The role of agricultural biomass in supply chain decarbonization

Abstract

To achieve supply chain decarbonization, environmentally conscious manufacturers are transforming their energy infrastructure. While certain manufacturers are adopting a pure bioenergy strategy in their production processes, others are opting for a hybrid energy approach that combines traditional energy with bioenergy. This choice is often influenced by limitations in land capacity and the developmental stage of biomass conversion technologies. This paper introduces a game-theoretic model that explores the optimal approach to achieving supply chain decarbonization by strategically selecting energy portfolios. Our findings reveal that in scenarios where the market size is small, manufacturers tend to adopt a hybrid energy strategy, particularly when the average yield of biomass is low. However, as the biomass yield increases, manufacturers lean towards a hybrid (or pure) bioenergy strategy in smaller (or larger) markets. In larger markets, the manufacturer’s energy strategies become more complex and are influenced by various factors. Our results emphasize that farmers should base their planting decisions on considerations such as available land, initial investment, and agricultural biomass yield. This paper urges manufacturers to effectively navigate the complexities of the carbon tax policy and make informed decisions that promote a sustainable energy strategy. By utilizing technological advancements, governments and manufacturers can collect and analyze data on factors such as market size, biomass yield, and carbon tax policy, ultimately working towards a more efficient, productive, and environmentally sustainable future.