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Energy saving potential of the Indian chemical Industry: Role of innovation and export

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  • Shah, Showkat Ahmad
  • Haider, Salman
  • Ganaie, Rafiq Hussain

Abstract

This analysis aims to estimate the savings potential through energy efficiency and explore the effects of innovation and exporting. We consider data from 85 firms in the Indian chemical industry for the period from 2003 to 04 to 2019-20. Widely used stochastic frontier analysis has been used to estimate production function-based Energy Efficiency (EE). Overall, the EE estimate has a median of 78 per cent, showcasing significant potential for energy savings in the industry. Firm-level total factor energy efficiency (TFEE) ranges from 55 to 82 per cent, with considerable variation. Our analysis reveals that firms with greater accumulated innovative capabilities tend to achieve higher energy efficiency. Additionally, factors such as firm age, financial performance and exporting are positively associated with better TFEE. Whereas firms with geographically dispersed production facilities and higher energy prices lead to lower energy efficiency. The results underscore the vital role of exporting, regional disparities, and technological gaps when designing EE strategies at the firm level. Our study offers valuable insights for policymakers.

Suggested Citation

  • Shah, Showkat Ahmad & Haider, Salman & Ganaie, Rafiq Hussain, 2026. "Energy saving potential of the Indian chemical Industry: Role of innovation and export," Energy, Elsevier, vol. 347(C).
    • Handle: RePEc:eee:energy:v:347:y:2026:i:c:s0360544226004603
    DOI: 10.1016/j.energy.2026.140357
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    JEL classification:

    • Q40 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - General
    • Q48 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Government Policy
    • Q33 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Nonrenewable Resources and Conservation - - - Resource Booms (Dutch Disease)

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