An empirical analysis of the CO2 shadow price in Chinese thermal power enterprises
This paper estimates the shadow price of CO2 and explores its determinants for thermal power enterprises in China. Using a parametric quadratic directional distance function, we evaluate the inefficiency and shadow price of CO2 for 124 power enterprises in 2004, applying deterministic and econometric methods. A regression analysis is undertaken to examine the factors that drive shadow prices. Our results indicate that there are large inefficiencies in terms of electricity production and CO2 emissions. The shadow price is a negative function of firm size, age, and coal share, and is positively correlated with the technology level. This correlation between shadow prices and its determinants is not sensitive to changing assumptions regarding directional vectors, although such changes do alter the distribution of shadow prices. The large variation witnessed in shadow prices across power enterprises argues in favor of market-based regulation such as an emissions trading system as opposed to the command-and-control regulation currently used in China to minimize overall abatement cost.
If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.
References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Pittman, Russell W, 1983. "Multilateral Productivity Comparisons with Undesirable Outputs," Economic Journal, Royal Economic Society, vol. 93(372), pages 883-91, December.
- Kwon, Oh Sang & Yun, Won-Cheol & Hwan An, Dong, 2005. "Market value for thermal energy of cogeneration:: using shadow price estimation applied to cogeneration systems in Korea," Energy Policy, Elsevier, vol. 33(14), pages 1789-1795, September.
- Baumol,William J. & Oates,Wallace E., 1988.
"The Theory of Environmental Policy,"
Cambridge University Press, number 9780521311120, December.
- Hettige, Hemamala & Huq, Mainul & Pargal, Sheoli & Wheeler, David, 1996. "Determinants of pollution abatement in developing countries: Evidence from South and Southeast Asia," World Development, Elsevier, vol. 24(12), pages 1891-1904, December.
- Pasurka, Carl Jr., 2006. "Decomposing electric power plant emissions within a joint production framework," Energy Economics, Elsevier, vol. 28(1), pages 26-43, January.
- Rolf Färe & Carlos Martins-Filho & Michael Vardanyan, 2010.
"On functional form representation of multi-output production technologies,"
Journal of Productivity Analysis,
Springer, vol. 33(2), pages 81-96, April.
- R. Fare & C. Martins-Filho & M. Vardanyan, 2010. "On functional form representation of multi-output production technologies," Post-Print hal-00800130, HAL.
- Zhang, Zhongxiang, 2000. "Decoupling China's Carbon Emissions Increase from Economic Growth: An Economic Analysis and Policy Implications," World Development, Elsevier, vol. 28(4), pages 739-752, April.
- Fare, Rolf & Grosskopf, Shawna & Weber, William L., 2006. "Shadow prices and pollution costs in U.S. agriculture," Ecological Economics, Elsevier, vol. 56(1), pages 89-103, January.
- Coggins, Jay S. & Swinton, John R., 1996.
"The Price of Pollution: A Dual Approach to Valuing SO2Allowances,"
Journal of Environmental Economics and Management,
Elsevier, vol. 30(1), pages 58-72, January.
- JAY S. COGGINS & John R. Swinton, 1994. "The Price of Pollution: A Dual Approach to Valuing SO2 Allowances," Wisconsin-Madison Agricultural and Applied Economics Staff Papers 378, Wisconsin-Madison Agricultural and Applied Economics Department.
- Stavins, Robert & Newell, Richard, 2000.
"Cost Heterogeneity and the Potential Savings from Market-Based Policies,"
dp-00-10-rev, Resources For the Future.
- Newell, Richard G & Stavins, Robert N, 2003. "Cost Heterogeneity and the Potential Savings from Market-Based Policies," Journal of Regulatory Economics, Springer, vol. 23(1), pages 43-59, January.
- Hailu, Atakelty & Veeman, Terrence S., 2000. "Environmentally Sensitive Productivity Analysis of the Canadian Pulp and Paper Industry, 1959-1994: An Input Distance Function Approach," Journal of Environmental Economics and Management, Elsevier, vol. 40(3), pages 251-274, November.
- Fare, Rolf & Grosskopf, Shawna & Pasurka, Carl Jr., 2007. "Pollution abatement activities and traditional productivity," Ecological Economics, Elsevier, vol. 62(3-4), pages 673-682, May.
- Kumar, Surender & Managi, Shunsuke, 2011. "Non-separability and substitutability among water pollutants: evidence from India," Environment and Development Economics, Cambridge University Press, vol. 16(06), pages 709-733, December.
- Reig-Martinez, Ernest & Picazo-Tadeo, Andres & Hernandez-Sancho, Francesc, 2001. "The calculation of shadow prices for industrial wastes using distance functions: An analysis for Spanish ceramic pavements firms," International Journal of Production Economics, Elsevier, vol. 69(3), pages 277-285, February.
- Carolyn Fischer & Richard D. Morgenstern, 2006.
"Carbon Abatement Costs: Why the Wide Range of Estimates?,"
The Energy Journal,
International Association for Energy Economics, vol. 0(Number 2), pages 73-86.
- Fischer, Carolyn & Morgenstern, Richard, 2003. "Carbon Abatement Costs: Why the Wide Range of Estimates?," Discussion Papers dp-03-42-rev, Resources For the Future.
- Auffhammer, Maximilian & Carson, Richard Taylor, 2004.
"Forecasting the path of China's CO2 emissions using province level information,"
CUDARE Working Paper Series
0971, University of California at Berkeley, Department of Agricultural and Resource Economics and Policy, revised 2007.
- Auffhammer, Maximilian & Carson, Richard T., 2008. "Forecasting the path of China's CO2 emissions using province-level information," Journal of Environmental Economics and Management, Elsevier, vol. 55(3), pages 229-247, May.
- Auffhammer, Maximilian & Carson, Richard T., 2007. "Forecasting the Path of China's CO2 Emissions Using Province Level Information," Department of Agricultural & Resource Economics, UC Berkeley, Working Paper Series qt6d28j8rg, Department of Agricultural & Resource Economics, UC Berkeley.
- M. Murty & Surender Kumar & Kishore Dhavala, 2007.
"Measuring environmental efficiency of industry: a case study of thermal power generation in India,"
Environmental & Resource Economics,
Springer;European Association of Environmental and Resource Economists, vol. 38(1), pages 31-50, September.
- M N, Murty & Kumar, Surender & Dhavala, Kishore, 2006. "Measuring Environmental Efficiency of Industry: A Case Study of Thermal Power Generation in India," MPRA Paper 1693, University Library of Munich, Germany.
- Christoph BOhringer & Andreas LOschel, 2003. "Market power and hot air in international emissions trading: the impacts of US withdrawal from the Kyoto Protocol," Applied Economics, Taylor & Francis Journals, vol. 35(6), pages 651-663.
- Park, Hojeong & Lim, Jaekyu, 2009. "Valuation of marginal CO2 abatement options for electric power plants in Korea," Energy Policy, Elsevier, vol. 37(5), pages 1834-1841, May.
- Wayne B. Gray & Ronald J. Shadbegian, 2001.
"Plant Vintage, Technology, and Environmental Regulation,"
NCEE Working Paper Series
200104, National Center for Environmental Economics, U.S. Environmental Protection Agency, revised Nov 2001.
- Gray, Wayne B. & Shadbegian, Ronald J., 2003. "Plant vintage, technology, and environmental regulation," Journal of Environmental Economics and Management, Elsevier, vol. 46(3), pages 384-402, November.
- Wayne B. Gray & Ronald J. Shadbegian, 2001. "Plant Vintage, Technology, and Environmental Regulation," NBER Working Papers 8480, National Bureau of Economic Research, Inc.
- Wayne B Gray & Ronald J Shadbegian, 2001. "Plant Vintage, Technology, and Environmental Regulation," Working Papers 01-08, Center for Economic Studies, U.S. Census Bureau.
- Kwon, Oh Sang & Yun, Won-Cheol, 1999. "Estimation of the marginal abatement costs of airborne pollutants in Korea's power generation sector," Energy Economics, Elsevier, vol. 21(6), pages 545-558, December.
- Susmita Dasgupta & Mainul Huq & David Wheeler & Chonghua Zhang, 2001.
"Water pollution abatement by Chinese industry: cost estimates and policy implications,"
Taylor & Francis Journals, vol. 33(4), pages 547-557.
- Dasgupta, Susmita & Huq, Minul & Wheeler, David & Chonghua Zhang, 1996. "Water pollution abatement by Chinese industry : cost estimates and policy implications," Policy Research Working Paper Series 1630, The World Bank.
- Springer, Urs, 2003. "The market for tradable GHG permits under the Kyoto Protocol: a survey of model studies," Energy Economics, Elsevier, vol. 25(5), pages 527-551, September.
- Yang, Hongliang & Pollitt, Michael, 2010. "The necessity of distinguishing weak and strong disposability among undesirable outputs in DEA: Environmental performance of Chinese coal-fired power plants," Energy Policy, Elsevier, vol. 38(8), pages 4440-4444, August.
- Färe, Rolf & Grosskopf, Shawna & Pasurka, Carl A., 2007. "Environmental production functions and environmental directional distance functions," Energy, Elsevier, vol. 32(7), pages 1055-1066.
- Timo Kuosmanen, 2005. "Weak Disposability in Nonparametric Production Analysis with Undesirable Outputs," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 87(4), pages 1077-1082.
- Adam Rose & Brandt Stevens & Jae Edmonds & Marshall Wise, 1998. "International Equity and Differentiation in Global Warming Policy," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 12(1), pages 25-51, July.
- Van Ha, Nguyen & Kant, Shashi & Maclaren, Virginia, 2008. "Shadow prices of environmental outputs and production efficiency of household-level paper recycling units in Vietnam," Ecological Economics, Elsevier, vol. 65(1), pages 98-110, March.
- Rolf Färe & Shawna Grosskopf & Carl A. Pasurka & William L. Weber, 2012. "Substitutability among undesirable outputs," Applied Economics, Taylor & Francis Journals, vol. 44(1), pages 39-47, January.
- Rezek, Jon P. & Campbell, Randall C., 2007. "Cost estimates for multiple pollutants: A maximum entropy approach," Energy Economics, Elsevier, vol. 29(3), pages 503-519, May.
- Fare, Rolf & Grosskopf, Shawna & Noh, Dong-Woon & Weber, William, 2005. "Characteristics of a polluting technology: theory and practice," Journal of Econometrics, Elsevier, vol. 126(2), pages 469-492, June.
- Pargal, Sheoli & Wheeler, David, 1995. "Informal regulation of industrial pollution in developing countries : evidence from Indonesia," Policy Research Working Paper Series 1416, The World Bank.
- Fare, Rolf, et al, 1993. "Derivation of Shadow Prices for Undesirable Outputs: A Distance Function Approach," The Review of Economics and Statistics, MIT Press, vol. 75(2), pages 374-80, May.
When requesting a correction, please mention this item's handle: RePEc:eee:eneeco:v:40:y:2013:i:c:p:22-31. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Shamier, Wendy)
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.