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The carbon footprints are increasing in the environment at an alarming rate mainly due to unplanned human activities. The world’s population will continue to grow at a rapid pace in the future. As a result, our future generations may find it difficult to live on this planet in a healthy manner. The world’s developed and developing countries began to investigate various methods for reducing their carbon footprint. However, it will not be sustainable if it is also not economically viable. In this scenario, maintaining a good profit for businesses while reducing their carbon footprint necessitates a pragmatic strategy. In this article, we will try to find a way out that will provide us with a practical solution. We will simulate the profitability of an upstream oil manufacturer that has invested heavily in green technologies. Under a carbon tax system, we will use the production-inventory model. This system assumes that capital investment in green technology can reduce emissions, and increase profits. We used data from the Oil and Natural Gas Corporation of India, available in its annual reports. As a matter of fact, the Oil and Natural Gas Corporation of India accounts for 70% of crude oil production in India and is a major player in India’s upstream oil companies. The results were quite encouraging, with deviations between expected and actual values being less than 10%. The findings also led us to believe that the excise duty and the pollution control tax levied in India can be regarded as a Green Tax or Carbon Tax. We used a published research model to find the optimal solution.

The paper develops a finite-horizon inventory model with source-based emissions, plan-based green investments under inflation, and the present value of money. The cap-and-trade policy is used as the carbon policy. The model is solved in a bi-objective scenario where the two objectives are maximization of the present value of net profit and minimization of the total emission. We find the Pareto optimal solutions represented by a Pareto front using the ∊-constraint method. A flowchart is provided to find the non-dominated solutions. Pareto solutions for three special cases (no inflation, carbon tax, and no green investments) are also derived. In our sensitivity analyses, we observe that the carbon quota does not affect the optimal policy. It only affects the optimum profit. Our model shows that green investment is beneficial for the polluting firm and also for the environment. [ABSTRACT FROM AUTHOR]