Energy Intensity: A Quantitative Exploration for Indian Manufacturing

Abstract

An econometric analysis of industry energy intensity is presented in this paper. The overall purpose of this study is to increase the understanding of the factors that are influencing industrial energy intensity. In this paper we have attempted to identify and measures the factors behind the firm level energy efficiency. Using an econometric approach that identifies source of variation in energy intensity we find an inverse relationship between energy intensity and firm size - this may be due to economies of scale - bigger firm size need not be associated with higher energy intensity. The analysis also brings out the finding that ownership type is also an important determinant of energy intensity. We find that foreign owned firms exhibit a higher level of technical efficiency and so are less energy intensive. Results do confirmed that state owned enterprises are more energy intensive in all industries during the period of the study. We find that R&D activities are important contributors to the decline in firm-level energy intensity. We also identified that different industries exhibit different levels of energy intensity.