Closed-loop supply chain for batteries under carbon trading policies: strategies for echelon use and information traceability

Purpose Rapid growth in electric vehicles (EVs) has generated large-scale battery retirements, creating an urgent need for efficient closed-loop supply chains (CLSCs). Blockchain technology offers traceability capabilities that can support sustainable recycling models. Design/methodology/approach This paper investigates suppliers’ blockchain adoption and echelon utilization decisions within a CLSC under carbon cap-and-trade policies. Three decision-making models are constructed: no-traceability, forward traceability and bidirectional traceability and the equilibrium decisions and profits for each model are derived. Furthermore, to resolve decentralized inefficiencies under bidirectional traceability, the authors design an improved side-payment self-enforcing contract (SSEC) to achieve supply chain coordination and compare all models from the dual perspectives of consumer surplus and social welfare. Findings Findings indicate: (1) the SSEC achieves a Pareto improvement, raising profits for both members while enhancing consumer surplus and social welfare. (2) Carbon trading prices and allowances jointly shape members’ recycling and technology adoption decisions, with their profit impact exhibiting a threshold dependence on the allocated carbon quota. (3) Blockchain-based traceability consistently improves product prices, member profits and socioeconomic welfare relative to the no-traceability baseline. (4) The advantage of bidirectional over forward traceability is conditional: it yields higher supplier profit only when the unit operating cost coefficient falls below a critical threshold and superior social welfare only when the carbon price lies within a favorable interval. (5) Bidirectional traceability leads to superior environmental and social performance when retired batteries possess sufficient remaining capacity and the echelon utilization market is well-developed. Originality/value The research findings provide practical decision-making references for EV and related battery manufacturers to formulate end-of-life utilization strategies, select information traceability technologies and respond to carbon policies. They hold significant application value, particularly in markets and policy environments characterized by high uncertainty.