Sustainability, Vol. 11, Pages 955: Biased Technical Change, Factor Substitution, and Carbon Emissions Efficiency in China (Sustainability)

This paper investigates the effect of biased technical change on total factor carbon emissions efficiency in China using provincial panel data from 2001–2014. It evaluates each province’s total factor carbon emissions efficiency by a two-stage super-efficiency Data Envelopment Analysis (DEA) model, and measures technical change bias in the framework of time-varying elasticity production function. Then, the impact of technical change’s capital–energy bias on carbon emissions efficiency is estimated by the fixed-effect panel and dynamic panel model. This study has the following findings: First, China’s total factor carbon emissions efficiency still has a long way to go. Carbon emissions efficiency varies a lot across regions. The eastern area boasts the highest carbon emissions efficiency. Second, China’s current technical change is energy-biased, and the marginal production growth rate presents energy>capital>labor, but the gap between energy and capital is diminishing. Third, technical change’s increasing capital bias helps to improve China’s carbon emissions efficiency substantially. The mechanism behind this is the changing factor substitution elasticity in the industry upgrade process.