CO2 Emission Performance, Mitigation Potential, and Marginal Abatement Cost of Industries Covered in China’s Nationwide Emission Trading Scheme: A Meta-Frontier Analysis

Abstract

China’s nationwide emission trading scheme (CN-ETS) is scheduled to be launched in 2017. It is of great urgency and necessity to obtain a good understanding of the participating sectors of CN-ETS in terms of energy utilization and CO2 emissions. In this regard, it should be noted that the findings may be biased without taking industry heterogeneity into consideration. To this end, a meta-frontier framework with the directional distance function is employed to estimate the CO2 emission performance (CEP), mitigation potential (MP), and marginal abatement cost (MAC) at sector levels under the meta-frontier and the group-frontier. The results indicate that significant disparities in the CEP, MP, and MAC exist under both frontiers among various sectors, and the sectoral distributions of CEP, MP, and MAC are found to be different between the two frontiers. Additionally, the differences between the two frontiers in terms of CEP, MP, and MAC are considerable, and exhibit unequal distributions among these sectors. Notably, MAC under both frontiers and the difference between them are found to be significantly correlated with the carbon intensity. Finally, policy implications are provided for the government and participating enterprises, respectively.