CO₂ price impact on Dell's supply chain : a framework for carbon footprint economic analysis

Abstract

The principal scope of this project is to design, analyze and report a case study of how to effectively account for the highly likely scenario of a CO2 price policy (cap-and-trade or tax) with regard to Dell's product and supply chain. Dell will use the cost implications of total carbon footprint for the supply chain in a strategic design of manufacturing and fulfillment networks. A carbon footprint Life Cycle Assessment (LCA) will be performed on Dell's 15-inch notebook supply chain. A detailed analysis of the current local and global climate change policy options is discussed. Furthermore, case study examples for the two main policy options, cap-and-trade and tax, are presented and analyzed. The target product for this study is a notebook manufactured in Asia and delivered to the United States. Results for the notebook show that the largest part of the CO2 footprint resides in the use phase, the suppliers' phase, and the finish goods transportation phase, with a 76.5, 11.9, and 9.7 percent, respectively. The most likely cost range for the time frame between 2012 to 2020 (phase 1) is $0.04 to $0.06 per notebook. In the case of a policy implementation with zero percent of free allowance and $15.00/CO 2-ton, the additional cost per notebook may range between $1.06 to $1.77. We conduct an analysis to determine what carbon price would make manufacturing in the U.S. competitive with manufacturing in China. We find that the average breakeven CO2 price is $103/CO2-ton.