Examining Environmental Efficiency of Power Generation Plants under the Emissions Trading Scheme

doi:10.15266/KEREA.2024.33.4.471

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2024 Vol.33, Issue 4 Preview Page

Research Paper

Examining Environmental Efficiency of Power Generation Plants under the Emissions Trading Scheme 배출권 거래제하에서 화석연료 발전소의 환경 효율성 분석: 오민혜*‧서동희**
Minhye Oh* and Dong Hee Suh**; *고려대학교 식품자원경제학과 석사과정, 제1저자(e-mail: mh_wow@korea.ac.kr)
**고려대학교 식품자원경제학과 부교수, 교신저자(e-mail: dhsuh@korea.ac.kr)

*Graduate Student, Department of Food and Resource Economics, Korea University, First author (e-mail: mh_wow@korea.ac.kr)
**Associate Professor, Department of Food and Resource Economics, Korea University, Corresponding author (e-mail: dhsuh@korea.ac.kr)

31 December 2024. pp. 471-485

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Abstract

This study aims to examine the environmental efficiency of power generation plants and explore its relationship with the Korea Emissions Trading Scheme (ETS) using a two-step approach. First, focusing on fossil-fueled power plants, we measure environmental efficiency scores using data envelopment analysis. Second, we identify the factors influencing these scores using bootstrapped pooled truncated regression, with particular attention to the relationship between environmental efficiency and emission permit prices. Our findings reveal that substantial variation in environmental efficiency exists across fossil-fueled power plants during the period from 2011 to 2022, while LNG-fired power plants outperform coal-fired power plants. Moreover, within the ETS framework, the findings show that higher emission permit prices are associated with improvements in environmental efficiency.

Keywords

Environmental efficiency

Emissions trading scheme

Power plants

Data envelopment analysis

Bootstrapped pooled truncated regression

본 연구는 화석연료 발전소의 환경 효율성을 평가하고, 한국 배출권 거래제하에서 배출권 가격과의 관계를 분석하였다. 실증 분석을 위해 첫 번째 단계에서는 자료포락분석을 통해 환경 효율성 점수를 측정하고, 두 번째 단계에서는 부트스트랩 절단 회귀분석을 통해 효율성 점수에 영향을 미치는 요인들을 배출권 가격에 주목하여 분석하였다. 분석 결과, 2011년부터 2022년까지의 기간 동안 화석연료 발전소 간 환경 효율성에 상당한 차이가 존재하였으며, LNG 발전소가 석탄 발전소보다 더 우수한 환경 효율성을 보이는 것으로 나타났다. 또한, 배출권 거래제하에서 배출권 가격이 상승할수록 발전소들의 환경 효율성이 향상되는 것으로 나타났다.

키워드

환경 효율성

배출권 거래제

발전소

자료포락분석

부트스트랩 절단 회귀분석

References

ADB (Asian Development Bank), The Korea Emissions Trading Scheme: Challenges and Emerging Opportunities, 2018.
Anderson, B. J., and C. Di Maria, “Abatement and allocation in the pilot phase of the EU ETS,” Environmental and Resource Economics, Vol. 48, No. 1, 2011, pp. 83~103.10.1007/s10640-010-9399-9
Charnes, A., W. W. Cooper, and E. Rhodes, “Measuring the efficiency of decision making units,” European Journal of Operational Research, Vol. 2, 1978, pp. 429~444.10.1016/0377-2217(78)90138-8
Charnes, A., W. W. Cooper, J. Rousseau, and J. Semple, “Data envelopment analysis and axiomatic notions of efficiency and reference sets,” University of Texas. Center for Cybernetic Studies, 1987, pp. 1~12.
Du, Z., C. Xu, and B. Lin, “Does the Emission Trading Scheme achieve the dual dividend of reducing pollution and improving energy efficiency? Micro evidence from China,” Journal of Environmental Management, Vol. 323, 2022, 116202.10.1016/j.jenvman.2022.116202
Ellerman, A. D., F. J. Convery, C. de Perthuis, Pricing Carbon: the European Union Emissions Trading Scheme, Cambridge University Press, Cambridge, 2010.
Färe, R., and S. Grosskopf, “Nonparametric productivity analysis with undesirable outputs: comment,” American Journal of Agricultural Economics, Vol. 85, No. 4, 2003, pp. 1070~1074.10.1111/1467-8276.00510
Färe, R., S. Grosskopf, and D. Tyteca, “An activity analysis model of the environmental performance of firms-application to fossil-fuel-fired electric utilities,” Ecological Economics, Vol. 18, No. 2, 1996, pp. 161~175.10.1016/0921-8009(96)00019-5
Fleishman, R., R. Alexander, S. Bretschneider, and D. Popp, “Does regulation stimulate productivity? The effect of air quality policies on the efficiency of US power plants,” Energy Policy, Vol. 37, No. 11, 2009, pp. 4574~4582.10.1016/j.enpol.2009.06.012
GIR (Greenhouse Gas Inventory & Research Center), 2018 Korean Emissions Trading System Report, 2020.
GIR (Greenhouse Gas Inventory & Research Center), 2023 Korean Emissions Trading System Report, 2024b.
GIR (Greenhouse Gas Inventory & Research Center), 2023 National Greenhouse Gas Inventory Report of Korea, 2024a.
Haynes, K. E., S. Ratick, and J. Cummings-Saxton, “Toward a pollution abatement monitoring policy: measurements, model mechanics, and data requirements,” Environmental Professional, Vol. 16, 1994, pp. 292~303.
ICAP (International Carbon Action Partnership), Korea Emissions Trading Scheme, 2018.
Jaraitė, J., and C. Di Maria, “Efficiency, productivity and environmental policy: A case study of power generation in the EU,” Energy Economics, Vol. 34, No. 5, 2012, 1557p.10.1016/j.eneco.2011.11.017
Johnstone, N., S. Managi, M. C. Rodríguez, I. Hašič, H. Fujii, and M. Souchier, “Environmental policy design, innovation and efficiency gains in electricity generation,” Energy Economics, Vol. 63, 2017, pp. 106~115.10.1016/j.eneco.2017.01.014
Kwon, O. S., “CO₂ Emission and Productivity of Fossil-fueled Power Plants: A Luenberger Indicator Approach,” Environmental and Resource Economics Review, Vol. 19, No. 4, 2010, pp. 733~752.
Kwon, O. S., and H. J. Park, “Imperfect Competition and Productivity: Korean Fossil-fueled Power Generation Sector,” Environmental and Resource Economics Review, Vol. 19, No. 1, 2010, pp. 3~21.
Sarıca, K., and I. Or, “Efficiency assessment of Turkish power plants using data envelopment analysis,” Energy, Vol. 32, No. 8, 2007, pp. 1484~1499.10.1016/j.energy.2006.10.016
Seifert, S., A. Cullmann, and C. von Hirschhausen, “Technical efficiency and CO₂ reduction potentials—An analysis of the German electricity and heat generating sector,” Energy Economics, Vol. 56, 2016, pp. 9~19.10.1016/j.eneco.2016.02.020
Simar, L., and P. W. Wilson, “Of course we can bootstrap DEA scores! But does it mean anything? Logic trumps wishful thinking,” Journal of Productivity Analysis, Vol. 11, 1999, pp. 93~97.10.1023/A:1007739507007
Tyteca, D., “Linear Programming Models for the Measurement of Environmental Performance of Firms—Concepts and Empirical Results,” Journal of Productivity Analysis, Vol. 8, 1997, pp. 183~197.10.1023/A:1013296909029
Tyteca, D., “On the measurement of the environmental performance of firms -a literature review and a productive efficiency perspective,” Journal of Environmental Management, Vol. 46, 1996, pp. 281~308.10.1006/jema.1996.0022
Widerberg, A., and M. Wråke, The Impact of the EU Emissions Trading System on CO₂ Intensity in Electricity Generation, IVT Swedish Environmental Research Institute Ttd, 2009.
Wu, C., K. Oh, X. Long, and J. Zhang, “Effect of installed capacity size on environmental efficiency across 528 thermal power stations in North China,” Environmental Science and Pollution Research, Vol. 26, 2019, pp. 29822~29833.10.1007/s11356-019-05981-7 31410828
Zhang, N., P. Zhou, and Y. Choi, “Energy efficiency, CO₂ emission performance and technology gaps in fossil fuel electricity generation in Korea: A meta-frontier non-radial directional distance function analysis,” Energy Policy, Vol. 56, 2013, pp. 653~662.10.1016/j.enpol.2013.01.033

Information

Publisher :Environmental and Resource Economics Review
Publisher(Ko) :자원 · 환경경제연구
Journal Title :자원·환경경제연구
Journal Title(Ko) :Environmental and Resource Economics Review
Volume : 33
No :4
Pages :471-485
DOI :https://doi.org/10.15266/KEREA.2024.33.4.471

[1] ADB (Asian Development Bank), The Korea Emissions Trading Scheme: Challenges and Emerging Opportunities, 2018.

[2] Anderson, B. J., and C. Di Maria, “Abatement and allocation in the pilot phase of the EU ETS,” Environmental and Resource Economics, Vol. 48, No. 1, 2011, pp. 83~103.10.1007/s10640-010-9399-9

[3] Charnes, A., W. W. Cooper, and E. Rhodes, “Measuring the efficiency of decision making units,” European Journal of Operational Research, Vol. 2, 1978, pp. 429~444.10.1016/0377-2217(78)90138-8

[4] Charnes, A., W. W. Cooper, J. Rousseau, and J. Semple, “Data envelopment analysis and axiomatic notions of efficiency and reference sets,” University of Texas. Center for Cybernetic Studies, 1987, pp. 1~12.

[5] Du, Z., C. Xu, and B. Lin, “Does the Emission Trading Scheme achieve the dual dividend of reducing pollution and improving energy efficiency? Micro evidence from China,” Journal of Environmental Management, Vol. 323, 2022, 116202.10.1016/j.jenvman.2022.116202

[6] Ellerman, A. D., F. J. Convery, C. de Perthuis, Pricing Carbon: the European Union Emissions Trading Scheme, Cambridge University Press, Cambridge, 2010.

[7] Färe, R., and S. Grosskopf, “Nonparametric productivity analysis with undesirable outputs: comment,” American Journal of Agricultural Economics, Vol. 85, No. 4, 2003, pp. 1070~1074.10.1111/1467-8276.00510

[8] Färe, R., S. Grosskopf, and D. Tyteca, “An activity analysis model of the environmental performance of firms-application to fossil-fuel-fired electric utilities,” Ecological Economics, Vol. 18, No. 2, 1996, pp. 161~175.10.1016/0921-8009(96)00019-5

[9] Fleishman, R., R. Alexander, S. Bretschneider, and D. Popp, “Does regulation stimulate productivity? The effect of air quality policies on the efficiency of US power plants,” Energy Policy, Vol. 37, No. 11, 2009, pp. 4574~4582.10.1016/j.enpol.2009.06.012

[10] GIR (Greenhouse Gas Inventory & Research Center), 2018 Korean Emissions Trading System Report, 2020.

[11] GIR (Greenhouse Gas Inventory & Research Center), 2023 Korean Emissions Trading System Report, 2024b.

[12] GIR (Greenhouse Gas Inventory & Research Center), 2023 National Greenhouse Gas Inventory Report of Korea, 2024a.

[13] Haynes, K. E., S. Ratick, and J. Cummings-Saxton, “Toward a pollution abatement monitoring policy: measurements, model mechanics, and data requirements,” Environmental Professional, Vol. 16, 1994, pp. 292~303.

[14] ICAP (International Carbon Action Partnership), Korea Emissions Trading Scheme, 2018.

[15] Jaraitė, J., and C. Di Maria, “Efficiency, productivity and environmental policy: A case study of power generation in the EU,” Energy Economics, Vol. 34, No. 5, 2012, 1557p.10.1016/j.eneco.2011.11.017

[16] Johnstone, N., S. Managi, M. C. Rodríguez, I. Hašič, H. Fujii, and M. Souchier, “Environmental policy design, innovation and efficiency gains in electricity generation,” Energy Economics, Vol. 63, 2017, pp. 106~115.10.1016/j.eneco.2017.01.014

[17] Kwon, O. S., “CO₂ Emission and Productivity of Fossil-fueled Power Plants: A Luenberger Indicator Approach,” Environmental and Resource Economics Review, Vol. 19, No. 4, 2010, pp. 733~752.

[18] Kwon, O. S., and H. J. Park, “Imperfect Competition and Productivity: Korean Fossil-fueled Power Generation Sector,” Environmental and Resource Economics Review, Vol. 19, No. 1, 2010, pp. 3~21.

[19] Sarıca, K., and I. Or, “Efficiency assessment of Turkish power plants using data envelopment analysis,” Energy, Vol. 32, No. 8, 2007, pp. 1484~1499.10.1016/j.energy.2006.10.016

[20] Seifert, S., A. Cullmann, and C. von Hirschhausen, “Technical efficiency and CO₂ reduction potentials—An analysis of the German electricity and heat generating sector,” Energy Economics, Vol. 56, 2016, pp. 9~19.10.1016/j.eneco.2016.02.020

[21] Simar, L., and P. W. Wilson, “Of course we can bootstrap DEA scores! But does it mean anything? Logic trumps wishful thinking,” Journal of Productivity Analysis, Vol. 11, 1999, pp. 93~97.10.1023/A:1007739507007

[22] Tyteca, D., “Linear Programming Models for the Measurement of Environmental Performance of Firms—Concepts and Empirical Results,” Journal of Productivity Analysis, Vol. 8, 1997, pp. 183~197.10.1023/A:1013296909029

[23] Tyteca, D., “On the measurement of the environmental performance of firms -a literature review and a productive efficiency perspective,” Journal of Environmental Management, Vol. 46, 1996, pp. 281~308.10.1006/jema.1996.0022

[24] Widerberg, A., and M. Wråke, The Impact of the EU Emissions Trading System on CO₂ Intensity in Electricity Generation, IVT Swedish Environmental Research Institute Ttd, 2009.

[25] Wu, C., K. Oh, X. Long, and J. Zhang, “Effect of installed capacity size on environmental efficiency across 528 thermal power stations in North China,” Environmental Science and Pollution Research, Vol. 26, 2019, pp. 29822~29833.10.1007/s11356-019-05981-7 31410828

[26] Zhang, N., P. Zhou, and Y. Choi, “Energy efficiency, CO₂ emission performance and technology gaps in fossil fuel electricity generation in Korea: A meta-frontier non-radial directional distance function analysis,” Energy Policy, Vol. 56, 2013, pp. 653~662.10.1016/j.enpol.2013.01.033

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