Research showed that acting toward mitigating the global warming issue was compulsory or mankind will face unbearable financial, social and environmental costs. Solutions exists to reduce the greenhouse effect. Among them the Green Logistics practices such as implementing solar panels on a warehouse’s roof. The three factors tested in our NPV model, the increase rate of energy, the initial price of energy, and the time length of the project were all positively related to the NPV of the project. The Carbon Tax level, tested in function of the three other factors was also positively related toward the NPV. With that said, when the discount rate is high, NPV values of Solar Panels Installation are nearly all negative in tested scenario. Keeping the discount rate low would mean a low cost of investment. A special credit rate for loan to green projects could drive the discount rate down and favorize investments in solar panels installation on warehouse’s roof for example. It would be beneficial for both companies and the planet to help companies to invest in Green Logistics project.
Nevertheless, the model suffers from a few limitations. The data taken for the analysis were for small scale photovoltaic (PV) projects, like household and little business infrastructure. Data for bigger scale of projects would have been preferable but were not available or in a less precise way. Non-residential solar installations, because significantly bigger, benefit from an economy of scale compared to PV residential installations. Therefore, the economy of scale could not be included in our model while an installation on a warehouse or plant’s roof is considered a non-residential solar installation. Regarding the Daily Market Output, a link with the Installation Cost could have been establish to consider different sizes of project of solar
‧
panels implementation, assessing an optimal size for an economic performance. Moreover, the leasing of the warehouse’s roof to a solar company, another mode of investment for solar panel installation was omitted in the study. This different business model put the investment weight on the photovoltaic supplier instead of the company owning the warehouse.
The model presented in this paper has put forward the economic and environmental performance through the NPV model, which gives the value in dollar and the reduction of CO2e in kilograms. However, the social performance is not be considered in the model. It is a significant factor but the quantitative analysis performed later is limited and cannot take it into account. Moreover, the NPV model can be apply to other business fields than Logistics.
For example, a production company can implement solar panels on a roof of a plant. The model can also be adapted to other type of projects.
Despite those limitations, the study delivers practical contributions. Based on the analysis in Section 5, a high price of energy favorizes the NPV of the implementation of solar panels.
Places where the energy is hard to get and expensive would better benefit from this type of project, as well as locations where the price of energy is expected to increase. As seen in section 5, a certain Carbon Tax level help to reach the break-even point when conditions do not suffice on their own. Under the estimated conditions in Table 2 and a discount rate of 2%, $ 59 dollars per metric ton of CO2e emitted would turn the NPV positive and make the project economically viable. Currently few countries implemented such Price of Carbon Tax. The trend is rising though, with the increasing need of a Carbon Tax to mitigate the consequences of the global warming issue. A higher Carbon Tax benefits more with a longer length of project. In the case of a solar panel installation, product characteristics should fit a long lifespan of project to
‧ 國
立 政 治 大 學
‧
N a tio na
l C h engchi U ni ve rs it y
get both best economic and environmental value.
Future studies could expend the work by incorporating randomness into model elements, e.g.
uncertainty in the Price of Carbon Tax, Decay Rate or Increase rate of energy price. The size factor of the solar panel implementation could be evaluated to estimate the best suitable size for economic viability of the project. Other types of Green logistics projects could be covered using an adapted version of the model to assess their financial feasibility.
‧ 國
立 政 治 大 學
‧
N a tio na
l C h engchi U ni ve rs it y
Reference
Aldy, J. (2017). Designating and Updating a US Carbon Tax in an Uncertain World. Discussion Paper 17-01: Resources for the Future, pp.4-21.
Barbose, G. and Gargouth, N. (2016). Tracking the Sun IX: The Installed Price of Residential and Non-Residential Photovoltaic Systems in the United States. Energy Technologies Area, Lawrence Berkeley National Laboratory, p.16.
Brander M., (2012) Greenhouse Gases, CO2, CO2e, and Carbon: What Do All These Terms Mean? Ecometrica, pp.1-3.
Carter, C. and Rogers, D. (2008). A framework of sustainable supply chain management:
moving toward new theory. International Journal of Physical Distribution & Logistics Management, 38(5), pp.360-387.
Cook, B., Smerdon, J., Seager, R. and Coats, S. (2014). Global warming and 21st century drying. Climate Dynamics, 43(9-10), pp.2607-2627.
Doraszelski, U. (2001). The net present value method versus the option value of waiting: A note on Farzin, Huisman and Kort (1998). Journal of Economic Dynamics and Control, 25(8),
‧ 國
立 政 治 大 學
‧
N a tio na
l C h engchi U ni ve rs it y
pp.1109-1115.
Emmett, S. and Sood, V. (2010). Green supply chains. Chichester, U.K.: John Wiley & Sons.
Hansen, J., Sato, M., Hearty, P. and Others (2016). Ice melt, sea level rise and superstorms:
evidence from paleoclimate data, climate modeling, and modern observations that 2 A degrees C global warming could be dangerous. 1st ed. eScholarship, University of California, p.3762.
IPCC (2007). IPCC Fourth Assessment Report: Climate Change 2007. Intergovernmental Panel on Climate Change. Cambridge University Press, Cambridge.
IPCC (2015). Climate Change 2014: Synthesis Report. Contribution of Working Groups I, II and III to the Fifth Assessment Report of the Intergovernmental Panel on Climate Change [Core Writing Team, R.K. Pachauri and L.A. Meyer (eds.)]. IPCC, Geneva, Switzerland, 151 p.13.
Landrigan, P. (2017). Air pollution and health. The Lancet Public Health, 2(1), pp.e4-e5.
Le Monde.fr. (2017). Climat : Paris vise la neutralité carbone en 2050. [online] Available at:
http://abonnes.lemonde.fr/planete/article/2017/03/13/climat-paris-vise-la-neutralite-carbone-e n-2050_5093437_3244.html?h=8 [Accessed 24 Jun. 2017].
Lin, Grier C. I.; Nagalingam, Sev V. (2000). CIM justification and optimisation. London:
Taylor & Francis. pp. 36. ISBN 0-7484-0858-4.
‧ 國
立 政 治 大 學
‧
N a tio na
l C h engchi U ni ve rs it y
McDonald, R. and Siegel, D. (1986). The Value of Waiting to Invest. The Quarterly Journal of Economics, 101(4), p.707-728.
Rezai, A., Van der Ploeg, F. and Withagen, C. (2012). The Optimal Carbon Tax and Economic Growth: Additive versus Multiplicative Damages. Center for Energy and Environmental Economic Studies. St. Petersburg: EUSP, pp. 1-27.
Rotemberg, J. and Woodford, M. (1996). Imperfect Competition and the Effects of Energy Price Increases on Economic Activity. Journal of Money, Credit and Banking, 28(4), p.549-577.
The Economist. (2017). Triple bottom line. [online] Available at:
http://www.economist.com/node/14301663 [Accessed 24 Jun. 2017].
US EPA. (2017). Greenhouse Gases Equivalencies Calculator - Calculations and References | US EPA. [online] Available at:
https://www.epa.gov/energy/greenhouse-gases-equivalencies-calculator-calculations-and-refer ences [Accessed 3 Jun. 2017]
van den Bergh, J. (2004). Optimal climate policy is a utopia: from quantitative to qualitative cost-benefit analysis. Ecological Economics, 48(4), pp.385-393.
Zhang, K., Douglas, B. and Leatherman, S. (2004). Global Warming and Coastal Erosion. Climatic Change, 64(1/2), pp.41-58.