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Determinants of Energy Intensity: A Preliminary Investigation of Indian Manufacturing

Author

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  • Sahu, Santosh
  • Narayanan, K

Abstract

The demand for energy, particularly for commercial energy, has been growing rapidly with the growth of the economy, changes in the demographic structure, rising urbanization, socio-economic development. In this context the energy intensity is one of the key factors which impact the projections of future energy demand. The Indian manufacturing sector is among the largest consumer of commercial energy compared to the other industries in India. Energy consumption per unit of production in the manufacturing of steel, aluminum, cement, paper, textile, etc. is much higher in India, in comparison to other developing countries. The purpose of this study is to understand the factors that influence industrial energy intensity in Indian manufacturing. The analysis undertaken in this paper find a positive relationship between energy intensity and firm size and an inverted U’ shaped relationship between energy intensity and size of the firm. The analysis shows that the foreign owned firms are less energy intensive compared to the domestic firms. Capital intensive firms as well as firms spending more on repair and maintenance are found to be more energy intensive. Further the results shows that expenditure on the research and development contribute to reduce firm level energy intensity and there is a sizable difference between highly energy intensive firm and less energy intensive firms.

Suggested Citation

  • Sahu, Santosh & Narayanan, K, 2009. "Determinants of Energy Intensity: A Preliminary Investigation of Indian Manufacturing," MPRA Paper 16606, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:16606
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    References listed on IDEAS

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    Cited by:

    1. Clara Inés Pardo Martínez, 2010. "Investments and Energy Efficiency in Colombian Manufacturing Industries," Energy & Environment, , vol. 21(6), pages 545-562, October.
    2. Tony Irawan & Djoni Hartono & Noer Azam Achsani, 2010. "An Analysis of Energy Intensity in Indonesian Manufacturing," Working Papers in Economics and Development Studies (WoPEDS) 201007, Department of Economics, Padjadjaran University, revised Aug 2010.
    3. Santosh K. Sahu & Deepanjali Mehta, 2018. "Determinants Of Energy And Co2 Emission Intensities: A Study Of Manufacturing Firms In India," The Singapore Economic Review (SER), World Scientific Publishing Co. Pte. Ltd., vol. 63(02), pages 389-407, March.
    4. Juergen Amann & Defne Gencer & Dirk Heine, 2024. "Firm-Level Effects of Energy Price Increases," World Bank Publications - Reports 41914, The World Bank Group.
    5. Anukriti Sharma & Hiranmoy Roy & Narendra Nath Dalei, 2019. "Estimation Of Energy Intensity In Indian Iron And Steel Sector: A Panel Data Analysis," Statistics in Transition New Series, Polish Statistical Association, vol. 20(2), pages 107-121, June.
    6. Herrerias, M.J. & Cuadros, A. & Orts, V., 2013. "Energy intensity and investment ownership across Chinese provinces," Energy Economics, Elsevier, vol. 36(C), pages 286-298.
    7. Santosh Kumar Sahu & Himani Sharma, 2016. "Productivity, Energy Intensity and Output: A Unit Level Analysis of the Indian Manufacturing Sector," Journal of Quantitative Economics, Springer;The Indian Econometric Society (TIES), vol. 14(2), pages 283-300, December.
    8. Yaya Keho, 2016. "Do Foreign Direct Investment and Trade lead to Lower Energy Intensity? Evidence from Selected African Countries," International Journal of Energy Economics and Policy, Econjournals, vol. 6(1), pages 1-5.
    9. Bishwanath Goldar, 2010. "Energy Intensity of Indian Manufacturing Firms: Effect of Energy Prices, Technology and Firm Characteristics," Working Papers id:2483, eSocialSciences.
    10. Santosh Kumar, Sahu & K., Narayanan, 2011. "Energy Intensity and Firm Performance: Do Energy Clusters Matter?," MPRA Paper 43457, University Library of Munich, Germany.
    11. Udit Kumar Sahu & Ashis Kumar Pradhan, 2025. "Hitting the nail on the head instead of beating the bush: Does corporate social responsibility actually address corporate environmental sustainability?," Environment, Development and Sustainability: A Multidisciplinary Approach to the Theory and Practice of Sustainable Development, Springer, vol. 27(9), pages 21451-21472, September.
    12. Daniel Balsalobre‐Lorente & Oana M. Driha & George Halkos & Shekhar Mishra, 2022. "Influence of growth and urbanization on CO2 emissions: The moderating effect of foreign direct investment on energy use in BRICS," Sustainable Development, John Wiley & Sons, Ltd., vol. 30(1), pages 227-240, February.
    13. Sonam Choudhry, 2025. "Composition of Intermediate Inputs: Detangling Price and Quantity Effect," Journal of Quantitative Economics, Springer;The Indian Econometric Society (TIES), vol. 23(1), pages 137-157, March.
    14. Herrerias, M.J. & Cuadros, A. & Luo, D., 2016. "Foreign versus indigenous innovation and energy intensity: Further research across Chinese regions," Applied Energy, Elsevier, vol. 162(C), pages 1374-1384.
    15. Jain, Princy & Goswami, Binoy, 2021. "Energy efficiency in South Asia: Trends and determinants," Energy, Elsevier, vol. 221(C).

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    JEL classification:

    • B23 - Schools of Economic Thought and Methodology - - History of Economic Thought since 1925 - - - Econometrics; Quantitative and Mathematical Studies
    • Q4 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy

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