A three-level meta-frontier directional distance function approach for carbon emission efficiency analysis in China: convexity versus non-convexity

Abstract

Achieving carbon peaking and carbon neutrality goals is a fundamental requirement for advancing high-quality development in China. Carbon emission efficiency (CEE) indicates the proportion of optimal emissions to actual emissions in the production system, providing a basis for reasonable carbon emission reductions. To facilitate the realisation of China's goals, this paper analyses CEE and the carbon emission reduction potential in China from 2001 to 2020. Considering the heterogeneity of both regions and industries, this paper proposes a three-hierarchy meta-frontier directional distance function (DDF) method to measure CEE under convex and non-convex assumptions of production possibility set (PPS). The empirical results show that the assumption of convex or non-convex axiom on the innermost PPS has a great impact on efficiency distribution, and the distribution of technology gap rate (TGR) is more affected by the selection of convex or non-convex assumption compared with the distribution of CEE. Currently, China's carbon emission efficiency remains low, mostly due to management inefficiency. The primary industry has more advanced emission reduction technologies than the other two industries. The eastern region has a large potential for carbon emission reduction because of its high carbon emission base, despite its high efficiency.