With the development of China's energy structure adjustment and energy conservation and emission reduction, China's carbon trading market has been fully launched. As an important participant in the carbon trading market, thermal power enterprises that play a major role in China's power supply structure may bear huge environmental cost pressures, including carbon transaction costs. Under such a circumstance, thermal power enterprises urgently need to ensure operating performance through environmental cost management. This article takes the thermal performance of Chinese thermal power companies under the background of carbon trading as the study object, designs a measurement method for the environmental costs of thermal power companies, and analyzes the influence mechanism of the environmental cost based on the principle of system dynamics. Relying on the correlation analysis between environmental costs and business performance of thermal power companies, the company's business performance is evaluated by data envelopment analysis (DEA) efficiency. After reaching the study conclusion, the article proposes an optimization strategy for thermal enterprises to manage and control their environmental cost and business performance. This paper closely integrates the actual background of carbon trading, including carbon transaction costs into environmental costs, and conducts an econometric analysis. It constructs a composite measurement of environmental costs that accounts for carbon transaction costs and conducts performance evaluations of power generation companies based on factors such as environmental costs, which all has a certain degree of innovation. © 2018 by the authors.
