To pick (or not to pick) the high-hanging fruits: Cleaner production audits and firm total factor energy efficiency

Abstract

The “low-hanging fruits” measures that easily and quickly reduced pollution and energy intensity over the past decades are now giving rise to issues. Cleaner production may provide new opportunities to gain the “high-hanging fruits”—more challenging or costly actions that have greater environmental and energy benefits but require advanced technologies or management for implementation. This study provides empirical evidence on the effects of cleaner production audits (CPAs) on Chinese manufacturing firms' total factor energy efficiency (TFEE), whose enhancement synergizes climate mitigation and green productivity growth. The study analyzes the effects of CPAs by employing a staggered difference-in-difference strategy combined with propensity score matching to compare samples of treated and untreated industrial firms for the period of 2000–2014. The findings show that regulated firms experience a 10.4% increase in TFEE. The contributions of green pure technical efficiency and green technical progress are 7.9% and 2.7%, respectively. Additionally, non-heavy polluters, small firms, and private firms demonstrate the greatest improvements in TFEE. However, CPAs do not significantly impact the TFEE of firms with high dependence on fossil energy. Finally, the mechanism analyses demonstrate that inner resource allocation optimization may be the main solution for improving TFEE by enhancing green pure technical efficiency. Green technological innovations in energy alternatives are the most promising paths for increasing TFEE by promoting green technical progress. These findings illuminate how manufacturing firms pick the “high-hanging fruits” of energy efficiency in more cost-effective ways and suggest useful insights for cleaner production promotion.