Energy Cost Performance of Thermal Power Industry in China Considering Regional Heterogeneity: A Meta-Frontier Cost Malmquist Productivity Decomposition Approach

Abstract

Since thermal power generation is still one of the main sources of carbon emissions in China, the economic benefits and productivity of the thermal power generation industry have been seriously affected in recent years with the increasingly strict environmental regulations and restrictions on carbon emissions, as well as by the sharp fluctuations of coal prices. Therefore, it has been an important issue to improve the productivity performance of the thermal power industry. Due to the regional heterogeneity among different regions of China, we introduced a meta-frontier framework into the energy cost productivity model to develop a meta-energy cost productivity model. The energy cost gap between the group-specific and meta-frontiers was also utilized to assess the convergence rate of the group-specific frontier to the meta-frontier. The estimated results present that the energy cost efficiency of the eastern region outperformed that of the other two regions, and the cost Malmquist (CM) productivity of these three regions all showed positive growth, in which the progress of allocative efficiency and price effect were the main driving factors. Additionally, the central and western regions displayed the convergence of group-specific CM productivity towards the meta-frontier.