Assessing drivers of CO2 emissions in China's electricity sector: A metafrontier production-theoretical decomposition analysis

Abating CO2 emissions from the electricity sector in China has received increasing attention in the past years. Assessing the drivers behind CO2 emissions is fundamental to identifying cost-effective policy measures to reduce emissions. Production-theoretical decomposition analysis (PDA) has been applied for such a purpose owing to its strength in quantifying the impacts of efficiency and technology related factors. As the determinants of emissions are likely to be affected by the group heterogeneity, we develop a metafrontier PDA (MPDA) model to resolve the heterogeneity issue. Applying the proposed MPDA model to examine the change in CO2 emissions from 93 Chinese fossil fuel power plants during 2005 and 2010 shows that all technology-related effects reduced power plants’ emissions, but at varying degrees. While the emission efficiency improvement was the primary contributor to the emission abatement in the 93 plants, the group heterogeneity had exerted an influence on emissions, and the change in the heterogeneity slightly reduced the emissions. More detailed results with further discussions are presented.