How does green manufacturing promote the recycling of renewable solid waste and carbon reduction?

Solid waste recycling plays a key role in the manufacturer's green transition. By introducing recycled materials into production, manufacturers can enjoy both the benefits of carbon reduction and the addressing of the carbon lock-in problem. However, given the inadequacy of recycling legislation, the supply of recycled material is subject to yield uncertainty. This creates a challenging decision for manufacturers in need of transition: should they build a new carbon-neutral production line or only upgrade the existing production line? We formulate the key tradeoffs including the varying consumer evaluations, the production quality control, and the reform of the supply chain structure. We find that building a new carbon-neutral production line is preferred when the carbon emission level is moderate, the market competition is intensified, and the recycling efficiency is high. We further identify the multi-win opportunities for both environmental and economic sustainability, which shed light on the government's green policy design.