Environmental technical efficiency, technology gap and shadow price of coal-fuelled power plants in China: A parametric meta-frontier analysis

• A new parametric meta-frontier estimation method is proposed.
• The environmental efficiency and shadow price of China's power plants are investigated.
• State-owned power plant is less efficient relative to the other plants.
• State-owned power plant is faced with the lowest cost to marginal CO2 abatement.

In this paper, we propose a new meta-frontier estimation method to investigate the environmental technical efficiency and carbon abatement cost of power plants in China taking the technological heterogeneities into consideration. This study is based on a plant-level cross-sectional data set comprising 648 observations for the year 2008. Results show that, state-owned power plants are least efficient relative to the meta-frontier. A further 44 percent of total CO2 emissions can be cut if all power plants are completely efficient. Additionally, the group of state-owned power plants is faced with the lowest cost to marginal CO2 abatement.