A Bi‐Level Optimization Model for Carbon Reduction in Multi‐Echelon Power Equipment Supply Chains Under Carbon Quota and Trading

The decarbonization of power systems is hindered by substantial embodied carbon from critical equipment manufacturing. This paper proposes a bi‐level optimization framework to coordinate carbon abatement across the multi‐echelon power equipment supply chain under carbon policies. The upper level model minimizes total lifecycle emissions by setting production targets. The lower level model maximizes the supply chain's economic profit through production scaling, abatement rates, and transfer pricing. A tailored genetic algorithm solves this NP‐hard problem. Simulations using transformer and inverter data validate the framework. Results show carbon price creates dual incentives, driving carbon abatement and generating revenue via quota management. The abatement cost coefficient is the dominant factor. Its superlinear escalation creates investment barriers once critical thresholds are passed. Analysis reveals distinct technological responses: manufacturers achieve the highest reduction rates (78.3%–98.5%) via system‐level innovation; suppliers attain 56.2%–68.5% reductions via component‐level optimization; and distributors contribute 10.7%‐38.6% abatement through logistics. This work provides a quantitative tool to translate carbon policies into echelon‐specific technical guidance for a cost‐effective decarbonisation.