Carbon-constrained firm decisions: From business strategies to operations modeling

This paper presents a systematic literature review on carbon-constrained operations models. First, carbon constraints are defined and categorized into three genres: policy-driven, market-driven, and nature-driven. Second, business strategies for fulfilling carbon constraints are summarized and classified into three main groups: internal emissions abatement, collaborative emissions abatement, and carbon compensation. Subsequently, ten specific types of carbon-constrained operations models are studied in support of these business strategies. Lastly, the research trend is analyzed and a conceptual studying framework is proposed. The results show that the policy-driven carbon constraints are the primary carbon considerations in operations models, with the emissions trading scheme and the carbon tax taking first and second place, respectively. In addition, the focus of carbon-constrained operations models evolves from short-term to long-term strategies, from internal to collaborative abatement strategies, and from simple to more practical models. From the carbon constraint modeling perspective, future studies regarding the coexistence of multiple carbon constraints and their interactive effects might have interesting results. From the business strategy perspective, the collaborative emissions abatement models, especially horizontal co-opetition mechanisms, remain to be further explored.