Effect of carbon price fluctuation on shore power system: a risk transmission analytics model

The pressure to control emissions has prompted governments to implement the cap-and-trade scheme. Carbon price fluctuation is common under the cap-and-trade scheme and inevitably affects current pricing and profitability in the shipping supply chain. Thus, this paper constructs a risk transmission model and takes government subsidy into account. It investigates the influence of carbon price fluctuation on the risk transmission of pricing and profit for shipping supply chain members under the cap-and-trade scheme in the shore power (SP) system. The results indicate that for the shipping company, the risk transmission degree is reduced when the basic market is larger or when the SP usage fee is higher. If the government offers higher subsidy, the fluctuation of freight rate with the carbon price is reversed. For the port, the degree and direction of risk transmission in port profit are related to the size of carbon emission allowance (CEA). If CEA is small, port profit decreases with the carbon price. If CEA is large enough, the risk transmission direction reverses. In summary, this paper conducts supply chain analytics through carbon price fluctuation and the extent of government subsidy, evaluating the risk transmission and economic returns in the supply chain to achieve efficiency and flexibility. It helps supply chain members better understand and utilize their supply chain information to make more informed decisions, thereby enhancing the performance and competitiveness.