Dynamic environmental efficiency evaluation of electric power industries: Evidence from OECD (Organization for Economic Cooperation and Development) and BRIC (Brazil, Russia, India and China) countries

Abstract

As most power is consumed domestically, the environmental efficiencies of electric power industries in different countries may serve as a benchmark to evaluate their emission reduction efforts. Taking the power generated and carbon emissions as desirable and undesirable outputs respectively, this study adopts the environmental Malmquist index, which is based on a SBM-DEA (slack based measure data envelopment analysis) model, to investigate the environmental TFP (total factor productivity) index of electric power industries in 26 OECD (Organization for Economic Cooperation and Development) and BRIC (Brazil, Russia, India and China) countries from 1996 to 2010. In addition, we employ the Tobit regression model to analyze the influence of related factors on TFP and its decompositions. The empirical results indicate that the dynamic environmental efficiency or TFP provides a good perspective for evaluating emission reduction efforts of electric power industries in different countries. Fuel structure change and technological progress are the main driving forces to promote dynamic environmental efficiency. Furthermore, the economic situation and energy price changes also affect dynamic environmental efficiency significantly. Therefore, taking the energy structure and affordability into consideration, environmental TFP may indicate climate change mitigation efforts to a large extent.