Operational and environmental performance in China's thermal power industry: Taking an effectiveness measure as complement to an efficiency measure.
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.
Center for Energy and Environmental Policy Research, School of Management and Economics, Beijing Institute of Technology, Beijing 100081, China; Sustainable Development Research Institute for Economy and Society of Beijing, Beijing 100081, China; Collaborative Innovation Center of Electric Vehicles in Beijing, Beijing 100081, China. Electronic address: kewang2083@gmail.com.
Ke
K
Wang
Center for Energy and Environmental Policy Research, School of Management and Economics, Beijing Institute of Technology, Beijing 100081, China.
Jieming
J
Zhang
Center for Energy and Environmental Policy Research, School of Management and Economics, Beijing Institute of Technology, Beijing 100081, China; Sustainable Development Research Institute for Economy and Society of Beijing, Beijing 100081, China; Collaborative Innovation Center of Electric Vehicles in Beijing, Beijing 100081, China.
Yi-Ming
YM
Wei
D002681:China; D004526:Efficiency; D004777:Environment; D033161:Government Regulation; D007221:Industry; D008962:Models, Theoretical
Efficiency; Environmental effectiveness; Joint performance; Operational effectiveness