Abstract
The energy and environmental regulations of thermal power plants became crucial issues in China due to the coal dependence of
electricity generation. The regulation costs, which are distributed differently between the plants are evaluated based on
directional distance functions approach using the input and pollution data of the main thermal power plants in 2008. The results
of our analysis show that potential cost for complying with the regulations entailing coal consumption for power generation
companies in the PRC is about 23% of output level in 2008, 24% for the regulation of coal consumption and SO2 and around
25% for the regulation of coal consumption, SO2, flue gas and NOx. In money terms, the potential environmental regulation costs
of power generation companies are CNY180-200 billion (at 2008 prices). The insights on the scope for government regulatory
strategies are provided.