Ecological total-factor energy efficiency of regions in China

Most existing energy efficiency indices are computed without taking into account undesirable outputs such as CO2 and SO2 emissions. This paper computes the ecological total-factor energy efficiency (ETFEE) of 30 regions in China for the period 2005–2009 through the slack-based model (SBM) with undesirable outputs. We calculate the ETFEE index by comparing the target energy input obtained from SBM with undesirable outputs to the actual energy input. Findings show that Chinaʹs regional ETFEE still remains a low level of around 0.600 and regional energy efficiency is overestimated by more than 0.100 when not looking at environmental impacts. Chinaʹs regional energy efficiency is extremely unbalanced: the east area ranks first with the highest ETFEE of above 0.700, the northeast and central areas follow, and the west area has the lowest ETFEE of less than 0.500. A monotone increasing relation exists between the areaʹs ETFEE and Chinaʹs per capita GDP. The truncated regression model shows that the ratio of R&D expenditure to GDP and the degree of foreign dependence have positive impacts, whereas the ratio of the secondary industry to GDP and the ratio of government subsidies for industrial pollution treatment to GDP have negative effects, on the ETFEE.