Total-factor CO2 emission performance of China's provincial industrial sector: A meta-frontier non-radial Malmquist index approach

The Chinese government has promised that China should peak its carbon emissions by 2030 and that the share of non-fossil fuels in primary energy consumption should rise to around 20%. Since the industrial sector is the largest CO2 emitter in China, emission reduction in the industrial sector is significant to the realization of those targets. Using the panel data of provincial industrial sectors in China during 1998-2011, we apply the meta-frontier non-radial Malmquist CO2 emission performance index (MNMCPI) to estimate the changes in China's CO2 emission performance as well as their driving forces, and compare MNMCPI with other traditional CO2 emission performance indices, such as the Malmquist CO2 emission Performance Index (MCPI). The results indicate that the CO2 emission performance of China's provincial industrial sector during 1998-2011 grew at an average annual rate of 5.53%, and that the average CO2 emission performance of industrial sector in Eastern, Central and Western China decreased in turn. MCPI overestimates CO2 emission performance. The efficiency change (EC) index based on MNMCPI increases by the average annual rate of 2.297%. EC of CO2 emission performance in 21 provinces shows an increasing trend. The innovation effect indicated by best-practice gap change (BPC) is significant. We also find that the increase in the CO2 emission performance of industrial sector of 23 provinces is mainly driven by technology innovation, but the CO2 emission performance of industrial sector of other 6 provinces is mainly driven by technology efficiency improvement. In terms of technology gap change (TGC) index, none of the three regions seem to be a technology leader, and the inter-temporal frontier of three regions has been shifting away from the global frontier.