Analysis, Evaluation and Optimization Strategy of China Thermal Power Enterprises’ Business Performance Considering Environmental Costs under the Background of Carbon Trading

Abstract

With the development of China’s energy structure adjustment and energy conservation and emission reduction, China’s carbon trading market has been fully launched. As an important participant in the carbon trading market, thermal power enterprises that play a major role in China’s power supply structure may bear huge environmental cost pressures, including carbon transaction costs. Under such a circumstance, thermal power enterprises urgently need to ensure operating performance through environmental cost management. This article takes the thermal performance of Chinese thermal power companies under the background of carbon trading as the study object, designs a measurement method for the environmental costs of thermal power companies, and analyzes the influence mechanism of the environmental cost based on the principle of system dynamics. Relying on the correlation analysis between environmental costs and business performance of thermal power companies, the company’s business performance is evaluated by data envelopment analysis (DEA) efficiency. After reaching the study conclusion, the article proposes an optimization strategy for thermal enterprises to manage and control their environmental cost and business performance. This paper closely integrates the actual background of carbon trading, including carbon transaction costs into environmental costs, and conducts an econometric analysis. It constructs a composite measurement of environmental costs that accounts for carbon transaction costs and conducts performance evaluations of power generation companies based on factors such as environmental costs, which all has a certain degree of innovation.

Research on the Impact of Carbon Trading Policy on the Structural Upgrading of Marine Industry

“…For companies participating in the carbon pilot, the government will issue carbon emission allowances. If the actual carbon emission of the enterprise exceeds the carbon emission quota, the enterprise will need to pay a fine or go to the carbon market to buy the quota, which will increase the environmental cost [30] and compress the profit space of the enterprise, and the development of high pollution and high emission marine industries will be restricted; if the actual carbon emission of the enterprise does not exceed the carbon emission quota, these firms can sell its excess carbon credits in the carbon market to gain additional green revenue [31], thus getting ahead of other firms, having the financial support to pursue low-carbon green innovation and promoting the structural upgrading of the marine industry. The role of carbon trading policies in promoting green innovation has also been empirically tested [32,33].…”

Effects of enterprise carbon trading mechanism design on willingness to participate——Evidence from China

“…Xu and Dong (2017) constructed an evolutionary game model between local governments and power generation enterprises, theoretically investigated the evolutionary laws and conditions for the existence of evolutionary stabilization strategies under the carbon emission trading mechanism, analyzed the factors affecting the direction of the evolutionary equilibrium of the system, and provided some policy suggestions for the government to guide power generation enterprises to reduce emissions consciously. Studies from other perspectives have also been designed, such as the aspects of enterprise carbon trading operation benefits and enterprise carbon trading operation improvement measures (Chen 2016;Chen and Yu 2018;Liao et al, 2018;Song et al, 2018;Zhang 2018;Wang et al, 2019;Yang and Yang 2019;Ren et al, 2020;Yu and Liu 2020;Zhou et al, 2020;Sun et al, 2021;Yu et al, 2021;Zhang 2021;Zhang et al, 2021;Lin and Wu 2022). Willingness to participate is a psychological decision of the decision-making subject before the actual participation behavior, which reflects the action tendency of the decision-maker before the participation behavior and is a typical representative of behavioral willingness.…”

Do firms with environmental concerns give better performance: A systematic literature review

“…The firms these days emphasize on averting or eliminating the waste disposals (Abd Rahman, Ismail, & Ariffin, 2016), carbon footprints (Chang et al, 2015; Lee & Min, 2015; X. Song et al, 2018) and other green‐house gas (GHG) emissions (Broadstock et al, 2018; Cucchiella, Gastaldi, & Miliacca, 2017). To the contrary, Wang, Li, and Gao (2014) report a positive correlation between the GHG emissions and the Australian firm's financial performance (tobin q ).…”

“…X. Song et al (2018) also focus on the managing and controlling the environmental costs related to carbon trading in China and proposes a composite measurement for such costs. Gutiérrez and Teshima (2018) and Sueyoshi and Goto (2009) investigate the causality of environmental investment and expenditure to the firm's performance of the manufacturing plants.…”

“…The firms these days emphasize on averting or eliminating the waste disposals (Abd Rahman, Ismail, & Ariffin, 2016), carbon footprints (Chang et al, 2015;Lee & Min, 2015;X. Song et al, 2018) and other green-house gas (GHG) emissions (Broadstock et al, 2018;Cucchiella, Gastaldi, & Miliacca, 2017).…”