Exploring energy efficiency in China׳s iron and steel industry: A stochastic frontier approach

The iron and steel industry is one of the major energy-consuming industries in China. Given the limited research on effective energy conservation in China׳s industrial sectors, this paper analyzes the total factor energy efficiency and the corresponding energy conservation potential of China׳s iron and steel industry using the excessive energy-input stochastic frontier model. The results show that there was an increasing trend in energy efficiency between 2005 and 2011 with an average energy efficiency of 0.699 and a cumulative energy conservation potential of 723.44 million tons of coal equivalent (Mtce). We further analyze the regional differences in energy efficiency and find that energy efficiency of Northeastern China is high while that of Central and Western China is low. Therefore, there is a concentration of energy conservation potential for the iron and steel industry in the Central and Western areas. In addition, we discover that inefficient factors are important for improving energy conservation. We find that the structural defect in the economic system is an important impediment to energy efficiency and economic restructuring is the key to improving energy efficiency.