Ecological total-factor energy efficiency of China's heavy and light industries: Which performs better?

Is it the heavy industry or light industry that performs better in energy efficiency incorporating undesirable outputs? Energy efficiency is the gap between actual and target energy inputs, thus the more energy intensive heavy industry is not necessarily the less energy efficient one. The purpose of this paper is to evaluate and compare the ecological total-factor energy efficiency (ETFEE) of the heavy and light industries as well as to assess their technology gaps. Considering the slack-bias of conventional DEA models and technological heterogeneity between heavy and light industries, the slack-based DEA model (SBM) and meta-frontier technology have been combined. The empirical results show that: (1) China's industries did not perform efficiently. Among them, heavy industry, albeit has more advanced technology, demonstrates lower energy efficiency than light industry. Thus, China needs to stimulate heavy industry to achieve its potential in efficiency improvement. (2) Compared with light industry, governmental stimulus induced expansion has promoted technological advancement in heavy industry, but it still has had no effect on the utilization of existing technologies by, for example, improving the managerial efficiency. Greater pressure on environmental standards is needed to motivate factories in heavy industry to utilize existing technologies more sufficiently. (3) Technological gap among industries has enlarged, thus more attention should be paid on encouraging technology spillover from heavy industry to light industry.