Abstract
This study measures operational and environmental efficiencies of nine incumbent electric power companies (EPCos) in Japan and examines an influence of market reform and Fukushima nuclear power plant accident on efficiencies using a data set from 2003 to 2015. This study applies output-oriented radial data envelopment analysis (DEA) model to the measurement of efficiencies. Three inputs and three desirable outputs are used for the measurement of operational efficiency, and one undesirable output besides inputs and desirable outputs is used to measure environmental efficiency. EPCos produce not only desirable output, for example, electricity, but also undesirable output, for example, CO2, for their operations. For the measurement of environmental efficiency, this study uses a unique DEA model that assumes occurrence of ecotechnology innovation. The results reveal that environmental efficiency of EPCos is mostly invariant over the period of this study, while operational efficiency decreases in the same period. In addition, the results present that Japanese EPCos make efforts to reduce CO2 emissions by promoting ecotechnology innovation. The Kruskal–Wallis rank sum test indicates differences in operational and environmental efficiencies among EPCos. Such performance differences might become larger as market liberalization advances, which could lead to further structural changes of the industry.
Highlights
Public awareness about environmental protection and sustainable development has been growing globally in recent years
Share of CO2 emissions from electricity generation in emissions from total energy use rose in Japan owing to the Mathematical Problems in Engineering decrease in electricity generation from nuclear power plants and the increase in that from fossil fuel power plants after the Fukushima Daiichi nuclear power plant accident, which occurred after the Great East Japan Earthquake and Tsunami on March 11, 2011
The upper panel indicates environmental efficiency under variable RTS (VRTS) technology (EEV), the middle panel indicates that under constant RTS (CRTS) technology (EEC), and the lower panel describes scale efficiency for environmental efficiency (SEE), which is calculated by dividing EEC by EEV
Summary
Public awareness about environmental protection and sustainable development has been growing globally in recent years. The problems of global warming and climate change in particular have received attention after the Kyoto Protocol was adopted in 1997 and enacted in 2005. Improving energy and environmental efficiencies of the electricity generation sector is one of the most important policy agendas toward the sustainable development of the world. In Japan, more than 90% of CO2 emissions have been produced from various energy uses. Under this situation, the role of the electricity industry in improving energy efficiency and environmental protection has become increasingly important. In 2010, CO2 emissions from electricity generation accounted for approximately 38% of the emissions produced from total energy use in Japan, but rose to approximately 43% in 2014.
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