Endless expansion of industrial production causes rampant atmospheric emissions, such as air-pollutant and green-house gas (GHG) emissions, which induce climate disasters and jeopardize human health. Northeastern Asian countries have been a major emitter of atmospheric emissions, and local citizens have been experienced severe damages caused by the emissions. Atmospheric emission regulation has, therefore, been contentiously debated in the public policy and enterprise management arena in those countries. A central focus of the debate is how emission regulation might compromise economic growth, and how to manage the trade-off. However, there has been a lack of comprehensive framework to measuring, and to appropriately manage the trade-offs. In this thesis, I presented a versatile and verifiable atmospheric emission efficiency (AEE) measurement framework based on Data Envelopment Analysis (DEA) to support the measurement and management of trade-offs between economic production and emission regulation. The framework is applicable at multi-scales with multi-inputs and outputs. I empirically examined the evolution of emission efficiency at utility, city, province, and country levels in major north-eastern Asian countries, such as China, Korea, and interpreted its implications for different governance mechanisms, such government-led governance, market-oriented governance, and regionally cooperative governance. This thesis could, for one, guide the development of a more comprehensive emission efficiency measurement, and, for the other, support efficient emission regulation in north-eastern Asian countries.
In the first chapter, I first explored the status-quo of economic development and atmospheric emission governance in northeastern Asia and pointed out the necessity of using AEE to inform emission management. I then traced back the emergence of the emission efficiency concept, and analyzed its policy and economic significance. Finally, I reviewed the development of approaches to emission efficiency measurement, ranging from parametric stochastic frontier approach to non-parametric data envelopment analysis, and identified a research paradigm for emission efficiency analysis. Those methodological and policy backgrounds serve as a basis for the empirical analysis of emission efficiency governance in northeastern Asia countries.
In the second chapter, I built an emission efficiency measurement model, examined AEE of 30 major cities in China using panel data from 2011 to 2017 considering SO₂, NOx, and PMs emissions. A meta-frontier non-radial SBM-DEA approach is adopted to measure the AEE and evaluate their regional heterogeneity. I identified a huge difference in the efficiency growth rates, indicating the varying performances of different governance mechanisms. Eastern cities achieved sustained efficiency improvement. Central cities showed a strong efficiency improvement at the initial stage but lacked momentum after 2016. Western cities lagged behind. This difference raises the question of how effective governance mechanisms should be, since the eastern cities have been promoting market-oriented governance mechanisms for emission regulation, while most central and western cities were encased in a command-and-control (CAC) style government-led governance. Furthermore, it is also important to examine the performance of governance mechanisms across regions and sectors, to identify whether this heterogeneity exists.
In the third chapter, based on the measurement of AEE, I built an operational model to analyze the performance of imposing CAC-style government-led governance in China's transport sector for both air pollutants and CO₂ emissions regulation. To do this, I built up a life-cycle data envelopment analysis model to measure the AEEs of China's 30 provinces' transport sectors during 2013-2017. I showed that the PM2.5 efficiency improvement was the main driver of China's AEE increase from 0.544 in 2013 to 0.649 in 2017. The western provinces exhibited the fastest growth and had the highest AEE since 2014; the central region also increased its AEE by 14.6% in the study period, while the eastern provinces showed a negligible AEE improvement. Furthermore, the results showed that strict environmental regulation in the transport sector may cost China's economic growth. Hence, I suggest that CO₂ management demands more regulatory attention, and that market-oriented regulatory mechanisms, such as integrating the transport sector into carbon and PM2.5 emission trading systems, is needed to lower cost and enhance AEE.
Therefore, in the fourth chapter, I further extended the previous analysis on government-led governance to market-oriented governance mechanism. To do this, I built up DEA-based operational model to simulate emission trading across Korean coal-fired power plants. By doing so, I compared the performance of government-led governance-based CAC emission regulation and market-oriented emission trading system (ETS) for Korean coal-fired power plants during 2011-2015. It is showed the initial phase of CAC in 2012 caused a sudden drop in power plants' efficiency, but the drop was gradually eliminated with green technology innovation. Emission trading is expected to increase only 0.990% output compared to CAC, yet it largely failed to deliver the potential benefit in its first year. The overlapped implementation of CAC and ETS contributes to a small share (5.567%) of unrealized benefit. Nonetheless, it is showed that it tends to disproportionately affect less efficient power plants through restricting their strategies to meet regulatory measures. Therefore, I suggest that the integration of CAC and ETS can be a transitory measure as ETS provides only marginal welfare benefits, but ETS must be fully adopted and strengthened in the near future to economically and equitably mitigate CO₂ emissions.
Furthermore, although there exist potential benefits for establishing emission trading markets, the feasibility of a regionally unified emission trading market is unknown. Therefore, in the fifth chapter, I investigated the feasibility of building an integrated emission trading market based on cooperative governance along the Regional Comprehensive Economic Partnership (RCEP) agreement-the largest free-trade bloc that established amongst north-Asian countries. To do so, I empirically examined the emission convergence in the RCEP countries using a modified dynamic β-convergence model. Emission convergence is a fundamental ground for cooperative CO₂ emission mitigation. Previous studies often concluded that emission diverges at the country level. Nonetheless, upon accounting for multiple inputs and outputs using data envelopment analysis, I find that two out of the three emission efficiency indicators show statistically significant absolute convergence. The carbon emission efficiency (CEE) of the fifteen RCEP countries grew from 0.5719 in 2000 to 0.6725 in 2017 and will converge at a value of 0.8187, while the carbon-population efficiency (CPE) increases from 0.4534 to 0.5690 and will converge at 0.7831. Furthermore, using a conditional β-convergence model, I found that trade volume has no significant effect on the growth rates of CEE and CPE, but can accelerate their speed of convergence, which indicates that the establishment of the RCEP may facilitate convergence of its fifteen member countries on CEE and CPE. The findings suggest that an emission mitigation agreement in the RCEP countries is feasible and desirable. CEE- or CPE-based indicators can be used for emission budget allocation among those countries.
In summary, the thesis identifies substantial heterogeneity of emission efficiency among different regions as well as in different gaseous emissions, and examined the performance of different governance mechanisms, such as imposing CAC or ETS regulation, across the northeastern Asian countries. It proves that establishing an emission trading market is both feasible and sustainable. It further identified a number of priorities in methodological development and policy analysis that are critical to improving the measurement and management of emission efficiency in the northeastern Asian countries. By doing so, the thesis provides firm support to inclusive and effective emission regulations in the region, which may advance local emission regulation practices to a global Pareto-efficient status.