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Operational and environmental performance in China¡¯s thermal power industry: Taking an effectiveness measure as complement to an efficiency measure

Author

Listed:
  • Ke Wang
  • Jieming Zhang
  • Yi-Ming Wei

    () (Center for Energy and Environmental Policy Research (CEEP), Beijing Institute of Technology)

Abstract

The trend toward a more fiercely competitive and strictly environmentally regulated electricity market in several countries, including China has led to efforts by both industry and government to develop advanced performance evaluation models that adapt to new evaluation requirements. Traditional operational and environmental efficiency measures do not fully consider the influence of market competition and environmental regulations and, thus, are not sufficient for the thermal power industry to evaluate its operational performance with respect to specific marketing goals (operational effectiveness) and its environmental performance with respect to specific emissions reduction targets (environmental effectiveness). As a complement to an operational efficiency measure, an operational effectiveness measure not only reflects the capacity of an electricity production system to increase its electricity generation through the improvement of operational efficiency, but it also reflects the system¡¯s capability to adjust its electricity generation activities to match electricity demand. In addition, as a complement to an environmental efficiency measure, an environmental effectiveness measure not only reflects the capacity of an electricity production system to decrease its pollutant emissions through the improvement of environmental efficiency, but it also reflects the system¡¯s capability to adjust its emissions abatement activities to fulfill environmental regulations. Furthermore, an environmental effectiveness measure helps the government regulator to verify the rationality of its emissions reduction targets assigned to the thermal power industry. Several newly developed effectiveness measurements based on data envelopment analysis (DEA) were utilized in this study to evaluate the operational and environmental performance of the thermal power industry in China during 2006-2013. Both efficiency and effectiveness were evaluated from the three perspectives of operational, environmental, and joint adjustments to each electricity production system. The operational and environmental performance changes over time were also captured through an effectiveness measure based on the global Malmquist productivity index. Our empirical results indicated that the performance of China¡¯s thermal power industry experienced significant progress during the study period and that policies regarding the development and regulation of the thermal power industry yielded the expected effects. However, the emissions reduction targets assigned to China¡¯s thermal power industry are loose and conservative.

Suggested Citation

  • Ke Wang & Jieming Zhang & Yi-Ming Wei, 2017. "Operational and environmental performance in China¡¯s thermal power industry: Taking an effectiveness measure as complement to an efficiency measure," CEEP-BIT Working Papers 100, Center for Energy and Environmental Policy Research (CEEP), Beijing Institute of Technology.
  • Handle: RePEc:biw:wpaper:100
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    File URL: http://ceep.bit.edu.cn/docs/2018-10/20181012074938803429.pdf
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    References listed on IDEAS

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    Cited by:

    1. Ke Wang & Zhifu Mi & Yi‐Ming Wei, 2019. "Will Pollution Taxes Improve Joint Ecological and Economic Efficiency of Thermal Power Industry in China?: A DEA‐Based Materials Balance Approach," Journal of Industrial Ecology, Yale University, vol. 23(2), pages 389-401, April.
    2. repec:eee:rensus:v:82:y:2018:i:p3:p:3962-3971 is not listed on IDEAS
    3. repec:eee:eneeco:v:67:y:2017:i:c:p:554-571 is not listed on IDEAS
    4. repec:eee:eneeco:v:66:y:2017:i:c:p:154-166 is not listed on IDEAS
    5. repec:eee:enepol:v:109:y:2017:i:c:p:479-487 is not listed on IDEAS

    More about this item

    Keywords

    Efficiency; Environmental effectiveness; Joint performance; Operational effectiveness;

    JEL classification:

    • Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters and their Management; Global Warming
    • Q40 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - General

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