An Analysis of Energy and Environment Efficiency of China's Iron and Steel Industry

Due to heavy energy consumption and low technical efficiency, China's iron and steel industry is trapped in the dilemma "large but not strong". This situation not only exerts enormous pressure on energy security but also on increased carbon emission and environmental pollution. The contribution of this study is to calculate the energy and environment efficiency of China's iron and steel industry and to analyze the factors affecting this efficiency. An index of energy and environment efficiency is introduced based on Directional Slacks-based Distance Measure Model. This index is adopted to measure the energy and environment efficiency of China's iron and steel industry using 2,382 firm observations during 2001 to 2005. In addition, Hierarchy Linear Model (HLM) is applied to analyze the factors which can influence the efficiency with both firm-level and province-level data. The conclusions are as follows: The energy and environment efficiency of China's iron and steel industry did not have a significant change during the research period. A firm's age, size, ownership, product category and the economy of its province have significant influence on its energy and environment efficiency.