CO₂ emissions efficiency and marginal abatement costs of the regional transportation sectors in China

Nowadays, evaluating CO₂ emissions efficiency and its marginal abatement cost in transportation sectors has been a hot topic. However, while evaluating the CO₂ marginal abatement cost using data envelopment analysis approach, the weak disposability of CO₂ may imply positive abatement cost, which undoubtedly violates our common sense. To obtain non-positive marginal abatement cost, CO₂ emissions should be treated as an input. To reconcile this contradiction, this paper intends to propose a global, directional distance function model based on previous study to investigate the productivity, economic efficiency, CO₂ emissions efficiency, and marginal abatement cost of the China's regional transportation sectors during 2007-2012. The results show that: (1) the productivity, economic efficiency and CO₂ emissions efficiency of different regions differ widely. More specifically, the coastal areas of south China perform better than the other areas in terms of productivity, economic efficiency, and CO₂ emissions efficiency. (2) Generally, the economic efficiency is greater than CO₂ emissions efficiency, which is relatively low in most areas. (3) A negative correlation is found between CO₂ emissions efficiency and its marginal abatement cost. For a 1% increase in CO₂ emissions efficiency, the CO₂ marginal abatement cost declines by 102 Yuan (in 2004 constant price). The results imply that improving CO₂ emissions efficiency plays an important role in marginal abatement cost reduction, and it also provides us a new approach to reduce abatement cost besides the technical progress.