Dynamic change in energy and CO2 performance of China's commercial sector: A regional comparative study

Energy and CO2 efficiency play important roles in promoting energy conservation and CO2 emission reduction in China's commercial sector. This paper applies the non-radial directional distance function to evaluate energy and CO2 efficiency in China's commercial sector, and also constructs a non-radial Malmquist energy and CO2 performance index to measure the dynamic performance of energy and CO2 efficiency in the sector. The results indicate that energy and CO2 efficiency in China's commercial sector is generally low, and there are significant regional differences and enormous energy-savings and CO2 emission reduction potentials. Eastern China has the highest energy and CO2 efficiency of all the regions. From the perspective of dynamic performance, energy and CO2 efficiency performance in China's commercial sector improved by 3.8% annually over the period 1995-2015. Technological progress is the major driving factor improving energy and CO2 efficiency in the sector. The technology gap changes (TGC) index which is less than 1 implies that the technological gap between the global frontier and the intertemporal frontier has increased, and does not help to improve energy and CO2 efficiency performance. Considering regional differences, policy makers should set both short- and long-term goals to achieve environmental goals in China's commercial sector.