Developing a Decision-Making Framework for Carbon: Incorporating Carbon into Optimized Business Objectives

Abstract

Carbon emission reductions have been at the center of decision-making for companies across industries, particularly in automotive. As electric vehicles are introduced to the market, there is a large potential for reducing emissions associated with transportation. However, the process to build and use these vehicles is itself carbon intensive.

This thesis explores mechanisms to enable effective decision-making to meet carbon reduction goals. Carbon accounting is a new concept for most original equipment manufacturers, and they lack a framework for weighing the importance of carbon alongside competing business objectives. Additionally, most mechanisms used in other industries require a high level of data availability and knowledge management that may not exist in a dynamic, fast-growing company launching its first products.

In this thesis, we test carbon decision-making mechanisms in a high-growth business environment. A framework is developed for carbon decision-making, and the use of a carbon price is tested for specific business use cases by adding this cost to the objective function of a cost-optimized battery storage system. Using the results from these use cases, recommendations are made for applying carbon pricing to future decisions as knowledge management infrastructure evolves. This work provides a model for decision-making in a high-growth environment and creates clear conditions under which carbon pricing can effectively impact decisions.