Remanufacturing and energy performance contracting (EPC) have attracted much attention recently because of their potential to reduce energy consumption and achieve sustainable production. In this paper, taking carbon emission trading (CET) into consideration, we discussed how EPC affected manufacturer production decision-making. We constructed an optimal production model and analyzed the manufacturer's production decision-making, parameter sensitivity, and economic and environmental effects. Our findings included (1) the implementation of EPC increased the output of new products and the manufacturer's profits. However, EPC did not effectively stimulate remanufacturing, and could increase carbon emissions; (2) CET could alleviate the adverse effect of EPC on remanufacturing and decrease carbon emissions, but may also decrease the total output; and (3) under certain conditions, CET combined with EPC could reduce carbon emissions while increasing the output of remanufactured products and manufacturer's profits. The conclusions of this paper could help the manufacturer to make rational operational decisions and achieve sustainable production.
Keywords: Carbon emission regulation; Energy performance contracting; Production decision-making; Remanufacturing; Sustainability.