The green efficiency of industrial sectors in China: A comparative analysis based on sectoral and supply-chain quantifications

Abstract

Industry is a main energy consumer and environmental polluter in modern society. The performance of China’s industrial development should therefore be integratively measured in economic, environmental as well as energy and resource contexts. This study employs the directional slacks-based inefficiency model to calculate sectoral and supply-chain green efficiency (SGE and SCGE respectively) of 37 industry sectors in China. Energy and water consumption are selected as the model inputs. Output considerations include value-added (desirable output), and SO2, NOx and CO2 emissions (undesirable outputs). Sectoral statistics data are used to calculate SGE while an input-output (I-O) analysis model, using China’s 2012 economy benchmark data, is employed to quantify SCGE. Furthermore, the sectors that significantly contribute indirect energy consumption to China’s industrial system are identified, and determinants of their SCGE are analyzed using the Tobit model. Results show that light industrial sectors present higher SGE but lower SCGE compared to that of heavy industrial sectors. Environmental regulation and independent innovation capacity promote industrial sectors’ SCGE, while capital-labor ratio and foreign direct investment exert inhibiting effects. Based on model results, policy suggestions are presented to advance green industry transition in China.