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Energy Savings Potential and Policy for Energy Conservation in Selected Indian Manufacturing Industries

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  • Manish Gupta
  • Ramprasad Sengupta

Abstract

Minimisation of damage from the rising trend of global warming would warrant two kinds of action for a country like India: (i) abatement of Green House Gas (GHG) emissions, (ii) adaptation to climate change to reduce climate change related vulnerability of the people. The target of low-carbon economic growth in terms of declining energy and carbon intensity of gross domestic product (GDP) assumes special significance in such context. Industrial sector being the largest consumer of energy in India, the article estimates energy savings potential of major energy consuming industries using unit-level data for 2007–08. It further develops an econometric model admitting substitutability among energy and non-energy inputs and between different fuels for selected industries to study their behavioural response to changes in input prices and suggest policy instruments for conserving energy using time series data for post economic reform period 1991–92 to 2008–09. The results point mostly to the significant response of energy consumption to own price increases and to the insignificance of the responsiveness of corresponding capital requirement to effect such energy conservation. Besides, a large part of the growth of factor productivity as estimated by the model has been found to be induced by energy price changes, price neutral component of technical change being negligible.

Suggested Citation

  • Manish Gupta & Ramprasad Sengupta, 2013. "Energy Savings Potential and Policy for Energy Conservation in Selected Indian Manufacturing Industries," Review of Market Integration, India Development Foundation, vol. 5(3), pages 363-388, December.
  • Handle: RePEc:sae:revmar:v:5:y:2013:i:3:p:363-388
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    References listed on IDEAS

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    1. Joyashree Roy & Jayant Sathaye & Alan Sanstad & Puran Mongia & Katja Schumacher, 1999. "Productivity Trends in India's Energy Intensive Industries," The Energy Journal, International Association for Energy Economics, vol. 0(Number 3), pages 33-61.
    2. Reghubendra, J. & Murty, M.N. & Paul, S. & Rao, B.B., 1992. "An Analysis of Technological Change, Factor Substitution and Economies of Scale in Manufacturing Industries in India," Papers e9214, Western Sydney - School of Business And Technology.
    3. Sanstad, Alan H. & Roy, Joyashree & Sathaye, Jayant A., 2006. "Estimating energy-augmenting technological change in developing country industries," Energy Economics, Elsevier, vol. 28(5-6), pages 720-729, November.
    4. Berndt, Ernst R & Wood, David O, 1975. "Technology, Prices, and the Derived Demand for Energy," The Review of Economics and Statistics, MIT Press, vol. 57(3), pages 259-268, August.
    5. Roy, Joyashree & Sanstad, Alan H. & Sathaye, Jayant A. & Khaddaria, Raman, 2006. "Substitution and price elasticity estimates using inter-country pooled data in a translog cost model," Energy Economics, Elsevier, vol. 28(5-6), pages 706-719, November.
    6. Fuss, Melvyn A., 1977. "The demand for energy in Canadian manufacturing : An example of the estimation of production structures with many inputs," Journal of Econometrics, Elsevier, vol. 5(1), pages 89-116, January.
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    Cited by:

    1. repec:wsi:jicepx:v:08:y:2017:i:02:n:s1793993317500120 is not listed on IDEAS
    2. Mehmood Mirza, Faisal & Bergland, Olvar & Afzal, Naila, 2014. "Electricity conservation policies and sectorial output in Pakistan: An empirical analysis," Energy Policy, Elsevier, vol. 73(C), pages 757-766.
    3. Ghani, Ejaz & Goswami, Arti Grover & Kerr, William R., 2014. "Spatial dynamics of electricity usage in India," Policy Research Working Paper Series 7055, The World Bank.

    More about this item

    Keywords

    Energy conservation; derived demand; elasticity;

    JEL classification:

    • Q41 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Demand and Supply; Prices
    • Q43 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Energy and the Macroeconomy
    • Q48 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Government Policy

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