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Determinants of Energy Intensity: A Preliminary Investigation of Indian Manufacturing

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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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    File URL: https://mpra.ub.uni-muenchen.de/16606/1/MPRA_paper_16606.pdf
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    References listed on IDEAS

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    1. Ang, B.W., 1995. "Decomposition methodology in industrial energy demand analysis," Energy, Elsevier, vol. 20(11), pages 1081-1095.
    2. Theodore Papadogonas & John Mylonakis & Demosthenes Georgopoulos, 2007. "Energy consumption and firm characteristics in the Hellenic manufacturing sector," International Journal of Energy Technology and Policy, Inderscience Enterprises Ltd, vol. 5(1), pages 89-96.
    3. Pindyck, Robert S, 1979. "Interfuel Substitution and the Industrial Demand for Energy: An International Comparison," The Review of Economics and Statistics, MIT Press, vol. 61(2), pages 169-179, May.
    4. Kumar, Nagesh & Saqib, Mohammed, 1996. "Firm size, opportunities for adaptation and in-house R & D activity in developing countries: the case of Indian manufacturing," Research Policy, Elsevier, vol. 25(5), pages 713-722, August.
    5. Alan D. Woodland, 1993. "A Micro-Econometric Analysis of the Industrial Demand for Energy in NSW," The Energy Journal, International Association for Energy Economics, vol. 0(Number 2), pages 57-90.
    6. Dani Rodrik & Arvind Subramanian, 2004. "Why India Can Grow At 7 Percent a Year or More; Projections and Reflections," IMF Working Papers 04/118, International Monetary Fund.
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    Citations

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    Cited by:

    1. 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.
    2. Bishwanath Goldar, 2010. "Energy Intensity of Indian Manufacturing Firms: Effect of Energy Prices, Technology and Firm Characteristics," Working Papers id:2483, eSocialSciences.
    3. Santosh Kumar, Sahu & K., Narayanan, 2011. "Energy Intensity and Firm Performance: Do Energy Clusters Matter?," MPRA Paper 43457, University Library of Munich, Germany.
    4. 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.
    5. 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.
    6. 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.
    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.

    More about this item

    Keywords

    Energy Intensity; Commercial Energy Consumption; Indian Manufacturing Industries;

    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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