Adjusting productivity measures for CO_2 emissions control: Evidence from the provincial thermal power sector in China

摘要

We examine productivity changes by the types of environmental regulations used to control CO2 emissions in the provincial, thermal power sector of China from 2009 to 2016. We derive a Tornqvist-type productivity index in which CO2 emissions are undesirable outputs. The shadow price of CO2, required for calculating the index, is estimated based on the duality between a revenue and a directional output distance function. Productivity changes are measured using both estimated shadow prices and the actual trading prices of CO2 in six pilot emissions trading systems. We find that productivity measurement is highly dependent on the choice of CO2 prices. We also investigate the impact of emission intensity and emissions per se on productivity measurement. We show that productivity measurement depends on the choice of environmental standard. (C) 2020 Elsevier B.V. All rights reserved.