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Efficiency, Productivity and Environmental Policy: a Case Study of Power Generation in the EU

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  • Jurate Jaraite
  • Corrado Di Maria

Abstract

This study uses the EU public power generating sector as a case study to investigate the environmental efficiency and productivity enhancing performance of the EU ETS in its pilot phase. Using Data Envelopment Analysis methods, we measures the environmental efficiency and the productivity growth registered in public power generation across the EU over the 1996-2007 period. In the second stage of our analysis we attempt to explain changes in productivity and efficiency over time using state-of-the-art econometric techniques. Our analysis suggests two conclusions: on the one hand carbon pricing led to an increase in environmental efficiency and to a shift outwards of the technological frontier; on the other hand, the overly generous allocation of emission permits had a negative impact on both measures. These results are shown to be quite robust to changes in controls and specifications.

Suggested Citation

  • Jurate Jaraite & Corrado Di Maria, 2010. "Efficiency, Productivity and Environmental Policy: a Case Study of Power Generation in the EU," Economics Working Papers 10-05, Queen's Management School, Queen's University Belfast.
    • Handle: RePEc:qub:wpaper:1005
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    More about this item

    Keywords

    Emissions Trading; EU ETS; Environmental Efficiency; Productivity Growth; Data Envelopment Analysis;
    All these keywords.

    JEL classification:

    • O38 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Government Policy
    • Q48 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Government Policy
    • Q58 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Government Policy

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