Energy Savings Potential and Policy for Energy Conservation in Selected Indian Manufacturing Industries
Minimization of damage from the rising trend of global warming would warrant two kinds of action for a country like India: a) abatement of greenhouse gas emissions and b) adaptation to climate change so as to reduce climate change related vulnerability of the people. The target of low carbon economic growth of India in terms of declining energy and carbon intensity of GDP assumes, therefore, a special significance in such context. Of the different options for lowering carbon intensity of GDP, the option of energy conservation through reduced energy intensity of output happens to be cheaper in most cases than the carbon free energy supply technology options. As the industrial sector has the largest sectoral share of final energy consumption in India this paper focuses on the assessment of energy savings potential in seven highly energy consuming industries. The paper estimates the energy savings potential for each of these industries using unit level Annual Survey of Industries data for 2007-08. The paper further develops an econometric model admitting substitutability among energy and other non-energy inputs as well as that among fuels using translog cost function for the selected industries and also for the manufacturing sector as a whole to study the behavioural response of the industries to changes in factor prices or fuel prices. The model uses time series data at the aggregate level of the concerned industry for the period 1991-92 to 2008-09. The results of the model point mostly to the significant response of energy consumption to own price increases and to the insignificance of the responsiveness of the 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, the price neutral component of technical change being negligible. All these have important policy significance in respect of the relevance and direction of fiscal, monetary or other policy instruments for energy conservation in India for abating global warming.
References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- 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.
- 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.
- 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.
- 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.
- 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 259-68, August.
- 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.
When requesting a correction, please mention this item's handle: RePEc:npf:wpaper:12/105. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (S.Siva Chidambaram)
If references are entirely missing, you can add them using this form.