A comparative study of dynamic changes in CO2 emission performance of fossil fuel power plants in China and Korea

This paper aims to conduct a comparative study of the changes in CO2 emission performance of state-owned fossil fuel power plants between China and Korea. For this purpose, we combine the concept of the metafrontier Malmquist productivity index and the non-radial directional distance function to develop a new index called the non-radial metafrontier Malmquist CO2 emission performance index (NMMCPI). This new methodology allows for the incorporation of technological heterogeneities and slack variables into the previously introduced Malmquist CO2 emission performance index (MCPI). The NMMCPI can be derived by solving several non-radial data envelopment analysis (DEA) models. The NMMCPI can be decomposed into an efficiency change (EC) index, a best-practice gap change (BPC) index, and a technology gap change (TGC) index. By fixing the non-energy inputs, we measure the pure CO2 emission performance change. Based on the proposed indices, the comparative study between Chinese and Korean fossil fuel power industries is conducted for the 2005-2010 period. Empirical results indicate significant differences in terms of various decomposed CO2 emission performance changes between China and Korea. Korean power plants demonstrate improvements in innovation, while Chinese power plants demonstrate a higher ability for technological leadership. Some related policy implications are also proposed based on the empirical results.