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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

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  • 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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    Cited by:

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    3. Opazo-Basáez, Marco & Monroy-Osorio, Juan Carlos & Marić, Josip, 2024. "Evaluating the effect of green technological innovations on organizational and environmental performance: A treble innovation approach," Technovation, Elsevier, vol. 129(C).
    4. Meng, Ming & Pang, Tingting, 2022. "Operational efficiency analysis of China's electric power industry using a dynamic network slack-based measure model," Energy, Elsevier, vol. 251(C).
    5. Lin, Hongbo & Zhang, Xiaoling & Chen, Zhenling & Zheng, Heyun, 2020. "Estimating the potential output and output gap for China's coal cities with pollutants reduction," Resources Policy, Elsevier, vol. 68(C).
    6. Feihua Huang & Yue Du & Debao Hu & Bin Zhang, 2021. "Sustainable Performance Analysis of Power Supply Chain System from the Perspective of Technology and Management," Sustainability, MDPI, vol. 13(11), pages 1-17, May.
    7. Li, Feng & Zhang, Danlu & Zhang, Jinyu & Kou, Gang, 2022. "Measuring the energy production and utilization efficiency of Chinese thermal power industry with the fixed-sum carbon emission constraint," International Journal of Production Economics, Elsevier, vol. 252(C).
    8. Zhigang Zhu & Xuping Zhang & Yujia Wang & Xiang Chen, 2021. "Energy Cost Performance of Thermal Power Industry in China Considering Regional Heterogeneity: A Meta-Frontier Cost Malmquist Productivity Decomposition Approach," Sustainability, MDPI, vol. 13(12), pages 1-19, June.
    9. Qingyou Yan & Yaxian Wang & Tomas Baležentis & Yikai Sun & Dalia Streimikiene, 2018. "Energy-Related CO 2 Emission in China’s Provincial Thermal Electricity Generation: Driving Factors and Possibilities for Abatement," Energies, MDPI, vol. 11(5), pages 1-25, April.
    10. Zhang, Yijun & Song, Yi, 2020. "Unified efficiency of coal mining enterprises in China: An analysis based on meta-frontier non-radial directional distance functions," Resources Policy, Elsevier, vol. 65(C).
    11. Sueyoshi, Toshiyuki & Goto, Mika & Wang, Derek, 2017. "Malmquist index measurement for sustainability enhancement in Chinese municipalities and provinces," Energy Economics, Elsevier, vol. 67(C), pages 554-571.
    12. Sueyoshi, Toshiyuki & Yuan, Yan, 2017. "Social sustainability measured by intermediate approach for DEA environmental assessment: Chinese regional planning for economic development and pollution prevention," Energy Economics, Elsevier, vol. 66(C), pages 154-166.
    13. Wang, Yongpei & Yan, Weilong & Komonpipat, Supak, 2019. "How does the capacity utilization of thermal power generation affect pollutant emissions? Evidence from the panel data of China's provinces," Energy Policy, Elsevier, vol. 132(C), pages 440-451.
    14. Xuemei Jiang & Huijuan Wang & Yan Xia, 2020. "Economic structural change, renewable energy development, and carbon dioxide emissions in China," Mitigation and Adaptation Strategies for Global Change, Springer, vol. 25(7), pages 1345-1362, October.
    15. Yu, Yanni & Qian, Tao & Du, Limin, 2017. "Carbon productivity growth, technological innovation, and technology gap change of coal-fired power plants in China," Energy Policy, Elsevier, vol. 109(C), pages 479-487.
    16. Chun Sun & Sheng Ang & Fangqing Wei & Dawei Wang & Feng Yang, 2024. "Supply–demand effectiveness: capturing the effects of supply and demand mismatches in operational performance measurement," Operational Research, Springer, vol. 24(2), pages 1-22, June.

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    More about this item

    Keywords

    Efficiency; Environmental effectiveness; Joint performance; Operational effectiveness;
    All these keywords.

    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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