Review and Analysis of Carbon Pricing for Mitigating Climate Change Problems

1. Introduction

In this era of industrialization and globalization, carbon emissions and climate change have become dangerous problems. The use of non-renewable sources of energy everywhere, cutting of trees, and lack of preventive measures are contributing significantly as the cause of these problems. These problems are also causing many health-related issues, which are significantly deteriorating the lifespan of most of the people on this earth. The global and dangerous nature of these problems has drawn significant attention from many government agencies and concerned authorities. Awareness among people has also elevated these problems to the next level. History shows that many preventive and mitigative actions have been taken to tackle these problems. Some of these actions involve shifting towards renewable sources of energy, tree plantation drives, awareness drives, and setting limits for every kind of carbon releaser (Hornibrook et al., 2015). Shifting towards renewable energy, tree plantation drives, and awareness campaigns contributed to the purpose judiciously with the support of concerned authorities in terms of subsidies and grants. New methods and schemes, such as carbon pricing and Industry 4.0 or the fourth industrial revolution (4IR), were also introduced to make these solutions more effective. The use of renewable energy sources for tackling carbon emissions from conventional sources contributed to more complexity in providing reliable energy, and the 4IR solves these issues and helps in providing efficient and reliable energy (Apata et al., 2021). 4IR involves the use of disruptive technologies such as artificial intelligence, machine learning, virtual reality, blockchain, robotics, and 3-D printing in manufacturing processes and supply chains. In comparison, carbon pricing involves putting a cost to the release of carbon for demotivating carbon emitters. This paper chapter particularly focuses on chronically reviewing and discussing carbon pricing in detail and finds its applicability and effectiveness in the supply chain context.

Earlier, to control carbon release, certain limits were set, and all the carbon releasers had to be abiding by these rules/limits (Liang et al., 2014). Although this was a good method to stop concerned carbon-releasing firms or organizations from releasing carbon beyond acceptable limits, it could not effectively minimize the release of carbon. This limit was forcing carbon-releasing firms or organizations to improve the existing technology to get the carbon emission under the limit, but they were mostly making the carbon emission just beside the set limit. Such carbon-releasing firms or organizations that were making a heavy investment to minimize carbon emissions were not getting any kind of incentives. So, this was also demotivating for minimizing carbon emissions.

This paper talks about the new scheme to tackle the above-discussed limitations. This paper discusses the recently developed carbon pricing scheme from a supply chain perspective (He et al., 2012). This paper extensively does a chronological review of the development of the carbon pricing scheme in the supply chain context. This paper also tries to study the carbon pricing instruments such as carbon emission taxes and carbon emission trading schemes for the supply chain (Li et al., 2017; Xu et al., 2016; Zakeri et al., 2015). This paper also tries to find the applicability and effectiveness of the carbon pricing scheme in the supply chain. With the objective of studying this new scheme from a supply chain perspective, the study is divided into the following sections:

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  The first section dealt with the introduction of the topic,

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  The second section is about the carbon pricing scheme and its development over the years,

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  Result and discussion of the study is shown in the third section,

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  The fourth section presents the concluding statement,

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  Future scope of the study is presented in the last section.