Potential output gap in China's regional coal-fired power sector under the constraint of carbon emission reduction

Highlights: • Estimate potential output gap under the constraint of carbon emission reduction. • Provide an insight into internal compositions of the total potential output gap. • Investigate potential output gap in China's regional coal-fired power sector. • Explore the external influencing factors of the potential output gaps. Under the constraint of carbon emission reduction, this paper investigates the potential output gap in China's regional coal-fired power sector using data envelopment analysis. For a clearer insight, the total potential output gap (TOG) is further decomposed into technical efficiency gap (TEG), environmental regulation gap (ERG) and equipment utilization gap (EUG). Furthermore, Tobit regression is used to explore the factors influencing these output gaps. The results show that: (1) TOG generally has an upward trend from 2002 to 2014. It is the highest in Northeast area, followed by Central area, while Qinghai has not suffered from any output losses. (2) EUG is the main cause of the huge potential output gaps. Although ERG is relatively small, it has been rising rapidly since 2002. (3) Renewable power expansion and economy scale impose certain crowding-out effect on the actual output, electricity price is helpful to reducing EUG and ERG, and a higher coal proportion reduces TEG but increases EUG. These findings clearly outline the regional potential coal power supply capability under various constraints, and corresponding policy implications in both temporal and spatial dimensions are expected to be instructive on the clean and efficient development of China's coal-fired power sector.