Eco-efficiency of the world cement industry: A data envelopment analysis

Chemical reactions and the combustion of dirty fuels, such as coal and petroleum coke (petcoke), that are used in cement production processes generate a significant amount of CO2 emissions. In this paper, we provide an eco-efficiency measure for 21 prototypes of cement industries operating in many countries by applying both a data envelopment analysis (DEA) and a directional distance function approach, which are particularly suitable for models where several production inputs and desirable and undesirable outputs are taken into account. To understand whether this eco-efficiency is due to a rational utilization of inputs or to a real carbon dioxide reduction as a consequence of environmental regulation, we analyze the cases where CO2 emissions can either be considered as an input or as an undesirable output. Empirical results show that countries where cement industries invest in technologically advanced kilns and adopt alternative fuels and raw materials in their production processes are eco-efficient. This gives a comparative advantage to emerging countries, such as India and China, which are incentivized to modernize their production processes.