Analysing energy intensity trends and decoupling of growth from energy use in Indian manufacturing industries during 1973–1974 to 2011–2012

Abstract

This paper has two research objectives: first, it derives and analyses energy intensity trends for seven energy intensive manufacturing industries and the aggregate manufacturing sector in India for the period 1973–1974 to 2011–2012 and compares the same with best practice benchmarks. Second, based on Index Decomposition Analysis, it studies the extent to which the energy efficiency has contributed in the decoupling of industrial activity growth from growth in energy use. The study finds faster decline in energy intensity in all the seven industries during the recent years (1998–1999 to 2011–2012). Aluminium, cement and fertilizer industries are found to operate close to the global best-practice energy intensities with transformational changes in process technology. Iron and steel and pulp and paper are found to be lagging behind with only incremental transformation in technology in place. The decomposition results show that activity growth is the major driver of growth in energy demand with marginal impact coming from structural change. However, declining energy intensity has been able to neutralize a major portion of the growing energy demand resulting in decoupling trends, especially in recent years, with more energy efficiency-related voluntary and mandatory policies in place).