Environmental efficiency analysis of China's coal-fired power plants considering heterogeneity in power generation company groups

This study conducts an environmental efficiency analysis of 104 coal-fired power plants in China by simultaneously considering multiple undesirable outputs (CO2, SO2, NOx, and PM2.5 emissions) generated during the production process and the heterogeneity caused by differences between the five major power generation companies (Datang, Guodian, Huadian, Huaneng, and Power Investment). In the empirical study, slacks-based data envelopment analysis (DEA) was employed to investigate the “total” and individual CO2, SO2, NOx, and PM2.5 “specific” environmental inefficiency scores for each power plant. These scores allow us to identify which undesirable outputs are the main sources of total environmental inefficiency for each company and power plant. The results show that inefficient PM2.5 and SO2 emissions are the main sources of environmental inefficiency for many plants. Furthermore, a meta-frontier DEA decomposition framework is adopted to identify whether the source of total environmental inefficiency for each power plant is due to technological gaps between the five major power generation companies or managerial gaps within the same power generation company. The results imply that, in most cases, managerial gaps within the same power generation company account for a larger proportion of total environmental inefficiency for each power plant. These findings are used to provide comprehensive policy suggestions for government and corporate managers to improve the environmental efficiency of power plants. •Environmental efficiency analysis of coal-fired power plants in China was performed.•Slacks-based model and meta-frontier DEA decomposition framework were employed.•Considered multiple undesirable outputs and heterogeneity between power companies.•The relationship between plant inefficiency and undesirable outputs were quantified.•Knowledge sharing and technology spillover can improve environmental efficiency.