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Which provincial administrative regions in China should reduce their coal consumption? An environmental energy input requirement function based analysis

Li, Hong-Zhou, Kopsakangas-Savolainen, Maria, Yan, Ming-Zhe, Wang, Jian-Lin, Xie, Bai-Chen
Energy policy 2019 v.127 pp. 51-63
coal, data collection, energy efficiency, greenhouse gas emissions, models, China
The study is designed to examine whether or not there are scientific grounds for Directive 2984 which was issued to reduce coal consumption by the Chinese central government in 2014. We propose a parametric stochastic frontier model that can be used to measure non-radial environmental energy efficiency, which has not been addressed so far and gather a panel data set covering 29 provincial administrative regions in Mainland China between 2000 and 2013. Our empirical results demonstrate the existence of inappropriateness and self-contradiction in this mandatory plan and offer a new list of regions for coal consumption reduction. We also recommend the implementation of regulatory impact analysis in the second round of this mandatory plan to improve transparency and consistency in the short run and the establishment of more market-based or market-mimicking incentive-compatible measures to reduce greenhouse gas emissions in the long run.