Potential Benefit of Carbon Benchmarking: Analysis of Semiconductor Industry in Taiwan

Abstract

The main purpose of this study is to explore the carbon reduction environmental benefits that can be achieved if carbon benchmarking is applied when semiconductor manufacturers in Taiwan work to improve the technical efficiency of their carbon reduction efforts. The evaluation method used is as follows. First, a technical efficiency measurement method that is capable of considering both desirable outputs and undesirable outputs is used to measure the technical efficiency of the carbon reduction efforts and identify the benchmark firms with the best technical efficiency. Next, an attempt is made to estimate the greenhouse gas reduction that is realized by the sample if their carbon reduction efforts are accompanied by the implementation of a benchmarking system. Finally, the monetary value of the greenhouse gas reduction is estimated so as to develop a better understanding of the carbon reduction benefits for the adoption of the process outlined above. The empirical results show that using carbon benchmarking to raise the technical efficiency of carbon reduction management would, on average, boost the annual sales revenue of each decision-making unit by about US$486.6 million, while also bringing up the average annual CO2 reduction benefits per decision-making unit by US$11.11 million per year.

Keywords

• technical efficiency
• carbon benchmarking
• bootstrapped directional distance function
• social cost of carbon
• semiconductor industry