Measuring green growth performance of China's chemical industry.

• This study investigates the environmental efficiency and shadow price of China's chemical sector. • Increased environmental regulation have substantial effect on environmental efficiency. • Estimated shadow prices show an increasing trend, especially after 2006. The chemical industry is a key energy-consuming sector in China. This paper aims to examine total-factor green growth performance, including energy efficiency and carbon shadow price of China's chemical sector from 1980 to 2013. On the basis of no-radial directional distance function, this paper takes into account both desirable and undesirable outputs. To investigate policy effects, we check the Granger causality test between shadow prices of emission and total-factor green energy efficiency. The results demonstrate that increased environmental regulation costs have substantial effect on total-factor green energy efficiency of the chemical industry in the last decade. The latter also causes significant improvement of the former. [ABSTRACT FROM AUTHOR]