Green index and supply chains

Green index and supply chains

By TA News Bureau:

An India engineering researcher has come out with a concept of integration of business economics with carbon tax policy. Dr Lokesh Kumar, an Assistant Professor in the Department of Mechanical Engineering of Delhi-based Jamia Millia Islamia, says his concept would help the Indian tyre industry address many of the challenges it faces as it tries to reduce carbon emission to mitigate global warming and climate change. In an interview to Tyre Asia, he says such initiative will make corporate entities not only more aware of the issue of carbon tax, but also hasten them and the government to adopt green policies without compromising on the industry’s competitiveness

The world is facing a challenging task to reduce carbon emissions to mitigate global warming and climate change. In this context, at the United Nations Climate Conference in Paris in 2015, countries and groups had committed their carbon emissions reduction targets.
For example, India has offered emission reduction targets of 33 per cent to 35 per cent while the US said it would work to slash it by 42 per cent. The offer from the European Union was a reduction of 20–30 per cent, while Japan offered 25 per cent, Russia 15–25 per cent, Canada 17 per cent and China 40–45 per cent.
Reducing carbon emissions has become critical to the design and operation of globally-integrated supply chain networks. Thus, the supply chain network design (SCND) modelling has become an area of intense on-going research to consider environmental regulatory policies such as carbon emission with economic objectives.
When asked what were the main objectives of such an integration designed to network tyre manufacturers to take advantage of carbon emission benefits, Dr Kumar disclosed that in India, the tyre manufacturing companies did not take up tyre remanufacturing due to a lack of sufficient economic benefits and legislative compulsion.
He however said some retreading companies remanufacture the used tyres for pure economic considerations.
Dr Kumar has a Masters and PhD from the Indian Institute of Technology Roorkee and his current research interests among others are Reconfigurable Manufacturing Systems, Supply Chain Management, Production Planning and Control, Operations Management, E‐commerce, Operation Research, Modelling and Simulation and Rapid Prototyping.
“To achieve carbon reduction commitments, India is to impose carbon taxes in the near future,” he says. The future tax policies may cause adverse impact on the economic and environmental performance of tyre remanufacturing companies.
His research has examined the future tax policy implications on the economic and environmental performance of tyre remanufacturing companies. This would help them minimise the negative effect of carbon taxes on company bottom lines.
“My current work will help the government and the remanufacturing industry to frame appropriate carbon emission policies for reconfigurable tyre remanufacturing supply chains in India,” he told Tyre Asia in an interview.
He suggested that the tyre remanufacturing industry should ask the government to get the foreign exchange saving (i.e. forex) reward to save foreign exchange by tyre remanufacturing supply chains for India.

Carbon tax

On July 1, 2010 India has imposed a nationwide carbon tax of Rs 50 per ton ($1.07/mt) on produced/imported coal in India. Australia’s federal parliament’s carbon tax legislation put a carbon price of $23 per ton, $24.15 per ton, $25.40 per ton for year 2012, 2013 and 2014, respectively. Compared to this the US government had decided on $37 per ton as the average social cost per ton for 2015.
India currently does not impose any mandatory carbon tax on tyre and tyre remanufacturing supply chains. To achieve carbon reduction commitments, India has to impose carbon taxes in the near future. Other Asian nations such as China, Japan, Korea, Taiwan, Singapore have also enforced or likely to enforce carbon policies in the near future.
Elaborating on his theme ‘multi-objective mixed integer programme model,’ Dr Kumar said that his study presented a multi-objective model for reconfigurable tyre remanufacturing strategic planning to consider business economics and carbon emission as environmental objective with some relevant constraints.
“The model included several aspects of practical relevance, namely, carbon emission policies, group decision-making environment etc. For the reconfigurable tyre remanufacturing network evolution, the model provides a decision-making tool to determine the location and capacity of new elements, capacity module expansion of existing elements over a multi-period planning horizon.”
A methodology is framed to solve the model by integrating various techniques. Dr Kumar’s study has suggested some important managerial and policy insights for remanufacturing tyre industry practitioners and the government.
This study proposed carbon tax policy (CTP), carbon tax-reward policy (CER) and carbon-tax-reward-forex saving policy (CTRF) for government to frame future carbon emission policies.
Dr Kumar says: “The best carbon policy is CTP for the government to get revenue and CTRF for tyre remanufacturing supply chain for enviro-business profit.”

Green Index

Commenting on how tyre company CEOs be prepared to accept his proposal of Green Index in order to compare tyre manufacturing supply chains, Dr Saxena said that there will be benefits accruing from it.
“There is a 30 per cent less carbon emission per tyre in tyre remanufacturing process compared to a new tyre manufacturing process,” he explains. “So, the tyre remanufacturing industry should demand to get carbon saving reward due to this benefit.”
In India, the tyre remanufacturing industry saves a lot of foreign exchange by decreasing the import of raw materials required for a new tyre manufacturing. Therefore, the tyre remanufacturing industry should demand that it should get foreign exchange saving reward due to this benefit to the nation.
To compare various tyre remanufacturing supply chains, Dr Kumar has suggested a greenness index of supply chain. Furthermore, forex saving reward rate for the carbon tax- reward-forex saving policy is recommended for the various tyre remanufacturing supply chains using SC greenness index.
“This index can be utilized by the government to compare greenness of various tyre remanufacturing supply chains in the tyre remanufacturing industry and give the revenue reward per remanufactured tyre to the tyre remanufacturing supply chains,” he remarked.

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