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Estimation of Energy Intensity in Energy-intensive Industries in India: A Panel Data Analysis

Anukriti Sharma, Hiranmoy Roy, Narendra Nath Dalei

Abstract



As per International Energy Agency (IEA), India has been classified as the third biggest consumer of fossil fuels such as coal, oil, etc. (primary energy) in the world. The total primary energy consumption in India in 2015 was 107 Mtoe. The aggregate final energy consumption of India was around 527 Mtoe out of which industry forms around 30% share (185 Mtoe) in 2013. Energy cost is considered as a major factor determining production cost of Indian industries. Energy Conservation Act, 2001 (ECA) and formulation of Bureau of Energy Efficiency is an important initiative taken up by government in order to reduce energy consumption by various sectors in the Indian economy. Another important initiative is launching of first of its kind market-based mechanism, Perform, Achieve and Trade (PAT) mechanism in 2010 particularly targeting the energy consumption by industrial sector of the economy. Phase-I for PAT ran from 2012-2015 including eight most energy-intensive sectors under Indian Industrial sector.The objective of this paper is to empirically estimate the energy intensity of Indian energy-intensive industries, also accounting for impact of ECA and PAT Cycle-I in dummy variable form.The most important observation that there is a significant negative relation between energy cost and profits. As profits increases energy cost decline. PAT doesn't seem to have affected the overall performance of industries much whereas in case of ECA, it is found to be favorably affecting energy intensity.

Keywords


Energy Intensity, Indian Energy-intensive industries, Energy Conservation Act, Regression, Perform-Achieve-Trade Mechanism, Panel Data

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