme, there is still a lack of models taking the government’s role as an independent player in the competitive market of refineries into account. Also, previous studies have not modeled the government and refineries competition as a competitive game in which they are the leader and follower, respectively. Moreover, no study has discussed the issue based on the sustainability goals of the government in the contexts of economic, environmental, and social aspects considering the selection of the tariff or investment strategy. To fill these gaps, this paper develops a bi-level multi-objective mathematical model incorporating two policies of tariff and investment on production capacity as environmental governance policy in refineries competition. The first level presents government problems under sustainability considerations. In the second level, the competition of bio and oil refineries is formulated using the Cournot competition game model. The transformation method is proposed by applying KKT conditions to obtain the best responses of refineries in the corresponding game. In addition, the revised multi-choice goal programming approach is used to solve proposed multi-objective model. A case study is presented to show the applicability of the model and the sensitivity analysis of the critical parameters is conducted. The findings show that government intervention policies on fuel production and consumption can be positively and directly related to reducing pollution and increasing social welfare.

Dont have a licence yet? Then find out more about our products and how to get one now:

Springer Professional "Wirtschaft+Technik"

Online-Abonnement

Mit Springer Professional "Wirtschaft+Technik" erhalten Sie Zugriff auf:

über 102.000 Bücher
über 537 Zeitschriften

aus folgenden Fachgebieten:

Automobil + Motoren
Bauwesen + Immobilien
Business IT + Informatik
Elektrotechnik + Elektronik
Energie + Nachhaltigkeit
Finance + Banking
Management + Führung
Marketing + Vertrieb
Maschinenbau + Werkstoffe
Versicherung + Risiko

Jetzt Wissensvorsprung sichern!

inform now

Springer Professional "Technik"

Online-Abonnement

Mit Springer Professional "Technik" erhalten Sie Zugriff auf:

über 67.000 Bücher
über 390 Zeitschriften

aus folgenden Fachgebieten:

Automobil + Motoren
Bauwesen + Immobilien
Business IT + Informatik
Elektrotechnik + Elektronik
Energie + Nachhaltigkeit
Maschinenbau + Werkstoffe

Jetzt Wissensvorsprung sichern!

inform now

Springer Professional "Wirtschaft"

Online-Abonnement

Mit Springer Professional "Wirtschaft" erhalten Sie Zugriff auf:

über 67.000 Bücher
über 340 Zeitschriften

aus folgenden Fachgebieten:

Bauwesen + Immobilien
Business IT + Informatik
Finance + Banking
Management + Führung
Marketing + Vertrieb
Versicherung + Risiko

Jetzt Wissensvorsprung sichern!

inform now

Ahmadian M, Chitnis M, Hunt LC (2007) Gasoline Demand, Pricing Policy and Social Welfare in IRAN; Surrey Energy Economics Centre (SEEC), School of Economics. University of Surrey, Guildford, UK

Annual Energy Outlook (2019) With projections to 2050. U.S. Energy Information Administration, Office of Energy Analysis, U.S. Department of Energy, Washington, DC 20585. www.eia.gov/aeo

Babaei M, Asgarian F, Jamali M-B, Rasti-Barzoki M, Piran MJ (2020) A game theoretic approach for pricing petroleum and determining investors’ production volume with the consideration of government and intermediate producers. Sustain Energy Technol Assess 42

Bai Y, Ouyang Y, Pang JS (2012) Biofuel supply chain design under competitive agricultural land use and feedstock market equilibrium. Energy Econ 34:1623–1633CrossRef

Bai Y, Ouyang Y, Pang JS (2016) Enhanced models and improved solution for competitive biofuel supply chain design under land use constraints. Eur J Oper Res 249:281–297MathSciNetCrossRef

Bárcena-Ruiz JC, Espinosa MP (1999) Should multi-product firms provide divisional or corporate incentives? Int J Ind Org 17(5):751–764CrossRef

Bazaraa MS, Sherali HD, Shetty CM (2006) Nonlinear Programming: Theory and Algorithms, 3rd Edn. A John Wiley & Sons, INC., Publication. 113–114

Benjamin C, Houee-Bigot M (2007) Measuring competition between nonfood and food demand on world grain markets: is biofuel production compatible with pressure for food production? Selected paper prepared for presentation at the American Agricultural Economics Association Annual Meeting, Portland, OR, July 29–August 1, 2007

Blumstein C (2010) Program evaluation and incentives for administrators of energy efficiency programs: can evaluation solve the principal/agent problem? Energy Pol 38(10):6232–6239CrossRef

Braungardt S, den Bergh J, Dunlop T (2019) Fossil fuel divestment and climate change: Reviewing contested arguments. Energy Res Soc Sci 50:191–200CrossRef

Cao J, Zhang X, Zhou G (2016) Supply chain coordination with revenue-sharing contracts considering carbon emissions and governmental policy making. Environ Prog Sustain Energy 35(2):479–488. https://doi.org/10.1002/ep.12246CrossRef

Chalmardi MK (2019) Camacho-Vallejo José-Fernando, A bi-level programming model for sustainable SC network design that considers incentives for using cleaner technologies. J Clean Prod. https://doi.org/10.1016/j.jclepro.2018.12.197CrossRef

Chang CT (2008) Revised multi-choice goal programming. Appl Math Model 32(12):2587–2595MathSciNetCrossRef

Chen X, Huang H, Khanna M, Onal H (2010) Meeting the mandate for biofuels: implications for land use, greenhouse gas emissions and social welfare. In: World Congress of Environmental and Resource Economists (Vol. 28)

Chen W, Zhi-Hua Hu (2018) Using evolutionary game theory to study governments and manufacturers’ behavioral strategies under various carbon taxes and subsidies. J Clean Prod. https://doi.org/10.1016/j.jclepro.2018.08.007CrossRef

Cucchiella F, D’Adamo I, Gastaldi M (2019) An economic analysis of biogas-biomethane chain from animal residues in Italy. J Clean Prod. https://doi.org/10.1016/j.jclepro.2019.05.116CrossRef

Dumka UC, Kaskaoutis DG, Devara PCS, Kumar R, Kumar S, Tiwari S, Gerasopoulos E, Mihalopoulos N (2019) Year-long variability of the fossil fuel and wood burning black carbon components at a rural site in southern Delhi outskirts. Atmos Res 216:11–25CrossRef

Farmer TC, Doherty MF (2019) Thermodynamic assessment of carbon dioxide emission reduction during fossil fuel derived energy production. Energy 177:565–573CrossRef

Florentino HO, Sartori MMP (2003) Game theory in sugarcane crop residue and available energy optimization. Biomass Bioenergy 25:29–34CrossRef

Gao J, Xiao Z, Wei H (2021) Competition and coordination in a dual-channel green supply chain with an eco-label policy. Comput Ind Eng 153

Ghaffari M, Hafezalkotob A, Makui A (2016) Analysis of implementation of Tradable Green Certificates system in a competitive electricity market: a game theory approach. J Ind Eng Int 12:185–197CrossRef

Ghorbani A, Rahimpour MR, Ghasemi Y, Raeissi S (2018) The biodiesel of microalgae as a solution for diesel demand in Iran. Energies 11:950. https://doi.org/10.3390/en11040950CrossRef

Giri RN, Mondal SK, Maiti M (2018) Government intervention on a competing supply chain with two green manufacturers and a retailer. Comput Ind Eng. https://doi.org/10.1016/j.cie.2018.12.030CrossRef

Goering GE (2007) Durability choice with differentiated products. Res Econ 61(2):105–112CrossRef

Gronkvist S, Bryngelsson M, Westermark M (2006) Oxygen efficiency with regard to carbon capture. Energy 31:3220–3226CrossRef

Hafezalkotob A (2015) Competition of two green and regular supply chains under environmental protection and revenue seeking policies of government. Comput Ind Eng 82:103–114CrossRef

Hafezalkotob A (2017) Competition, cooperation, and coopetition of green supply chains under regulations on energy saving levels. Transp Res Part E 97:228–250CrossRef

Hafezalkotob A, Mahmoudi R (2017) Selection of energy source and evolutionary stable strategiesfor power plants under financial intervention of government. J Ind Eng Int. https://doi.org/10.1007/s40092-017-0190-1CrossRef

Hafezalkotob A, Zamani S (2019) A multi-product green supply chain under government supervision with price and demand uncertainty. J Ind Eng Int 15:193–206CrossRef

Halat K, Hafezalkotob A (2019) Modeling carbon regulation policies in inventory decisions of a multistage green supply chain: a game theory approach. https://doi.org/10.1016/j.cie.2019.01.009

Hassanzadeh E (2018) Recent Developments in Iran’s Energy Subsidy Reforms. Policy Brief. International Institute for Sustainable Development. Available online: www.iisd.org/gsi/sites/default/files/pb14_iran.pdf (accessed on 28 March 2018)

Hua K, Chen Y (2019) Equilibrium fuel supply and carbon credit pricing under market competition and environmental regulations: a California case study. Appl Energy 236:815–824ADSCrossRef

Huang MW, Lee GWM, Wu CC (2008) GHG Emissions, GDP growth and the kyoto protocol: a revisit of environmental kuznets curve hypothesis. J Energy Policy 36:239–247CrossRef

Hunt C, Weber O (2019) Fossil fuel divestment strategies: financial and carbon-related consequences. Organ Environ 32(1):41–61CrossRef

Iqbal M, Azam M, Naeem M, Khwaja AS, Anpalagan A (2014) Optimization classification, algorithms and tools for renewable energy: a review. Renew Sustains Energy 39:640–654CrossRef

Itsekor L (2020) A need for investment in Nigerian crude oil refining and infrastructures: a panacea to refined petroleum shortages and economic growth. Arch Business Res 8:31–46CrossRef

Jafari-Raddani M, Asgarabad HC, Aghsami A, Jolai F (2023) A hybrid approach to sustainable supplier selection and order allocation considering quality policies and demand forecasting: a real-life case study. Process Integr Optim Sustain. https://doi.org/10.1007/s41660-023-00350-x

Kenisarin M, Mahkamov K (2007) Solar energy storage using phase change materials. Renew Sustain Energy Rev 11:1913–1965CrossRef

Kraal D (2019) Petroleum industry tax incentives and energy policy implications: a comparison between Australia, Malaysia, Indonesia and Papua New Guinea. Energy Policy 126:212–222CrossRef

Kristianto Y, Zhu L (2019) Platforms planning and process optimization for biofuels supply chain. Renew Energy 140:563–579. https://doi.org/10.1016/j.renene.2019.03.072CrossRef

Liao H, Cao H-S (2018) The pattern of electricity use in residential sector: the experiences from 133 economies. Energy 145:515–525CrossRef

Ghobadian B (2012) Liquid biofuels potential and outlook in Iran. Renew Sustain Energy Rev 16(7): 4379–4384. https://doi.org/10.1016/j.rser.2012.05.013

Luo Y, Miller S (2013) A game theory analysis of market incentives for US switchgrass ethanol. Ecol Econ 93:42–56CrossRef

Ma H, Lou G, Fan T, Chan HK, Chung SH (2021) Conventional automotive supply chains under China's dual-credit policy: fuel economy, production and coordination. Energy Policy 151

Macintosh A, Wilkinson D (2011) Searching for public benefits in solar subsidies: a case study on the Australian government’s residential photovoltaic rebate program. Energy Policy 39:3199–3209CrossRef

Maeda K, Owada M, Kimura N, Omata K, Karube I (1995) CO₂ fixation from the flue gas on coal-fi red thermal power plant by microalgae. Energy Convers Manage 35:717–720CrossRef

Mafakheri F, Nasiri F (2014) Modeling of biomass-toenergy supply chain operations: applications, challenges and research directions. Energy Policy 67:116–126CrossRef

Markovska N, Duic N, Mathiesen BV, Guzovi Z, Piacentino A, Schlör H et al (2016) Addressing the main challenges of energy security in the twenty-firstcenturyecontributions of the conferences on sustainabledevelopment of energy, water environment systems. Energy 115:1503CrossRef

Martikainen, J.P., 2019. Response to ‘A comparative analysis of electricity generation costs from renewable, fossil fuel and nuclear sources in G20 countries for the period 2015–2030’. Journal of Cleaner Production, 208, pp.142-143.CrossRef

Mizobuchi K, Takeuchi K (2016) Replacement or additional purchase: the impact of energy-efficient appliances on household electricity saving under public pressures. Energy Pol 93:137–148CrossRef

Monasterolo I, Raberto M (2019) The impact of phasing out fossil fuel subsidies on the low-carbon transition. Energy Policy 124:355–370CrossRef

MoradiNasab N, Amin-Naseri MR, Behbahani T, Abadi INK (2016) An integrated economic model of fossil fuel energy planning for government and private sectors. Energy Sources, Part B Econ Plan Policy 11(7):651–664. https://doi.org/10.1080/15567249.2016.1163437CrossRef

MoradiNasab N, Amin-Naseri MR, JafariBehbahani T, Jafarzadeh H (2018) Competition and cooperation between supply chains in multi-objective petroleum green supply chain: a game theoretic approach. J Clean Prod 170:818–841CrossRef

Narayan Rath B, Akram V, Prasad Bal D, Kumar MM (2019) Do fossil fuel and renewable energy consumption affect total factor productivity growth? Evidence from cross-country data with policy insights. Energy Policy 127:186–199CrossRef

Nasiri F, Zaccour G (2009) An exploratory game theoretic analysis of biomass electricity generation supply chain. Energy Policy 37:4514–4522CrossRef

Nicoletti J, You F (2020) Multiobjective economic and environmental optimization of global crude oil purchase and sale planning with noncooperative stakeholders. Appl Energy 259:114222CrossRef

Perrin R, Vogel K., Schmer M, Mitchell R (2008) Farm-scale production cost of switchgrass for biomass. BioEnergy Res 1:91–97

Quadrelli R, Peterson S (2007) The energy-climate challenge: recent trends in CO2 emissions from fuel combustion. Energy Policy 35:5938–5952CrossRef

Rajagopal D, Sexton S, Hochman G, Roland-Holst D, Zilberman D (2009) Model estimates food-versus-biofuel trade-off. California Agric 63(04):199CrossRef

Report WCoEaD (1987) Our common future. New York

Rezaee JA (2016) Parameter estimation of solar photovoltaic (PV) cells: a review. Renew Sustain Energy 61:354–371CrossRef

Rowe RL, Street NR, Taylor G (2009) Identifying potential environmental impacts of large-scale deployment of dedicated bioenergy crops in the UK. Renew Sustain Energy Rev 13:271–290CrossRef

Safarzadeh S, Rasti-Barzoki M (2019) A game theoretic approach for pricing policies in a duopolistic supply chain considering energy productivity, industrial rebound effect, and government policies. Energy 167:92–105CrossRef

Shabani N, Sowlati T, Ouhimmou M, Ronnqvist M (2014) Tactical supply chain planning for a forest biomass power plant under supply uncertainty. Energy 78:346–355. https://doi.org/10.1016/j.energy.2014.10.019

Shabani N, Sowlati T (2013) A mixed integer non-linear programming model for tactical value chain optimization of a wood biomass power plant. Appl Energy 104:353–361ADSCrossRef

Sheu J-B (2011) Bargaining framework for competitive green supply chains under governmental financial intervention. Transp Res Part E 47:573–592CrossRef

Sheu J-B, Chen YJ (2012) Impact of government financial intervention on competition among green supply chains. Int J Prod Econ 138:201–213CrossRef

Sivaraman D, More MR (2012) Economic performance of grid-connected photovoltaics in California and Texas (United States): the influence of renewable energy and climate policies. Energy Policy 49:274–287CrossRef

Smith RL (2010) Biofuel supply chains; impacts, indicators and sustainability metrics. J Ital Assoc Chem Eng 21:1135–1140. https://doi.org/10.3303/CET1021190CrossRef

Sun J, Li P, Hou L (2011) Game equilibrium of agricultural biomass material competition-its assumptions, conditions and probability. Energy Procedia 5:1163–1171CrossRef

Szargut J, Stanek W (2008) Influence of the pro-ecological tax on the market prices of fuels and electricity. Energy 33(2):137–143CrossRef

Tao J, Yu S (2011) Implementation of energy efficiency standards of household refrigerator/freezer in China: potential environmental and economic impacts. Appl Energy 88(5):1890–1905ADSCrossRef

Tominac P, Mahalec V (2017) A game theoretic framework for petroleum refinery strategic production planning. AIChE J 63:2751–2763ADSCrossRef

Torabzadeh SA, Nejati E, Aghsami A, Rabbani M (2022) A dynamic multi-objective green supply chain network design for perishable products in uncertain environments, the coffee industry case study. Int J Manag Sci Eng Manag 17(3):220–237

Tyner W, Taheripour F (2008) Biofuels, policy options, and their implications: analyses using partial and general equilibrium approaches. J Agric Food Ind Organ 6(2). https://doi.org/10.2202/1542-0485.1234

Vine E (2008) Strategies and policies for improving energy efficiency programs: closing the loop between evaluation and implementation. Energy Pol 36(10):3872–3881CrossRef

Wan N, Hong D (2019) The impacts of subsidy policies and transfer pricing policies on the closed-loop supply chain with dual collection channels. J Clean Prod 224:881–891CrossRef

Wang C-H, Ko M-H, Chen W-J (2019) Effects of Kyoto Protocol on CO2 emissions: a five-country rolling regression analysis. Sustainability 11:744. https://doi.org/10.3390/su11030744CrossRef

Wang C, Peng Q, Xu L (2020) Decision and coordination of a low-carbon supply chain considering environmental tax policy on consumers. Kybernetes, Vol. ahead-of-print No. ahead-of-print. https://doi.org/10.1108/K-05-2020-0318

Xia Y, Xiao T, Zhang GP (2013) Distribution channel strategies for a manufacturer with complementary products. Decis Sci 44(1)

Xu J, Cao J, Wang Y, Shi X, Zeng J (2020) Evolutionary game on government regulation and green supply chain decision-making. Energies 13:620. https://doi.org/10.3390/en13030620CrossRef

Yue D, You F (2014) Game-theoretic modeling and optimization of multi-echelon supply chain design and operation under stackelberg game and market equilibrium. Comput Chem Eng 71:347–361CrossRef

Yuyin Y, Jinxi L (2018a) The effect of governmental policies of carbon taxes and energy-saving subsidies on enterprise decisions in a two-echelon supply chain. J Clean Prod. https://doi.org/10.1016/j.jclepro.2018.01.188CrossRef

Yuyin Y, Jinxi L (2018b) Cost-sharing contracts for energy saving and emissions reduction of a supply chain under the conditions of government subsidies and a carbon tax. Sustainability 10:895. https://doi.org/10.3390/su10030895CrossRef

Yu-zhuo Z, Xin-gang Z, Ling-zhi R, Ji L, Ping-kuo L (2017) The development of China’s biomass power industry under feed-in tariff and renewable portfolio standard: a system dynamics analysis. Energy 139:947–961CrossRef

Zhai M, Zhang X, Cheng F, Zhou X, Su X (2016) A game-theoretic analysis of the government’s role on the biomass supply chain construction. Int J Ambient Energy 38:444–458. https://doi.org/10.1080/01430750.2016.1144526ADSCrossRef

Zhang X, Yousaf HAU (2020) Green supply chain coordination considering government intervention, green investment, and customer green preferences in the petroleum industry. J Clean Prod 246:118984CrossRef

Zhang Y, Song J, Hamori S (2011) Impact of subsidy policies on diffusion of photovoltaic power generation. Energy Policy 39:1958–1964CrossRef

Zhenkai L, Xuming L, Xiaozhen D (2020) Game-theoretic models of green products in a two echelon dual-channel supply chain under government subsidies. Math Probl Eng 2020:Article ID 2425401MathSciNet

Zokaee M, Nazari A, Aghsami A, Jolai F (2021) An inventory system with coordination among manufacturers and retailers under buyback contract, vertical integration, retailer’s effort and carbon footprint constraint. Int J Sustain Eng 14(6):1551–1571CrossRef

Title: Governance intervention policies in the production competition of biofuels and fossil fuels: a pathway to sustainable development
Authors: Elaheh Jafarnejad
Ahmad Makui
Ashkan Hafezalkotob
Amir Aghsami
Publication date: 02-03-2024
Publisher: Springer US
Published in: Operations Management Research
Print ISSN: 1936-9735
Electronic ISSN: 1936-9743
DOI: https://doi.org/10.1007/s12063-024-00441-z

Springer Professional

Abstract

Please log in to get access to your license.

Dont have a licence yet? Then find out more about our products and how to get one now:

Springer Professional "Wirtschaft+Technik"

Springer Professional "Technik"

Springer Professional "Wirtschaft"