The Effects of The Multi-Target Policy on Green Productivity: Evidence from China’s Fossil Fuel Power Plants

Abstract

We propose the non-radial meta-frontier global Luenberger productivity index, which addresses the issues of technology heterogeneity, slack variable, and linear programming infeasibility, and decompose it based on the technology perspective and factor perspective. With the dataset of China’s power plants from 2005 to 2015, we identify the effects of the multi-targets, including energy-saving targets and SO2 reduction targets, in the 12th Five-Year Plan on green productivity encompassing all channels of effects. A 1% increase in the average energy-saving target cumulatively increases green productivity by 0.50%, while a 1% increase in the average SO2 reduction target cumulatively decreases that by 0.03%. In all channels, the technology leadership effect and generation efficiency exhibit sensitivity. Differential effects of the multi-targets on state-owned versus non-stateowned plants imply significant differences in observed production technology.