Measuring the energy production and utilization efficiency of Chinese thermal power industry with the fixed-sum carbon emission constraint

Along with the rapidly development of economy in recent years, China has also become one of the largest countries for energy consumption and carbon emission. Recently, the Chinese government announced its dual-carbon policy target of achieving carbon peak by 2030 and carbon neutrality by 2060, implying that there exists a fixed-sum constraint on total carbon emissions. As China's important energy sector and source of carbon emissions, the thermal power industry has become the key to meeting the energy needs of China's socio-economic development and to successfully achieving carbon peak and carbon neutrality. In this paper, we consider the thermal power industry as a two-stage process with energy production and energy utilization, which shows a fixed-sum constraint on shared undesirable outputs. To measure and analyze the two-stage energy production-utilization performance with the fixed-sum carbon emission constraint, we propose a novel two-stage data envelopment analysis approach based on a generalized equilibrium efficient frontier method. The equilibrium efficient frontier is obtained by minimizing the total adjustment of carbon emissions and is further used for calculating the two-stage overall energy production-utilization efficiency. Afterward, we develop an efficiency decomposition framework to obtain individual energy production efficiency and energy utilization efficiency. Finally, we apply the approach to empirically analyze the energy production-utilization efficiency of the Chinese thermal power industry at the provincial level from 2015 to 2019. We then provide some analytical findings on the Chinese provincial energy production-utilization performance in the thermal power industry.