A Study on the Sustainable Performance of the Steel Industry in Korea Based on SBM-DEA

Since South Korea has implemented its emissions trading scheme (ETS) in 2015, several studies have explored the sustainable performance of ETS in terms of production efficiency. However, few studies focused on Korean company-level data in their model. Thus, this study focuses on data from firms in the steel industry, which is a representative greenhouse gas emitter. Based on the slack-based measure (SBM) approach, we find the following implications: First, this paper evaluates both environment energy efficiency (EEE) and traditional energy efficiency and discovers that the efficiency value, in general, is overestimated, when greenhouse gas emissions are ignored. EEE still shows a decreasing efficiency value over time, implying that strong regulation is needed to increase efficiency. Second, this paper provides the return to scale status of decision-making units in the steel industry, through decomposing EEE. Results show that many steel firms are in the state of increasing returns to scale, so they can enhance their efficiency by increasing their scale. Finally, this paper provides benchmark information with which an inefficient firm can enhance its performance.