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Abstract: Recently, a relatively new methodology named directional distance function (DDF) has been attracting positive attention in the field of energy and environmental (E&E) modeling. However, there is still no literature review on the application of DDF in E&E studies. This paper is intended to fill this gap. First, the most widely used DDF techniques and its extensions are briefly introduced. Second, this article attempts a classification of typical publications in this field. The main issues raised by the previous studies are discussed. Some guidelines for model selection and future directions are proposed for DDF related research in E&E studies. [Copyright &y& Elsevier]

In terms of economic development and feeding the world's populations, the importance of the agricultural sector is well known. However, agriculture and its related sectors are also known for contributing more than one-quarter of the world's GHG emissions. To address this issue, we evaluate the performance of agriculture and its related firms in India from 2013 to 2019 with its environmental efficiency under the paradigm shift promoted by the National Agroforestry Policy in 2014. To evaluate the feasibility of this paradigm shift in agricultural policy, the non-radial slack-based measure (SBM) is utilized in the first stage, and Tobit regressions are used to assess the determinants of efficiency (or sources of inefficiency) measures at the second stage. The results from non-radial SBM show that Indian agricultural firms (foreign direct investment, private, and public) show huge potential with 32.2% on average to enhance their performance if they move toward the frontier of the production possibility curve. This suggests that Indian policymakers should regulate much stronger regulations for firms, especially for the use of agricultural inputs such as energy (fertilizers), with performance-oriented financial measures for sustainable agriculture. To determine the strategic variables for these firms to enhance their performance, Tobit regressions showed that fertilizers use (−3.350%) appears to have the highest negative impact on environmental efficiency. On the other hand, credit access (2.710%) has the highest positive impact on environmental efficiency, implying that policymakers should provide subsidies to firms in the form of soft loans (or credit access) for the purchase of high-quality fertilizers and to adopt energy-saving equipment/technology to minimize the use of chemical fertilizers in India. [ABSTRACT FROM AUTHOR]

The transportation industry is one of the major sectors for air pollution. In particular, the freight transportation sector possesses the biggest share of air pollution in South Korea. Therefore, it is required to evaluate current environmental performance of this sector and predict regulation impact on the local economy for a sustainable future. Based on the sustainable governance, each local government should take actions or change the paradigm of the regulatory policies. Thus, this study examines the environmental performance of the freight transportation industry with air pollution of PM2.5 and NOx in 16 Korean local governments, based on the non-radial directional distance function (NDDF). On average, the freight transportation sector shows very low performance with a high potential value of 0.649. Furthermore, no significant uptrend was witnessed during the sample period (2012 to 2017), implying a lack of sustainable governance. Some local governments such as Seoul (0.9301) and Busan (0.9709) show high efficiency, and Gwangju shows a slow but increasing trend, while most of other cities are very low in their environmental performance of freight transportation industries. Even Seoul and Busan may not maintain their sustainable performance, because outperforming high sales revenue in these cities could lead to high efficiency even with high levels of aggravating air pollution. Therefore, it is meaningful to empirically test the sustainable feasibility in terms of regulatory costs, reflecting the opportunity costs to select increased regulation toward a sustainable, higher environment-friendly efficiency. Environmental regulation causes very low, negligible costs in most of the local governments, except Seoul, implying that a more regulatory regime will bring in the sustainable governance of the environmental efficiency (Porter hypothesis) for the freight transportation sector for these local governments. However, Seoul will endure a heavy economic burden if heavier environmental regulations are posed on its freight transport sector. Stepwise and fine tuning of regulations is required for Seoul. In contrast to Seoul, Incheon needs drastic reformation since it shows low efficiency with low regulatory cost. [ABSTRACT FROM AUTHOR]

There is a rapid increase in inflows of foreign direct investment (FDI) into developing countries such as India. Some researchers argue that FDI has a positive impact on sustainable development in terms of environmental efficiency and brings innovative green technology to the host country. In contrast, others claim that FDI brings considerable pollution to the host country, and their motive is only to yield profit. To address this issue, this paper analyzes environmental efficiency between FDI and domestic firms in India for seven years between 2012 and 2018. The research aims to evaluate the performance of FDI firms in terms of environmental efficiency in India after implementing certain policy regulations, nationally and globally. In this analysis, we use the non-radial metafrontier Malmquist CO2 performance index (NMMCPI) with three decomposition indices: efficiency change index, best practice gap index, and technological gap change index. Our empirical results indicate that domestic firms have performed well in terms of better catch-up and innovation performance. On the other hand, FDI firms only demonstrated higher technology leadership performance, indicating weaker catch-up performance and weaker innovation performance. From the results, we proposed that policymakers should harmonize between the FDI promotion and regulation in its sustainable performance because global companies are not sensitive to the local regulations, and not very proactive in implementing the global standard of eco-friendliness. [ABSTRACT FROM AUTHOR]

With the worldwide spread of emissions trading schemes (ETSs) and the need for international cooperation on climate change, there is growing interest in linking ETSs. Along with sustainable development, preventing and controlling pollution, is now regarded as an urgent priority by China and Korea. In the context of the willingness of the Chinese and Korean governments to cooperate on ETS, this paper examines the feasibility of a pilot ETS cooperation between Shanghai and Korea from environmental efficiency and CO2 marginal abatement cost (MAC) perspectives. We apply a directional distance function (DDF) and stochastic frontier analysis (SFA) to estimate the environmental efficiency and the CO2 MAC of coal-fueled power plants in Shanghai and Korea using cross-sectional data from 2015. The results indicate that the group frontier environmental efficiency of Shanghai and Korea reached a similarly high score. However, as to meta-frontier environmental efficiency, the coal-fueled power plants in Korea performed better than those in Shanghai. The CO2 MAC results indicate that, despite the small gap in efficiency performance, the CO2 MAC of coal-fueled power plants is much higher than that in Shanghai due to the big feed-in tariff difference. This is because the MAC not only relates to the environmental efficiency, but also to the feed-in tariff. A higher feed-in tariff leads to higher MAC. To tackle this serious problem, which has also been addressed in previous studies, we suggest that policymakers should focus on the huge CO2 MAC differences caused by feed-in tariff differences to avoid equity problems when building the structure of the Shanghai-Korea ETS cooperation. For instance, compared with power plants in Shanghai, policymakers should set a looser cap and a higher offset for Korean plants. To reduce the impact of feed-in tariff on carbon trading in the market, it would also be effective to arrange a higher quota or a lower carbon tax for coal-fueled power plants in Korea. In addition, policymakers should fill the gaps of 85.15% and 67.6% between the realistic market price and the MAC results of coal-fueled power plants in Shanghai and Korea, respectively, by introducing stricter regulations. [ABSTRACT FROM AUTHOR]