Energy abatement in Chinese industry: Cost evaluation of regulation strategies and allocation alternatives

For Chinese industry, the costs of different energy consumption abatement scenarios are evaluated by the method of directional distance function. These scenarios are based on the combinations of regulation strategies and allocation alternatives—the former are sectors and provinces, and the latter include the five principles of average, intensity share, absolute share, discriminatory absolute and discriminatory intensity. For all the scenarios, the quantitative impacts in terms of output potential loss are calculated and compared. Due to less output potential loss for all the allocation alternatives, the sector regulation strategy is shown to be more effective than the province regulation strategy. It is also demonstrated that, among all the scenarios considered, the sector regulation based on the intensity share principle and the province regulation based on the absolute share principle are the two optimal. The performances of energy abatement allocation of the 11th and 12th Five Year Plans of China are assessed against the simulated scenarios.