Comparison of improving energy use and mitigating pollutant emissions from industrial and non-industrial activities: Evidence from a variable-specific productivity analysis framework

Abstract

This paper seeks to account for differences in productivity of the industrial and non-industrial activities in the productivity analysis framework. The Luenberger productivity indicator is widely applied to analyze the productivity change, and can be decomposed as it follows the additive structure. But there have been few studies on sector operation performance and industrial structure involving both the industrial and non-industrial inputs, output and air pollutant emissions. Resorting on the China's province-level data on energy, output and air pollutants from 2006 to 2019, we find that the industrial SO2 emissions, energy consumption and NOX emissions are the major factors leading to sector operation inefficiency. By decomposing the operation performance indicator (OPI), we observe that contribution to productivity change by energy consumption, air pollutant emissions and output is higher than contribution by the non-industrial variables. Furthermore, technical progress offsets negative efficiency growth. In order to implement energy conservation, emissions reduction and industrial restructuring at the provincial level, China's government should take efforts to improve the efficiency of non-industrial energy consumption and support the development of cleaner industries.