Measuring environmental efficiency of thermal power plants in China: an improved Malmquist-Luenberger index with materials balance principle.

Improving environmental efficiency of thermal power plants is a crucial way to realize green and sustainable development. This paper investigates environmental efficiency of thermal power plants in China in 2011, 2013, and 2015 by conceptualizing a modified super-efficiency slacks-based measure with materials balance principle (MBP), which also eliminates the infeasibility in Malmquist-Luenberger index (MLI). An improved MLI is proposed based on the new efficiency measure. The results show that (1) the thermal power plants in most provinces have high environmental efficiency and productivity. (2) The improvement of productivity mainly originates from technical progress. This study provides a new perspective for environmental efficiency measurement on thermal power plants and advances related studies by (1) considering the first law of thermodynamics and introducing MBP in measuring environmental efficiency of thermal power plants and (2) defining a new MLI that captures the efficiency change and technical change in a super-efficiency framework. The thermal power plants in China can improve their environmental performance based on the results of current study.