Dynamic change in energy and CO₂ performance of China's commercial sector: A regional comparative study

Highlights: • The non-radial directional distance function and Malmquist index methods are implied. • Energy and CO₂ efficiency in China's commercial sector is generally low. • There are significant regional differences in China's commercial sector. • The dynamic energy and CO₂ performance in China's commercial sector has improved. • Technological progress is the major driving factor improving energy and CO₂ efficiency. - Abstract: Energy and CO₂ efficiency play important roles in promoting energy conservation and CO₂ emission reduction in China's commercial sector. This paper applies the non-radial directional distance function to evaluate energy and CO₂ efficiency in China's commercial sector, and also constructs a non-radial Malmquist energy and CO₂ performance index to measure the dynamic performance of energy and CO₂ efficiency in the sector. The results indicate that energy and CO₂ efficiency in China's commercial sector is generally low, and there are significant regional differences and enormous energy-savings and CO₂ emission reduction potentials. Eastern China has the highest energy and CO₂ efficiency of all the regions. From the perspective of dynamic performance, energy and CO₂ efficiency performance in China's commercial sector improved by 3.8% annually over the period 1995–2015. Technological progress is the major driving factor improving energy and CO₂ efficiency in the sector. The technology gap changes (TGC) index which is less than 1 implies that the technological gap between the global frontier and the intertemporal frontier has increased, and does not help to improve energy and CO₂ efficiency performance. Considering regional differences, policy makers should set both short- and long-term goals to achieve environmental goals in China's commercial sector.