Optimal Replacement, Retrofit, and Management of a Fleet of Assets Under Regulations of an Emissions Trading System

This thesis presents the development of a model for parallel replacement and improvement for a fleet of assets to minimize both the economic costs and greenhouse gas (GHG) emissions where the emissions are limited by cap-and-trade. The firm which owns the assets has the options of using the assets, putting them in inventory, improving them, or salvaging them. Different technological types and their performances have been considered for assets. The firm has the option of purchasing new assets from varying technologies and/or improving its existing assets to a higher-performance type. Moreover, the model considers the possibility of both banking the emission allowances and trading them in the market. The model was later used with data of a fleet of excavators in Ontario, Canada. The use of this model could help emitter firms to simultaneously manage the emissions and costs of their fleet of assets in a jurisdiction regulated by cap-and-trade.