Regional Environmental Efficiency Analysis And Abatement Cost Estimation Of China’s Key Pollution Industries

With the rapid development of industry since China’s Reform and Opening, the environment problem and resource waste is becoming increasingly serious. To solve this problem, the “11th five-year plan”, and “12th five-year” plan put forward the goal of energy saving and emission reduction on key polluting industries. In the thermal power industry, coal consumption accounted for the consumption of the thermal power sector more than half of the national coal consumption. The electricity production process will typically result in a certain amount of air pollutions such as: SO2, NOx, dust and CO2. In China Cement industry is also a high energy consumption and heavy pollution industry, and it is the second largest energy consumption and carbon dioxide emissions industry after the thermal power sector. So it has important theory value and application value to evaluate the energy and emissions efficiency. In addition, making regional comparative analysis and attributions analysis are considered a crucial way to identify the regional efficiency levels and efficiency promotion potentials, as well as to explore the marginal abatement costs of SO2 emissions in China.A number of previous studies have contributed to the measurement of energy and environmental efficiency using data envelopment analysis(DEA). However, most of them were restricted to the radial expansions of outputs or radial contractions of inputs. This paper employs a non-radial DEA approach instead of a radial DEA to evaluate the energy and environmental efficiency of key polluting industry of 30 Chinese provinces. We first propose the multi-factor environmental performance index(MEPI) based on three single emission environmental performance index, which includes SO2 environmental performance index(SEPI), NOx environmental performance index(NEPI) and dust environmental performance index(DEPI). Then we calculate energy efficiency index(EEI). Finally, integrated environmental and energy efficiency index(IEEEI) combines two weighted indicators: EEI and MEPI is proposed. In addition, using factor analysis and identify the sources of the increase in energy and emissions efficiency and estimating the SO2 shadow prices, i.e., the marginal abatement costs of SO2 emissions from key polluting industries of these Provinces. Finally, this paper put forward several policy recommendations to improve the energy and emissions efficiency of key polluting industries for China’s provinces.The main findings of this study are:(i) In 2006-2011 the national average integrated environmental and energy efficiency of the thermal power industry increased by 4.80%, the national average energy efficiency increased by 2.97%, and the national average multi-factor environmental performance increased by 8.69%. In 2006-2011 the integrated environmental and energy efficiency of the thermal power industry has increased as multi-factor environmental performance have been improved. However, the national average energy efficiency of the thermal power industry is lower than multi-factor environmental performance. The national average energy efficiency is 0.784, and the national average multi-factor environmental performance is 0.423. In order to improve the integrated environmental and energy efficiency, the government should also strengthen regulation in energy-saving emission reduction and improve the eco-environment. Besides, dust environment performance was significantly lower than SO2 and NOx environment performance. This result implies that China’s government needs to expand the scope of next five-year plan to the emission control of dust.(ii) During the period 2006-2111 the national average integrated environmental and energy efficiency of the cement industry is raising from 0.303 to 0.516. However, the three single emission environmental performance index are relatively low in research period. The national average CO2 environmental performance of the cement industry is 0.414, the SO2 environmental performance is 0.200, and the CO2 environmental performance is 0.213. In order to improve multi-factor environmental performance supervising ability construction of emission should be strengthened.(iii) The energy and environmental efficiency show great variation among "8 big economic zones", thermal power industry of the south coastal and the northeast comprehensive economic zones have the best and worst integrated environmental and energy efficiency performance respectively. The gap between them is 0.280. The east coastal of the cement industry has the highest integrated environmental and energy efficiency performance, and southwest and northwest areas lag behind other regions.(iv) Through analyzing the influencing factors of the energy and environmental efficiency of the thermal power industry, this study suggests in the areas where the coal resources are ample, the environmental controlling should be more strengthened, and the development model should be guided to a more environmentally friendly and resources intensive way. "Planned electricity" and "market coal" system has limited the improvement of energy efficiency. Therefore, coal-fired electricity price linkage policy should be further enhanced and the reform of electric power market should be deepened on continuously. Through analyzing the influencing factors of the energy and environmental efficiency of the cement industry, this result shows that cement price has significant positive effect on multi-factor environmental performance and the coal and electricity prices have a significant negative effect on energy efficiency. This paper suggests that relevant departments should pay more attention on preventing cost pressures of the cement industry caused by vicious competition and resolve the excess production.(v) The result on SO2 shadow prices of cement and thermal power industry shows great variation between 30 provinces. The national SO2 shadow prices of thermal power industry are between 1682-171827RMB/ton, and the national SO2 shadow prices of cement industry are between 345-17614 RMB/ton. The national SO2 shadow price has risen with the narrow of mitigation space during the study period.