Environmental Performance Assessment of Energy-Consuming Sectors Through Novel Data Envelopment Analysis

Abstract

This study evaluates the role of information in the environmental performance index (EPI) in different energy-consuming sectors in Pakistan through a novel slack-based data envelopment analysis (DEA). The index combines energy consumption as the primary input and gross domestic product (GDP) as the desirable output and CO2 emissions as the undesirable output. Yale’s EPI measures the efficiency of the sectoral level environmental performance of primary energy consumption in the country. Performance analysis was conducted from 2009 to 2018. The sectors were assigned scores between one and zero, with zero indicating maximum decision-making unit (DMU) inefficiency and one indicating maximum DMU efficiency. Despite being in the top-performing sector, agriculture scored only 0.51 in 2018, and the electricity sector obtained 0.412. Results also show that even the best-performing sector operates below the efficiency level. The mining and quarrying sector ranked second by obtaining 0.623 EPI and 0.035 SBEPI. Results also show that much of the energy supply of Pakistan (60.17%) is focused on fossil fuels, supplemented by hydropower (33%), while nuclear, wind, biogas, and solar power account for 5.15%, 0.47%, 0.32%, and 0.03%, respectively. Nonetheless, the overall results for both measures remained reasonably consistent. According to the literature and the energy crisis and climate instability dilemma, the authors conclude that changes to a diverse green power network are a possibility and an imminent need. Similarly, the government should penalize companies with poor performance. Furthermore, to ensure the capacity development and stability of environmental management and associated actions in the country, providing access to knowledge and training to groom human resources and achieve the highest performance is crucial.