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The environmental efficiency analysis of China’s power generation sector based on game cross-efficiency approach

Bai-Chen Xie, Jie Gao, Shuang Zhang, Rui-Zhi Pang and ZhongXiang Zhang ()

Structural Change and Economic Dynamics, 2018, vol. 46, issue C, 126-135

Abstract: China’s unbundling reform in 2002 aimed to introduce competitiveness into the power industry. With the increasing concern about the environmental issue and climate change, the ability to balance the reduction of carbon emissions with economic benefits may to a great extent determine the competitiveness of power generation sector. This study first adopts the game cross-efficiency approach to evaluate the environmental efficiencies of the generation sector in China’s 30 provinces. The results indicate that significant efficiency gap does exist among regions. It then employs a system generalized method of moments model to explore the determinants of their performance while eliminating the associated endogeneity issue. Considering the negative correlation between environmental efficiency and the thermal power ratio, the power mix should be adjusted gradually. The per capita regional GDP and capacity utilization rate are positive factors boosting the environmental efficiency. Accordingly, the incentive policies for clean energy development should be differentiated across regions according to their power mix, self-sufficiency ratio, and economic development situations.

Keywords: Game cross-efficiency; Data envelopment analysis; Generalized method of moments; Power industry; Environmental efficiency; China (search for similar items in EconPapers)
Date: 2018
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