Environmental Efficiency of China’s Thermal Power Enterprises: A Bootstrapped Directional Distance Function with Metafrontier Approach

Abstract

China’s thermal power generation has attracted worldwide attention because of its significantly high amount of carbon emissions and environmental protection measures. The focus of efficiency studies has gradually shifted from the traditional technical and cost efficiency approaches to an environmental efficiency approach. This study employs a bootstrapped directional distance function approach to measure the environmental efficiency of 24 listed thermal power generation companies in China during the period 2011–2017. To consider the influence of heterogeneity, we divide the decision-making units into groups using a metafrontier method. In addition, we perform regression analysis to identify the causal effects of heterogeneity. The results show that an efficiency gap exists among China’s thermal power companies, and there is substantial room for improvement. Enterprise age, coal density, the amount of government subsidies, and carbon emission trading policies all have negative effects on the environmental efficiency of enterprises. However, enterprise ownership and installed capacity do not affect environmental efficiency significantly.