Methods and Policies to Reduce Carbon Dioxide Emission in Logistics

Master's Thesis, 2021

109 Pages, Grade: 2.6










1.1. Research Background
1.2. Problem Statement
1.3. Research Objectives
1.4. Scope And Limitations Of The Research
1.5. Structure Of Thesis

2.1. Introduction
2.1.1. Green Logistics
2.1.2. Carbon Dioxide Emission
2.2. Factors Influencing CO2 Level Through Logistics
2.2.1. Structural And Operational Factors
2.2.2. Commercial And Functional Factors
2.3. Background Of Methods And Policies
2.4. Methods To Reduce Carbon Dioxide Emission In Transportation Management
2.4.1. Shipping Route
2.4.2. Chargeable Weight
2.4.3. Choice Of The Transportation Mode
2.4.4. Efficiency Of Transport
2.4.5. Other Methods
2.5. Alternative Methods To Reduce Carbon Dioxide Emission In Warehouse Management
2.5.1. Renewable Energy
2.5.2. Material Handling Equipment
2.5.3. Green Technology Investment
2.5.4. Warehouse Construction
2.6. Policies To Reduce Carbon Dioxide Emission
2.6.1. Carbon Emissions Trading
2.6.2. Carbon Tax
2.6.3. Difference Between Policies By Various Parameters

3.1. Data Collection Methods
3.2. Primary Data
3.3. Secondary Data

4.1. Expertise Survey Of Logistics Department
4.1.1. Type Of Industries
4.1.2. Approach For Carbon Dioxide Emission Calculation And Kyoto Protocol
4.1.3. Selection Of Transportation Practices
4.1.4. Efficient Methods And Policies For CO2 Emission Reduction
4.1.5. CO2 Emission Reduction And Impacts Within Companies
4.2. Semi-Structured Interview With Employees Of Logistics Department
4.2.1. Problems Related To Transportation
4.2.2. Problems Related To Warehouse
4.2.3. Problems Related To Policies
4.3. Case Studies On Various Methods In Logistics
4.3.1. Case Study: Selection Of Mode
4.3.2. Case Study: Increasing Loading Degree Or Payload
4.3.3. Case Study: Comparison Of Engine Technologies In Heavy Duty Vehicle
4.3.4. Case Study: Use Of APU And SP
4.3.5. Case Study: Use Of Drones For Delivery
4.3.6. Case Study: Use Of Forklift
4.4. Official Reports On Technology And Policies
4.4.1. Alternative Fuels
4.4.2. Performance Of Carbon Tax And Emission Trading System

5.1. Summary
5.2. Critical Appraisal
5.3. Outlook

6.1. Conclusion
6.2. Recommendation


APPENDIX I: Structured Questionnaire For Expertise Survey
APPENDIX II: Semi-Structured Interview


Figure 1. 1: CO2 emission from transportation modes on Global level

Figure 2. 1: Overview of Greenhouse gas emission of year 2018, EU-27

Figure 2. 2: Global CO2 Emission Of Different Sector

Figure 2. 3: Parameters of the carbon emissions in transportation

Figure 2. 4: Options to reduce carbon dioxide emission through warehouse

Figure 3. 1: Methods for data collection

Figure 3. 2: Flowchart of the secondary Data collection

Figure 4. 1: Statistics of response by industry

Figure 4. 2: Approach for CO2 emission calculation

Figure 4. 3: CO2 emission data collection accuracy

Figure 4. 4: Engagement with Kyoto Protocol

Figure 4. 5: Modes of Transportation

Figure 4. 6: Types of vehicles used for transportation

Figure 4. 7: Usage of fuel in road transportation by companies

Figure 4. 8: Efficient methods applied by companies

Figure 4. 9: Preferred policies by companies

Figure 4. 10: Achieved CO2 reduction within past 10 years by logistics practices

Figure 4. 11: Impacts on organization after reducing CO2 emission

Figure 4. 12: Carbon emission relevant to payload (Scenario 1)

Figure 4. 13: Carbon emission relevant to payload (Scenario 2)

Figure 4. 14: Engine type and relevant emission

Figure 4. 15: Covered GHG Emission from ETS and Carbon Tax


Table 2. 1: Practices to remove negative impacts for ‘Green Logistics’

Table 2. 2: Summary of feasible methods for CO2 reduction

Table 2. 3: Co-relation between emission allowances from government, use of green technology investment, and expected output

Table 2. 4: Difference between policies

Table 4. 1: Comparison of multiple emission factors of transportation for modal shift selection

Table 4. 2: Carbon Emission through APU and SP

Table 4. 3: Comparison of CO2 reduction through APU and SP

Table 4. 4: Comparison of carbon emission

Table 4. 5: Difference of carbon emission and Percentage reduction

Table 4. 6: Comparison of Forklifts based on fuel type


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I am dedicating my master’s thesis to my God ‘Bramha Chaitanya Gondavalekar Maharaj’, for showering blessing on me and strengthening my abilities. To the memory of my grandparents Late. Ghatpande Shivaram and Late. Ghatpande Vimal and for teaching me to dream and work hard enough to achieve those dreams. To my parents Mr. Ghatpande Ravindra Shivaram (Member Industrial Court/ District Judge) and Mrs. Ghatpande Poonam Ravindra (Headmistress - Kanya Vidyalaya, Chakan) for being my strong pillar and inspiration. To my brother Mr. Ghatpande Amey Ravindra and sister-in-law Mrs. Radhika Amey Ghatpande who supported me throughout the journey.

मी माझा प्रबंध माझे जगन्नियंता सद् गुरू श्री. ब्रम्हचैतन्य ग दवलकरे महाराज याच्यां चरणी

समन्नपित करते. त्ांच्याकडू न न्नमळालेल्या आशीवािद आन्नण सामर्थ्ि यांमुळे च मी हा प्रबंध यशस्वीपणे पूणि करू शकले. मला स्वप्न बघण्याचा दृन्निक न आन्नण ती स्वप्ने साकार करण्यासाठी लागणारे कि करण्याची तयारी ही न्नशकवण न्नदलेले माझे न्नदवंगत आजी-आज बा न्नवमल घाटपांडे व न्नशवराम घाटपांडे यांस दे खील मी हा प्रबंध समन्नपित करते. तसेच माझे आधारस्तंभ व

प्रेरणास्थान माझे आई-वडील सौ. पूनम रवीद्र

घाटपांडे आन्नण श्री. रवीद्र

न्नशवराम घाटपांडे यांस

देखील हा प्रबंध समन्नपित करते. माझ्या ह्या वाटचालीत प्रेरणा आन्नण मागिदशिनात म लाचा वाटा

असणाऱ्या माझा भाऊ श्री. अमेय रवीद्र देखील हा प्रबंध मी समन्नपित करते.

घाटपांडे आन्नण वन्नहनी सौ. रान्नधका अमेय घाटपांडे यांना


I started my master’s thesis in November 2020, during this period whole world was passing through the massive COVID-19 pandemic crisis. During that period, emergency protocols were implemented in every country of the world to control the spread of the virus which resulted in restrictions on all non-essential public movements. To keep always motivated for any individual was the most difficult part throughout this period.

This thesis would have not possible without the support and help of several individuals and institutions who one way another contributed and extended their valuable assistance in the preparation and completion of this study.

First and foremost, I would like to express my sincere gratitude to my supervisor Prof. Dr. Stephan Seeck for his motivation and enormous contribution of knowledge. His guidance and support were invaluable to the success of this work. My sincere gratefulness goes to Mr. Engelhardt Maximilian for his supervision and support.

Besides my supervisors, I would like to thank my company colleagues at Volkswagen AG, Kassel, Dr. Schade Konrad, Mr. Kleis Stefan, Mr. Ernst Martin, Ms. Noyer Julie Carole, and Ms. Kramer Adriana for their support by participating in group discussion and guidance on topic selection for this thesis. Will always remember our team meetings and a great time working at Volkswagen AG, Kassel.

My sincere appreciation goes to all responders of the survey for sharing their knowledge and information.

I would like to thank my parents for their huge contribution to my academic pursuit from my primary to master’s stage. You sacrificed everything to help me come this far in life. To my brother and sister-in-law, you were all there for me with every form of encouragement. Talking with your 2 years old daughter ‘Radnyee’ was one of the factors for boosting my positivity.

Last but not least, special thanks to my friends for being there always with me.


The report is focused on carbon dioxide emission in logistics industry. It evaluates some segments of logistics industry that how carbon dioxide emission is takes place in the logistics operations. Global warming and climate control elements are turning into a genuine worldwide concern. The enactment is turning into a fundamental plan to control the measure of carbon dioxide discharge that may impact the entire world in upcoming years. To figure out this issue, the research is conducted to investigate the methods and policies which support the logistics operation to lessen or control the carbon dioxide emission. The report has some insight that how various logistics factors are responsible to influence level of carbon dioxide. Furthermore, various opportunities to reduce the transportation as well as warehouse related carbon dioxide emission are identified. With the analysis of different industries, the most promising and feasible methods for logistics operations are determined such as increasing load factor, modal shift, alternative fuels, electric forklifts. In addition to this, analysis of environmental policies are also determined namely carbon emission trading, carbon tax. The impacts on organizations after applications of studied methods and policies has been also reviewed. The research outcome has overall contribution to green logistics management.


Carbon dioxide emission, transportation emission, warehouse emission, green logistics, environmental tax policy, environmental taxes, carbon footprint.


The purpose of the research study is to provide feasible information, methods, and environmental policies which will support the industries to implement in the logistics department to reduce carbon dioxide emission. This chapter gives general information about carbon dioxide emission in transportation, as well as legit agreement, highlighting the problems, and challenges faced by the Logistics sector. This chapter is organized as follows: Section 1.1 introduces the background of the research; section 1.2. defines the problem statement; sections 1.3. and 1.4. objectives and scope along with limitations of the research respectively; section 1.5. describes the structure of this master’s thesis.

1.1. Research Background

In the world, inhabitants are increasing day by day and it is reached up to 7.79 billion by the end of the year 2020. The activities like industrialization and development have increased pollution with a dropping level of natural resources shown a major impact on the environment. Due to climate change, the earth’s temperature together with environmental issues is grabbing peak point from last few years. The earth’s temperature is one of the major responsible factors for global warming.

Human lifestyle is evolving day by day with rising new activities in various sectors namely manufacturing, industrialization, global proliferation, transportation, etc. The development is building a bridge between human and environmental changes. These environmental changes could be pollution, deforestation, biodiversity, and global warming, etc.

Production of food, utilization of energy and fossil fuels, cutting of trees and forest, building construction, agricultural production and land usage, transportation, manufacturing from various metals are mainly responsible to emit greenhouse gas (GHG) emissions. Waste production from business and household activities plays vital role in climate change. The logistics and recycling networks to withdraw scrap or waste to decrease contamination have been promoted and applied by all businesses. The greenhouse gas emissions will be able to control or reduce by implementing various ideas by human beings only. On the industrialization level, organizations are trying to reach a zero-emission zone to save the earth’s climate. Worldwide, there are various sectors which have the potential to proceed further to mitigate emission. In this technical era, organizations are discovering plenty of strategies to trash out greenhouse gas secretion.

To control these greenhouse gas emissions, environmental laws have been prolonged. The widely known treaty which is Kyoto Protocol 1997 has made an agreement to reduce greenhouse gas. Under this protocol, European Union (EU) and EU-15 were agreed to decrease emission levels by 5 percent between the period Year 2008-2012. Regardless, EU-15 countries succeeded in emission reduction by 8 percent below the 1990 level. For the time frame over 2012, the EU re-established concurrence with the goal of 30% emission abatement by the Year 2020 in contrast with the Year 1990 level (UNFCCC 2013). To handle this unwanted carbon dioxide emission level, in the Year 2005 EU countries came up with the first international trading system in the world with name European Union Emission Trading System (EU ETS). Furthermore, another policy named Carbon Tax came into notice to act on carbon emission.

Transportation is the major reason for the direct CO2 emission of 24 percent due to fuel combustion (IEA 2020). The contribution of road transportation amongst all transportation modes gives the biggest share of CO2 emission. Road transportation also generates few problems such as traffic, blockage, energy consumption which causes damage to the surrounding. To beat such kind of issues, ‘Green Supply Chain’ and ‘Green Logistics’ has been started playing an important role in the world. This core idea of sustainable and green logistics is contributing to the long-term goal of a well- being society. Therefore, it is advantageous for logistics and supply chain management researchers to think about the effect of sustainable supply chains and logistics on the environment.

Challenges and issues of carbon dioxide emission have been delivered by many authors. But, to reduce the gap of knowledge, this master’s thesis has a significant focus on various methods as well as policies that can be helpful to reduce CO2 emission through the logistics field.

1.2. Problem Statement

Industrial expansion is majorly responsible to create global warming particularly with respect to climate change. Greenhouse gas especially carbon dioxide emission is one of the main reasons by which the world is facing adverse challenges from the environment.

Nowadays, many industries are facing difficulties regarding pollution, global warming, climate change, environmental damage by their different functions such as production, supply chain, logistics, service, and maintenance, etc. Following Fig. 1.1 shows how CO2 emission varies from the Year 2010 to 2018 in numerous transportation modes.

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Figure 1. 1: CO2 emission from transportation modes on Global level [Source: IEA 2020; own work]

In the Year 2018, the rail mode has emitted the least carbon emission (83.518 Mt) whereas road freight (2365.85 Mt) represents the second-highest position for carbon dioxide emission by following passenger mode (3622.37 Mt). Furthermore, aviation and shipping movement had nearly similar emission of 929.52 Mt and 855.09 Mt respectively at the end of the Year 2018. To show some concern about the environment and to conquer some dark impact of CO2 emission in the world, companies are taking a major interest in the sustainable and green supply chain including logistics.

With the increasing impact of mentioned challenges and carbon dioxide emission through the logistics sector on the surrounding, the implication of several methods along with policies is an essential agenda. Furthermore, it is required to consider different options from warehouse management which could be valuable to reduce carbon dioxide emission in the logistics areas.

1.3. Research Objectives

After studying various literature, articles, and research papers as well as considering all the benefits of having several methods and policies, the following objectives are taken into account. The objectives are divided into two sections to achieve the aim of the research.

- Main Objective

The main objective of this master’s thesis is ‘To study different methods and policies which help to reduce carbon dioxide emission in logistics sector’.

- Specific Objectives

1. To summarize the available knowledge of numerous methods as well as policies that give benefits of carbon emission mitigation in logistics.
2. To analyse the data of efficient methods and policies used in logistics by different companies in different regions of the world.
3. To analyse the data of environmental policies for purpose of carbon and GHG emission reduction.
4. To identify the problems of carbon emission in the current situation in logistics.

1.4. Scope And Limitations Of The Research

- Scope

This research only included studies on the transportation and warehouse sector of logistics. Whereas the study of other areas of logistics such as packaging and inventory management will not be included.

Since CO2 is considerable for the majority of total greenhouse gas emission from transport and warehouse management sector activities and therefore only CO2 emission will be listed in the study. As there are a lot of solutions that can be helpful to reduce CO2 emission, but this thesis will specify various methods, and environmental policies. Also, the information about these emission reduction options will be helpful for the industries to achieve more efficiency and sustainability in logistics.

- Limitations

This examination is performed and finished in 16 weeks, subsequently, to complete research and for understanding different boundaries, considerably more time would be required. Therefore, the study area is only limited to the transportation and warehouse management sector to complete the study within the time frame. For equal reason, areas such as inventory management, material procurement, and third-party logistics, etc., were not considered for the research. Further, due to a COVID-19 pandemic period, a personal interview with logistics expertise for primary data collection was not possible. For the same reason, university libraries were closed, so access to research papers, journals, books were not available. Therefore, research papers for this study were gathered through the internet. The willingness of expertise to complete the questionnaire survey was also one of the aspects of limitations of the research study.

1.5. Structure Of Thesis

The master’s thesis consists of five chapters.

Chapter 1 introduces the research background, problem statements, research objectives, scope and limitation of research.

Chapter 2 spotlights on recently directed examination writing and applicable exploration of green logistics, carbon dioxide emission, tracked by literature studies of various methods and policies to confront the research objective.

Chapter 3 includes data collection methods which shows further how required data is gathered and segregated to analyse results.

Chapter 4 draws relevant results after analysing collected data which is gathered by expertise survey, interview, literature, and official reports, etc. Results are pulled by taking research objectives into account.

Chapter 5 emphasises on summary pulled from the results of the research which explains the fact and figures of the results in brief. The chapter also focuses on critical appraisal and outlook are to put some light on assumptions regarding results and scope of research.

Chapter 6 includes the conclusion of the entire research study and further recommendations where logistics could find benefit in terms of CO2 emission.


2.1. Introduction

This chapter shows the structure of the study as well as hypothetical concepts dependent on the works of literature which are associated to the stated subject. The type of this research is a qualitative research where all data has been collected by reviewing various literature including different previous research papers, articles, journals, books, etc.

Section 2.1. begins with the introduction of the current chapter. This section also presents a review of previous studies in green logistics and carbon dioxide emission in logistics respectively. This section will describe how it is important to increase the value of green logistics by decreasing carbon dioxide emissions.

Section 2.2. explained different factors of logistics that would influence the CO2 emission level of transportation.

Section 2.3. states background of methods and policies which describes the ways proposed by automotive industry as well as the regulations introduced by the United Nations to achieve climate change goal.

Section 2.4. shows literature study of different methods which could be very helpful to reduce carbon dioxide emission in transportation. furthermore, this part also shows how these methods can deliver positive results regarding carbon dioxide emission reduction.

Section 2.5. provides a piece of information, that how different methods help to mitigate carbon dioxide emission from the warehouse.

Section 2.6. presents the review on environmental policies which support the Kyoto Protocol 1997 Act to control climate change.

2.1.1. Green Logistics

Logistics is the term majorly used to represent different areas like transportation, storage, warehouses, and picking raw material from suppliers to deliver the product to the end customer. As a key factor of various business operations, professions, and academic studies also, logistics has come into focus for the last fifty years with increment in profit. During the past fifteen years, with increasing concern regarding environmental impact by public and government, numerous industries have gone under tremendous pressure to minimize negative environmental impact. The distribution of goods damages local air quality, generates noise and vibration, causes accidents that add to an Earth-wide temperature boost. Moreover, greenhouse gases are also responsible for climate change on earth. (McKinnon 2012).

Logistics is a major part of supply chain management, which is defined as a set of processes where different stakeholders for example suppliers, factories, warehouses, distributor, and retailers work together to convert raw material into a final product ready to be delivered to end customer (Pinto 2018, p.447). Nowadays, a lot of industries are designing a sustainable approach for the logistics departments by considering their impact on nature.

With a lot of interest in the ‘green movement’, there are few definitions of ‘green logistics’. Green logistics exercises incorporate estimating the ecological effects of different distribution tactics, bringing down the energy usage in logistics exercises, lessening waste, and dealing with its treatment (Sbihi; Eglese 2010).

In the last few decades, the term “Logistics” was utilized related to the ‘green’ by making ‘Green Logistics’. ‘Green Logistics’ is defined as, supply chain management practices and strategies that reduce the environmental and energy footprint of freight distribution, which focuses on material handling, waste management, packaging, and transport (Seroka-Stolka 2014, p.303).

The author Kumar (2015) described the contribution of green logistics to social values. The social values could be higher by reducing environmental impact (e.g., CO2 emission reduction), by appropriate utilization of natural resources (e.g., fuel, packaging). There is another part of a research paper is ‘The conceptual model for green logistics’, which could help to overcome environmental negative impact. This model includes five parameters that contribute sources that help for green logistics are as follows:

Table 2. 1: Practices to remove negative impacts for ‘Green Logistics’ [Source: Kumar, 2015 p.11, own work]

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The prime source of carbon dioxide emissions directly or indirectly is transportation. To limit the adverse consequence on the climate, the logistics sector must consider

good logistics network design, warehouse design, proper use of natural resources and fuels, implementation of upgraded technologies and equipment, etc. Also, logistics should take carbon dioxide emissions into consideration while designing transportation strategies. There are multiple factors that influence the CO2 emission level in transportation exercises. These factors are further described in section 2.3. of this chapter.

2.1.2. Carbon Dioxide Emission

Worldwide development, domestic and international businesses are increasing pollution which ultimately increases the earth’s temperature level. This pollution may occur due to a lot of different reasons including construction, firework, factories, burning of garbage waste, transportation, etc. But carbon dioxide emission by burning fossil fuel is the main reason that boosts pollution. The following subsegment will clarify, carbon dioxide emission and carbon footprint.

Carbon Dioxide Emission

According to OECD (2013), carbon dioxide can be defined as, Carbon dioxide (CO2) is a colourless, odourless, and non-poisonous gas formed by combustion of carbon and in the respiration of living organisms and is considered a greenhouse gas. Emissions mean the release of greenhouse gases and/or their precursors into the atmosphere over a specified area and period of time.

This CO2 is the most vital greenhouse gas, and if global warming crosses the safety threshold of 2℃ then the repercussions could be worse. There is evidence that the threshold may be 1.5℃. To keep this threshold below 2℃, greenhouse gas concentration should be stable (IPCC 2014). In 2014, across the globe, transportation was accountable for 23% of the all-out CO2 emission while present day it count for 24% of direct CO2 discharge due to fuel-consumption. Road vehicles such as heavy and light duty vehicles, two-wheelers, and three-wheelers imply approximately three- quarters of CO2 emission among all transportation modes (IEA 2020).

- Carbon Footprint

Carbon footprint is The level of greenhouse gas emissions produced by a product, activity, entity or process of a company (Taborga 2018, p. 170).

Fig. 2.1 of Overview of Greenhouse gas emission in 2018 of EU-27, clearly shows the individual share of respective greenhouse gases. Carbon dioxide is the largest emitter by providing a share of 81.19% among all six greenhouse gases. Below carbon dioxide, methane, nitrous oxide, and fluorinated gases emit 10.48%, 5.75%, and 2.58% respectively.

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Figure 2. 1: Overview of Greenhouse gas emission of year 2018, EU-27 [Source: EEA Data Driver, 2020; own work]

- Carbon Dioxide Emission In Transport Sector

Across the world, almost all industrial sectors are trying to reduce carbon dioxide emissions in plenty of ways. The following line graph in Fig. 2.2, represents how worldwide carbon dioxide emission has changed from the Year 1990 to the recent Year 2018 in various sectors.

The transportation industry is the second-highest emitter among all the industries while emission is increasing gradually from the Year 1990 to the Year 2018 with a value of 4609 Mt CO2 to 8258 Mt CO2. Minimizing CO2 emission in the transportation sector is more challenging and costly as compared to other sectors because transportation is heavily dependent upon fossil fuels such as petrol and diesel. Due to the continuous increment of traffic flow, the transportation field is facing some trouble to minimize CO2 emission directly. To reduce CO2 emission from logistics and maintain long-term climate protection, it is crucial to deliver conceivable portability with diminished traffic-induced CO2 emanations (IEA 2020).

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Figure 2. 2: Global CO2 Emission Of Different Sector [Source: IEA, 2020; own work]

The main aim of this research is to discuss methods and policies which will help to reduce carbon dioxide emission. By considering mentioned aim, further Background of methods and policies are described in this chapter.

2.2. Factors Influencing CO2 Level Through Logistics

Author Piecyk and McKinnon (2010) have explained the challenges of logistics. To overcome environmental issues, they have explained general solutions by taking into consideration green logistics. The factors of logistics that are CO2 emission by mentioned authors are described further below.

The factors of logistics are foreseen influencing CO2 emission level. The CO2 emission in logistics can be escorted by direct or indirect operations. All the factors are described down.

2.2.1. Structural And Operational Factors

-Structural Factors

Structural factors relate to the locality and limit, distribution centres, and supplementary facilities in the logistics structure.

As the manufacturing and stock is increasing than the normal length of shipping although shipping per tonne-kilometre also increases.

In such cases, delivering a product to the end customer will increase travelling distance as well as the amount of product. Such transportation can be function under the hub and spoke system. This system is based on air transportation where products shipped to local airports and then to central airports for long flights, hence adding new connections to the supply chain network and expanding the weight to be moved per kilometre. Nevertheless, there will be an addition in transportation cost (Piecyk; McKinnon 2010).

- Operational Factors

Operational factors affect the product flow planning. The factors like order declination, delivery window minimization, more deliveries, etc. inspire to apply the Just-In-Time (JIT) theory in supply chain management.

According to Haraisa (2014, p.159) Just-In-Time includes the right items, right quantity and quality, right place or location at the right time. It also manages material flow in warehouses in order to reduce inventory. Toyota Motor Company derived the JIT system in the Year 1970. JIT also minimizes inventory by delivering the goods to customers on time which results in supply chain flow efficiency. This also reduces the cost which is needed to hold inventory.

JIT system improves production by saving time, so that manufacture can quickly move to the production of multiple products. However, if a raw material supplier cannot deliver the material on time, then there are consequences the production department can face.

2.2.2. Commercial And Functional Factors

-Commercial Factors

In logistics, commercial factors comprise of the distribution tactics, sourcing, and policies (Piecyk; McKinnon 2010). The impact on transportation explicitly rise in e- commerce services, volumes of goods, and returning of products for recycling or reuse can be forecasted. Also, outsourcing of the products from domestic countries to international countries could affect the transportation and routes across the country.

The volume of goods affects the payload while distribution. Product design and packaging can have both favourable as well as unfavourable impacts on CO2 emission. Improper packaging of products and unnecessarily added volume for packaging will cover more space in the vehicle than required which will increase the shipment frequency and ultimately CO2 emission.

- Functional Factors

Under the logistics sector, functional factors relate to the choice of vehicle, loads, transport resources, and routing of shipments. As per previous studies, at the present moment logistics companies ought to apply telecommunication plus informatics and ‘smart routing’ with backhauling or computerized vehicle routing and scheduling systems (CVRS) to affect the utilitarian components of conveyance of products. The inappropriate choice of vehicle or routes, as well as poor load adjustments for deliveries, will influence the CO2 emission level (Piecyk; McKinnon 2010).

Further, increasing fossil fuel and oil prices also influence transportation and vehicles. Framework utilization charges to decrease clog and improve trustworthiness in the street network in both metropolitan and country zones are referenced as a potential move to improve natural norms. This may lead to the addition of financial load on transportation vendors.

2.3. Background Of Methods And Policies

Climate change is the latest powerful topic which seeking attention from the whole world. Day by day, many industries are developing and hence such industries are under pressure to put some effort in order to reduce CO2 emission together with an increase in the stability of the climate. Logistics of each industry is a sector of multiple sub- area like transportation, warehouses, material flow, storage, and inventories. These sub-areas have possible numerous options to mitigate CO2 emissions.

With increasing awareness of global warming, customers are expecting more sustainability in shipments and developments of the product from companies. For the improvements in same area many countries have been executed rules and regulations to overcome this issue. Each passing day, governments and stakeholders are showing more interest in the environment and logistics. Consequently, organizations have been and are progressively compelled to consider their effect on the climate to stakeholder groups. Stakeholders has moved the logistics area into sustainable or green logistics movements due to connection of climate and logistics movements.

The European automotive industry has been seeking to minimize emissions by investing in new technologies. Europe is focusing on identifying possible responses to climate change challenges. The automotive industry ACEA (2017) has proposed few simple possible ways to reduce emissions.

Fuel option: instead of fossil fuel, electrically chargeable vehicles could bring CO2 emission reduction. Also, according to European Biodiesel Board (EBB), advanced biodiesel could help to minimize CO2 emissions.

Intelligent transport systems (ITS): this system shows real-time information that helps drivers make better decisions with routes, parking. ITS and associated vehicle innovation can help lower fuel utilization, lessen costs, improve traffic stream, and lower CO2 emanations.

Driver behaviour: 'Eco-driving' is a set of techniques and practices that drivers can use to design their excursion and drive in all the eco-friendly to bring down fuel use.

In addition to the alternative ways, developed countries have started implementing an aspect of policies. The policies arise in the world due to a major cause of climate change. The key role of policies is to control and perhaps to reduce carbon dioxide emission through various domains of almost all industrial companies.

Kyoto Protocol ratified in the year 1997 and was the first international agreement to lessen environmental change. The Protocol anticipated to diminish CO2 emission by 5% from the Year 1990 carbon level over a 5-year time frame for developed nations (UNFCCC, 1998). Under this Kyoto Protocol, Annex I comprises all developed countries. Wherein Annex B, these nations are focused on diminishing carbon dioxide emanation. For The Duration Of the first commitment period, the nations should meet the purposes set under the Kyoto Protocol through its domestic actions.

International Energy Agency (IEA 2021) shows that in the Year 2018 China, the United States, and India are the biggest countries which emit CO2 emission in the world. China shares 28% whereas the United States and India share 15% and 7% respectively. These countries have the largest share of CO2 emission in the world however they have not approved the agreement. By considering these emission shares, developed countries need to guarantee that developing countries such as India and China additionally partake in decreasing carbon dioxide emanations.

Hanafi (2013) has explained the weaknesses together with strength of Kyoto Protocol. The Kyoto Protocol has been criticised because of certain weaknesses. Problem of emission leakage encourages decreasing cost-effectiveness and climate performance of the agreement. Further, a shortcoming is found in the insufficiency of the objectives to manage the uncertainties surrounding climate change particularly in favour of reduction cost.

Along with flaws, Kyoto Protocol has the strength for utilizing a market-based methodology in decreasing the worldwide emission cost. Kyoto Protocol’s essential strength remains in emission trading features with cost-effectiveness, ecological effectiveness, and fair play. Therefore, the participation of developing countries within the project- CLEAN DEVELOPMENT MECHANISM (CDM) can assist to reduce CO2 emission in in contrast with business-as-usual trends in non-regulated regions.

Besides Kyoto Protocol, United Nations introduced Paris Agreement to the whole world. The Agreement was ratified in December 2015 at the 21st meeting of the Conference of Parties (COP21) and forwarded to the United Nations Framework Convention on Climate Change (UNFCCC), which was directed in Paris at the end of the Year 2015. The Paris Agreement confine developed as well as developing countries to maintain global warming below 2℃ and desiring target would be of 1.5℃. This Agreement came into effect on 4th November 2016. The Paris Agreement also mentioned that developing countries will receive financial support from developed countries to help them with mitigation and adaptation. Further, this Agreement requires all parties to advance their emission reduction target and report consistently about emission reduction with implementation activities. Moreover, The Paris Agreement has a long-term ambition of net zero-emission, which would viably eliminate fossil fuel. This will involve total decarbonization of the transportation domain (Santos 2017).

In commitment to downgrade greenhouse gas comprising carbon dioxide emission, the international associations namely United Nations (UN), European Union (EU), Intergovernmental Panel on Climate Change (IPCC), Organization for Economic Co- operation and Development (OECD) have advised amply of policies as follows:

- Energy transformation,
- Environmental-related taxes,
- Carbon-tax, emission standards, and
- Emission trading schemes.

Out of all above policies, carbon emission tax policy is highly preferable by the international associations because of its efficient outcomes for carbon emission reduction as compared to others. The primary aim of the above-stated policies is to achieve efficient climate control. The performance of carbon emission policies and desired environmental targets can be achieved by supervising techniques. Carbon emission policies have many ranges, for instance, regional, national, and local environmental policies. As stated above, the environmental target is possible to achieve by implementing many policies. But this research has described two carbon policies namely carbon emission trading and carbon tax in section 2.6.

2.4. Methods To Reduce Carbon Dioxide Emission In Transportation Management

The author Koc (2010) has explained how carbon emission reduction can be achieved by introducing few methods in transportation operations.

There are main four parameters for CO2 emission in the transportation sector of every organisation. Following Fig. 2.3 shows those main four elements.

Abbildung in dieser Leseprobe nicht enthalten

Figure 2. 3: Parameters of the carbon emissions in transportation [Source: Koc, 2010, p.18; own work]

The above figure 2.3 describes that CO2 emission is dependent on mentioned factors. These factors are related to many different parameters which are explained further. As this thesis is based on a qualitative method, therefore only theoretical methods will be considered and learned during the studies. Those methods are interpreted in the below segment.

2.4.1. Shipping Route

According to Koc (2010, p.18), the key characteristics of the shipping network can be defined as the density of destinations (number of stops) and average distance travelled in between these stops. Travelled distance and destination visits arrangement is majorly studied under operation management. As there is a strong relationship between fossil fuel consumption and the distance travelled by the vehicle, hence Logistics Service Providers (LSP)s utilize a few strategies to lessen the length of transport. Additionally, some regional features like transport region, empty vehicle running, and traffic intensity have an impact on carbon emission.

- Moving Production Closer To The Customers

The more transport distance rather than the more physical mass of goods is responsible for the growth in the freight movement. Several companies plant their manufacturing works in low-wage countries in order to earn commercial benefits. For instance, low- wage countries are located far away from European market. In such a scenario, shifting production to low-wage countries have consequences with long way transportation and operational barriers due to an increase in lead time. Hypothetically, it is feasible to restructure supply chain network to gain environmental benefits by minimising the length of transport by restructuring production, distribution near to the market (Koc 2010; Boere 2010).

- Minimising Empty Running

The phenomenon empty running can be defined as the unloaded means of transport. According to the report published by EC 2017, under the transportation sectors nearly 23% of the heavy duty vehicle runs in unloaded condition harming environment by means for emitting CO2 and increasing cost of transportation (Tomasz; Daniel, 2019). This indicate the need of steps to integrate transportation routing and minimizing the empty running of trucks.

In transportation, the term ‘positioning distance’ stands for the distance travelled by the means of transport to the cargo site (Koc 2010, p. 19). For air, sea, and rail transport, commonly the distance is considered as a zero. Conversely, this position distance can be considered for road transport that sums up extra carbon emission in the regular transportation process. Emissions from road haulage are directly proportional to the distance covered. Empty return trips can be assumed as a unique instance of positioning distance.

In such mentioned cases, total carbon emission can be estimated as the addition of emission by distance positioning or empty running with emission by air, sea, or rail transportation. By choosing logistics service providers close to cargo location can minimize positioning distance which ultimately reduces carbon emission.

- Pallet Banking

Pallet banking is an additional approach to reduce empty kilometres. When goods are distributed from the warehouse to the consumer, then there are chances of abandoning empty pallets at the customer’s spot and counted as waste. At a certain movement, companies try to get those empty pallets to return and reuse them. The collection of empty pallets needs a supplementary transportation line, that leads with excessive cost and CO2 emission. For the pallets requirements few companies supply the needed amount of pallets on time and take them back once need is fulfilled. These services add benefits by eliminating extra transportation cost for collection of the pallets and results into reduction of CO2 emission (Koc 2010).

- Network Optimization

This method is related to the appropriate route selection while delivering goods or products to the customer. In general, rebuilding the supply chain and optimization of delivery routes aims to take out unnecessary steps and intermediaries to make transportation more sustainable. Further, author Koc (2010) says that by integrating transportation routing of the vehicles highly helps to reduce carbon emission as well as it has ability to create the efficient networking process. Similarly, it helps to minimize the length of transportation routing. At the same time, limiting the transportation length can show negative effect in fuel consumption if there is involvement of hilly road, urban areas, and crowding. So, while optimizing the route, there should be a consideration of the geographic condition of that particular region. This method of restructuring the supply chain and route optimization will show notable results in the reduction of carbon dioxide emission.

2.4.2. Chargeable Weight

Chargeable weight varies with the characteristics of the goods; such as if the weight and volume of the goods is more the chargeable weight is high and vice-verse. Packaging material and its quality likewise makes difference for chargeable weight calculations. Also, the shape of the goods plays and important role in the selection of appropriate vehicle for transportation. The more proficient the vehicle implies used, the chargeable weight per item will be less. For the chargeable weight calculation, ratio of volume to weight of the goods is essential parameter. In addition, the effect of chargeable weight is related with a lot of absolute outflow in joined all shipments instead of emanation per shipment (Koc, 2010).

- Packaging Design Initiatives

For the reduction of carbon emission in supply chain packaging of the product plays equal role as of chargeable weight. The packaging material should be sustainable and less harmful for the environment. Packaging design influences stack ability, and hence the loading degree of shipment.

Author Koc (2010) has explained a case study of chargeable weight in company ‘Philips’. The company uses airplanes, trucks, and container ships as a transport mode. As previous information of shipments has been evaluated by the researcher, the findings state that the volume index has extend to reduce the carbon emission through shipments as most of the times weight of the goods counts less than chargeable weight. According to Koc (2010, p. 21) volume index can be defined as the ratio of the volume of the box to the volume of the product is being utilized as a performance indicator that helps to explore the products that have the potential for improvement. while deciding further development in products, there should be consideration of supply chain network and annual sales of that products. So that there will be possibilities of emission reduction.

- Postponement - Late Customization

Postponement is the process of delaying distribution operations until accurate details of customer orders open up. Late customization represents postponement of final customization of the product prior to the orders has been collected. As soon as an order occurs from the customer, only final assembly is performed and delivered to the customer in a quick time frame. Further author has given example of company where, products are manufactured and customized in Asia according to forecasts and then invest them further for sales. For international shipments company use ocean freight which takes a long transport time hence, there should be accurate forecasts.

In Consumer Lifestyle (CL) sector, for the international shipments packaging of product and user manual takes place in the end. In such a scenario, products are shipped without packaging material. Where, packaging of the products is done bz the local supplier of the particular country. This will transport less volume parallelly reduce CO2 emission. This strategy will build the flexibility of the process as final customization is completed later on as per exact forecasts and orders (Koc, 2010).

2.4.3. Choice Of The Transportation Mode

As mentioned in Fig 2.3 the next crucial factor for carbon reduction is the choice of proper transport mode. The type of transport mode and the kind of vehicles used for shipments of goods is directly proportional to the CO2 emission. At the same extend, availability of stock, demand of market, payload, and distance to be travelled varies the selection transportation mode.

Based on such parameters every company has to change their decisions about transportation mode and must select the efficient mode considering above mentioned variables. Sometimes, if there is an urgency, an alternative transport mode can be utilized. Those transport modes are expensive although can satisfies service level with a minimum lead time (Blanco; Sheffi, 2017).

- Modal Shifts

Co-modal transport means applying numerous transport modes in parallel. Modular movements to rail and ocean for the most part requires multi-purpose transport. There should be consideration of emission factors and increased distances.

Authors Blanco and Sheffi (2017) have elaborated the distance and mode shifts show the major impact on green logistics in order to lower the emission. As all business

decisions are made at the strategic, tactical, and operational level, the author has explained how such decisions are helpful in the modal shift method. The modal shift can be achieved by evaluating the network design of logistics by merging intermodal terminals as well as designing networks to uphold flexible inventory to allow network speed. Collaboration with customers and suppliers for adjusting order quantities, inventory and service levels, lead time, etc. could also permit numerous modes in paths. Furthermore, developing multi-modal third-party logistics providers and operating appropriate vehicles along with lanes could show an impact on emission level.

- Use Of Drone

In this technological era, today drones are taking place in logistics after used for military purposes. Drones can be also defined as a flying object or robot with no pilot on board (Drivers of change 2020, p.1 read in Santamarina Campos). This technology is developing rapidly in logistics along with more different sectors such as retailers, sports, tourism, etc. Under some circumstances, drones are more CO2-efficient and able to reduce CO2 emission as compared to other classical methods namely trucks, rails, airplanes. But the drones only function on narrow markets which means last-mile delivery and short distance delivery along with low weight (Drivers of change 2020).

- Inventory Management

For the efficient inventory management, slower transportation modes are favourable as the CO2 emission through fasters transportation modes is high. While, meeting the requirements during lead time the essence of higher inventories is one of the crucial measures. To attain the enough CO2 emission use of efficient inventory strategies can be implemented. Even if the company keeps stock level possibly lower, it shows results in an increasing number of shipments in case of an emergency delivery.

For some items in the CL Sector, the out-of-date quality danger is excessively high, or item lifetime is short; hence the overall strategy is to keep the stock level low and to utilize quick vehicle modes to fulfil client demand on scheduled time. Hence, the lighting area where market situations are most stable is more adequate for the examination of inventory on emission (Koc, 2010).

2.4.4. Efficiency Of Transport

As mentioned earlier, transport shows a direct impact on carbon emission, so efficient use of vehicles gives results in less environmental impact. Further, in this section below described methods regarding transport aspects.

- Increase Load Factor:

Increasing load factor means efficient use of space for goods. Loading degree relies upon a few factors, for example, the capacity of the vehicle, count of products, country explicit regulations on extreme payloads, etc. Nevertheless, reducing the payload can increase the emission essentially or vice-versa. Most of the countries follow the 44- tonne limit law which is described below.

Road transport — 44-tonne limit:

According to European Parliament (2015), the law states that, under cross-border movement within intermodal transportation, only up to 44 tonnes of the total weight is allowed in most of the European countries. This law came into force on 1st January 2013.

The higher load factors can be possible if products are categorised within same groups and set on the same pallets. Nevertheless, low-density products fulfil the vehicle area well before the most extreme payload is reached. This helps to make goods more levelled and need less shipment trips. Moreover, the loading degree of the vehicle is highly reliant on the client’s orders and restriction such as limited available storage capacity (Boere 2010).

- Use Of Double-Deckers

The utilization of double-deckers gives more space plus loading the pallets on top of each other is also possible. Despite that, there are some drawbacks while using double- deckers. At the moment of loading and unloading the vehicles, equipment for example forklift should be used. Ultimately, this loading and unloading spend time as well as energy. Compromises between the use of energy during loading and unloading has potential to gain CO2 emission due to increment in load factor. Besides that, this option is only valid for road transport but not applicable for all lanes (Boere, 2010).

- Transport Sharing

This alternative represents the shipment consolidation with different organizations. Consolidation means to combine shipments of different companies and delivered by sharing same transport and facilities. LSP can also combine the shipments of different organizations based on the destinations of deliveries. When it comes to share the transportation with competitors or other industries in the market, scheduling of the orders and managing of the route integration can influence logistics decision of company. At the same time, industries have to count on the trustworthiness and privacy policies (Boere 2010).

- Reduction In Truck Idling

Due to continuous increment in road traffic, engine idling majorly in trucks is becoming a rising issue. Engine idling in assorted traffic uses about a quarter of the fuel of the engine working and delivers about a quarter of emissions (Traffic technology, 2011). Long-haul truck drivers need to take compulsory rest halt and during such rest halt, truck drivers generally keep the vehicle in idling mode for the following reasons:

- To keep sleeper car heated or cooled
- To mask out noises
- To keep the engine warm as well as to avoid a cold start in the winter season

To overcome such issues from the transportation system, the mounting of generator units such as Auxiliary Power Unit (APU) and Shore Power (SP) to the truck frame provides current to electrically powered heating, cooling, and air conditioning (HVAC) system (Frey; Kuo 2009).

- Energy Efficient Driving

To reduce the carbon emission through the efficient driving of the vehicles leads into increase in fuel efficiency and results into less CO2 emission. To obtain the positive outcome from this approach the proper training about efficient driving of the vehicle should be provide to the respective drivers. Drivers should be focused on aspects like low speed, less cognition, economy speed driving, breaking and preventing harsh driving, etc. As there is no control over an individual’s driving manner, this alternative cannot be considered an effective one (Boere 2010).

- Vehicle Integration With Alternative Fuels

There are possibilities to count alternative fossil fuels in order to minimize carbon emissions. fuels such as biodiesel, ethanol, hydrogen, CNG, etc. can assist to reduce CO2 emission. Vehicle integration practices with fuel such as hybrid, electric or vehicle that has Compressed Natural Gas (CNG) gas will give significant drop in CO2 emission. The reduction chance by the practices of CNG is restricted due to the way that the vehicle must be armed with substantial tanks which thusly decline the additions.

With developing technology, it is possible to replace old vehicle which has higher CO2 impact into efficient fuel-based vehicle for lower CO2 impact. Bio-LNG fuel has an ability to minimize the CO2 Well-To-Wheel (WTW) up to 30% whereas, Hydrotreated Vegetable Oils (HVO) and Diesel-hybrid are able to reduce CO2 WTW emission up to 15% and 10% respectively. However, the price of such alternative fuels, as well as specific technology adoption in vehicles is becoming a concern (IRU 2020).

2.4.5. Other Methods

Apart from above-mentioned methods, the other options are noted below (Koc 2010).

- Return Delivery

In terms of not fulfilling the expectations of the consumer results in return the product and increase the transportation management. Such returns of products from customers also encourages logistical movements which sum up carbon emission. The issue of return delivery is the biggest challenge encountered by the e-commerce industry. Nowadays online purchasing has increased vastly, and product returning has also increased highly as compared to conventional purchasing. This results in increasing

the demand for efficient and sustainable networking of the logistics. This problem leads to generate unwanted carbon emissions through logistics.

- Forecast Accuracy

Emission also comes from inter-continental shipments. The standard way of transport for logistical movements is sea freight. This transportation mode is slow but also less polluting. Due to irregularities, quantity ships through air freight are more. To keep inventory level low, the company has to increase the accuracy of forecasting as well as planning. The accuracy of emission forecasting will give a high impact on emission.

In conclusion, In conclusion, some of the mentioned methods are practicable to practice and these methods provide more benefits in favour of emission reduction. These all methods are applicable on air, road, and sea transportation mode.

Following is a summary of feasible methods:

Table 2. 2: Summary of feasible methods for CO2 reduction [Source: Koc, 2010 p. 25-26, own work]

Abbildung in dieser Leseprobe nicht enthalten

2.5. Alternative Methods To Reduce Carbon Dioxide Emission In Warehouse Management

The warehouse is the heart of logistics, where all the goods, inventories, materials, etc. are stored and handled by various operations. All the inventories and goods can be arranged as well as controlled here by initializing warehouse management and systems. On the other hand, the system includes various transfer and handling equipment namely forklift, dock levellers, pallets jacks and scales, etc. The warehouse system also has packing and picking spots, a conveyor system, etc. The warehouse has software that manages goods flow, sorting algorithms, label printing, inventory tracking performance.

Warehouses from all different industries have different types of storage and systems. Mechanical or automobile parts or goods storage required maintenance, cooling- heating, and lighting system. Whereas food industry has to procure, store and maintain all types of food products at a particular temperature and humidity for a long time by utilizing refrigerators, electricity, air conditioning system. Utilization of such technical appliances, hardware, and software promotes climate changes by varying temperature along with generating carbon dioxide emission or greenhouse gas emission. For example, 60% of carbon emission is associates with carrot storage (Wayne et. al 2012).

The warehouse management system can become a part of green logistics by introducing some eco-friendly and sustainable practices. Previous research papers and studies share vast information and data on the production, transportation, procurement sector as well as few warehouse functions. There are studies available on separate sectors under warehouse such as maximum space utilization, inventory control, loading and unloading factors, order completion, material handling issues of logistics. To understand the overall impact of the entire warehouse department, there are not enough studies performed about all the warehouse functions. Furthermore, barely any literatures put some light on legit policies and regulations which elaborate strategies for sustainable warehouse management.

For the use of the available energy sources to supply power to material handling equipment (MHE) together with ideal temperature control system almost all industries focuses on the efficiency of the operation. Also, for water and electricity usage in warehouse, the efficiency of the operational systems is on the top of the list of the industries. (McKinnon 2010).

Marchant (2010) has built up a three-stage warehouse sustainability model by considering economic, business, social, and environmental aspects, where companies can find how to achieve minimal impacts, especially over an environmental feature. Though sustainability counts all mentioned aspects, the thesis has only focused on the environmental aspect.

By considering aspects of environmental or climate change and the relevant potential of carbon emission reduction in the warehouse area, the following Fig. 2.4 shows four different factors which will be beneficial to mitigate emission from the warehouse at the possible level.

Abbildung in dieser Leseprobe nicht enthalten

Figure 2. 4: Options to reduce carbon dioxide emission through warehouse [own work]

2.5.1. Renewable Energy

In the current era of industrialization and development, the whole world is responsible to generate electricity from fossil fuels, nuclear, and renewables. In the Year 2019, the worldwide production of electricity from fossil fuels is 62.74% however from nuclear and renewables are comparatively less which is 10.48% and 26.77% respectively (BP Statistical Review of World Energy; Ember, 2021). This shows obvious electricity has been majorly generated from fossil fuels. To reduce carbon emission through the electricity produced by fossil fuels, industries need to switch to renewable energy. According to IRENA (2017), renewable energy and energy efficiency can likely reduce carbon emissions by up to 90%.

In logistics, distribution centres or warehouses use carbon-intensive such as oil or coal- based energy sources to generate electricity. The warehouse has a significant potential to switch to green or renewable energy from fossil fuel-based energy in order to mitigate emissions. This can be achieved directly or indirectly via a grid-based electricity production system, where the system allows power to the businesses with renewable energy.

To become more efficient or low-carbon intensity based warehouses, the following renewable energy sources will be helpful to produce green energy:

- Biomass, Wind, and photovoltaics
- Reprocess or reusing waste energy such as heat which is generated by refrigeration plants or air compressors
- Use of recovered kinetic energy for forklift
- Use of low-carbon intense natural gas and biodiesel

The interest of energy within a warehouse in the form of power or heat is not consistent. Also, green energy production arises few drawbacks due to some complexity. Geographical weather conditions, government regulations, past warehouse construction factors increase difficulties to green energy generation. Furthermore, these factors also create trouble to manage total energy demand against additional short-term external green energy as well as disposal or sale or storing of surplus green energy.

On the other hand, the combination of technologies such as self-cleaning transparent-film technologies in conjunction with solar photovoltaic laminates such as ethylene tetrafluoroethylene (ETFE) roof light panels can be manifest energy and cost-efficient even in the medium term. The photovoltaic technology has a payback period of 15-20 years. These are reported as having 50 to 200 times less embodied energy, with a trial 33,900 m2 distribution centre installation generating 80 MWh of power and saving 32 tonnes of CO2.

Further, in order to promote GHG or carbon emission reduction, the UK government introduced the Carbon Reduction Commitment Energy Efficiency Scheme where all medium to large organizations need to purchase carbon credits; Feed-in Tariffs offer companies compensation for electricity from low-carbon sources fed into the National Grid; Non-Domestic Renewable Heat Incentives and Enhanced Capital Allowances give tax relief for certain green technologies. In 2013, the mandatory greenhouse gas reporting scheme was introduced whereby the UK quoted companies must report on their greenhouse gas emissions in their annual reports. It is further proposed under the Energy Savings Opportunity Scheme (ESOS) that from late 2015 companies must have independent energy audits undertaken every four years (Marchant 2010).

2.5.2. Material Handling Equipment

In order to obtain intensive and rapid movement of goods, the warehouse has various types of material or mechanical handling equipment. These equipment are mainly forklift trucks to unload vehicles and to move pallets into block stacks, reach trucks to achieve high storage densities, whereas ride-on trucks and conveyors require for picking of items or orders. Consideration of all above mentioned equipment is not feasible; hence only major single type, forklift trucks have been taken into account.

Furthermore, these forklift trucks lie between two engine categories, one is the internal combustion engine, and another is a lead-acid battery based engine. A combustion engine uses diesel or Liquefied Petroleum Gas (LPG) as a main energy generation alternative. In addition to that, Johnson stated in the research that “fuel carbon footprints of electric and LPG forklifts are, in principle, about equal, while in actual practice, LPG’s footprint is smaller than that of electricity” (Facchini et. al. 2016, p. 1037 read in Johnson 2016, p.1572).

The author Facchini et. al. (2016) in another research regarding the comparison of electric and LPG forklifts, has developed a tool to recognize the most excellent material handling equipment diminishing the carbon footprint of inbound logistic functions. In contrast to the statement of Johnson, author further concluded that electric powered forklift allows lower carbon footprint than LPG power forklift. The author Facchini et. al. (2017), has explained the comparison of LPG and electric forklift in terms of GHG emission (equivalent to carbon dioxide emission) impact by introducing a simple model of energy consumption and relevant emission. The author further concluded that, though electric-based forklift has the potential to reduce carbon emission, manufacturing or recycling of batteries also produces carbon dioxide emission during operations, and hence significant amount of emission reduction is not feasible.

2.5.3. Green Technology Investment

Re-use of resources along with green technology is winning attention in the supply chain. Due to complications of relevant cost for green technology investment is a barrier for a successful application. At this point, businesses want the opportunity

where not only economic but also environmental performance will be enhanced. The warehouse is counted as an energy concentrated process. Investment in green techniques can reduce carbon emission and make the warehouse more energy efficient.

Organizations considered a technologically related investment as a tactical choice in order to reduce emissions and become eco-friendly. By considering the issue of investment in green technology, the author Chen (2016) built a mathematical model which will be beneficial to get a result in various aspects such as cost- effectiveness, order quantity, time period, carbon emission, etc. Among all these aspects, only carbon emission-relevant results have been studied under this research.

The model is built by considering a retailer who sells required product to the end consumer by purchasing it from suppliers. Before selling season, the government gives initial carbon emissions allowances to the retailer. By investing in green technology, it is likely to lower initial warehouse carbon discharge during the retailer period. The technology makes easy decision circumstances for retailers with the purpose of utilizing emission allowances in a proper way.

The researcher noted the effect of investing in green technology where optimal order quantity has no consequences. This proposition gives results as follows:

Table 2. 3: Co-relation between emission allowances from government, use of green technology investment, and expected output [Own work]

Abbildung in dieser Leseprobe nicht enthalten

By applying green technology investment while having less initial carbon emission allowance from the government, the technology helps to reduce the warehouse carbon emission at the same time the emission quota also declines. Which results in purchasing of required emission quota from outside market. In contrast, having high carbon emission allowance provided by the government, technology boost the carbon emission quota along with reduction in warehouse emission. As a result, the retailer will gain benefit by selling left over emission quota to other industries.

2.5.4. Warehouse Construction

Apart from energy consumption for warehouse operations and equipment, the construction of the warehouse is another significant factor from which CO2 emits. In warehouse construction, the use of materials such as cement, steel, roof lights, etc is high. In order to reduce CO2 emission, the material selection need to be very specific. The author Rai . (2011) has conducted research on how CO2 emission takes place while constructing a distribution warehouse by assessing the material used for construction. Emission from the warehouse can be considered in terms of building energy which is operational and embodied energy.

- Operational Energy:

The operational energy of a building is the energy needed to power the equipment and systems as well as to maintain temperature ranges such as warm or cool, light inside areas.

- Embodied Energy:

Embodied energy is the energy needed for the cycles associated with the creation of buildings. The embodied energy is essential throughout the product life cycle.

The author has considered embodied materials and heating effect over the design life of 25 years corresponding to the roof light ratio (RLR) and enhanced insulation. The findings of the study determined that for the addition of high insulation as compared to that of low or medium insulation, the operational CO2 emission savings can be achieved for the entire design life Further, embodied emission savings can be gained by selecting alternative lower embodied carbon materials for construction. The study recommends that the use of alternative concrete with 50% Ground granulated blast

furnace slag (GGBS) content may possibly have the ability for emissions savings. For doors, the use of steel that has higher recycled content will also deliver benefits of emission savings. Instead of steel wall cladding, the timber walling system will save CO2 emissions.


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Methods and Policies to Reduce Carbon Dioxide Emission in Logistics
University of Applied Sciences Berlin
MBA&E Global Procurement
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ISBN (eBook)
ISBN (Book)
Carbon dioxide emission, supply chain management, transportation emission, warehouse emission, green logistics, environmental tax policy, environmental taxes, carbon footprint
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Hrucha Ghatpande (Author), 2021, Methods and Policies to Reduce Carbon Dioxide Emission in Logistics, Munich, GRIN Verlag,


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