Assessing the Impact\nof Chain of Custody Models on\nthe Long-Term Planning of Low-Carbon Ammonia Supply Chains

With growing concerns about climate\nchange, efforts to invest in\nlow-carbon alternatives to conventional fossil-fuel-based products\nare on the rise globally. As more low-carbon products are developed,\ncurrent systematic methods for optimizing supply chain expansion and\noperations need to be redesigned due to differences in consumer preferences\nbetween sustainable and conventional products. In this work, we investigate\nhow the choice of traceability method (i.e., the chain of custody\nmodel), which governs a consumer’s claim to a sustainable product,\nimpacts decision-making in the expansion of low-carbon ammonia supply\nchains. We propose a mixed-integer nonlinear programming formulation\nthat applies the mass balance and book-and-claim models, the two most\nrelevant chain of custody models in the chemical industry, to an ammonia\nsupply chain. We then present a comprehensive case study spanning\n25 years that includes nine U.S. states and highlights differences\nin solutions between the two models, such as the extent of renewable\ntechnology expansions, ammonia distribution decisions, demand met,\nand the breakdown of different costs under various ammonia price scenarios.\nMoreover, we make key observations in the solutions provided by a\nrolling-horizon simulation to cases with uncertain ammonia demand.\nThis work highlights the critical role of chain of custody models\nin evolving low-carbon ammonia supply chains, laying the groundwork\nfor future research into their application and impact on other sustainable\nsupply chains.