A study of changing patterns of energy consumption and energy efficiency in the Indian manufacturing sector

Jena, Pradyot (2009): A study of changing patterns of energy consumption and energy efficiency in the Indian manufacturing sector.

Abstract

In the present economic scenario, the key concerns in policy making in India are: how to achieve higher energy efficiency in the key sectors and how to reduce the vulnerability of the economy to external shocks. In this paper, an attempt is made to study the changing pattern of commercial energy consumption in the manufacturing sector, which is the largest user of commercial energy and to identify the alternative energy saving processes through technological upgradation. For this purpose, we have adopted Divisia index decomposition method, which decomposes the aggregate energy intensity index into structural intensity index and the energy intensity index. The findings of the paper suggest that while several sub-sectors have shown increasing trends of technical efficiency, there is still a lot of scope for energy saving potential in the industrial sub-sectors. Further, it is found out that the change in the aggregate energy intensity index has not been influenced much by the structural effects. Instead, major segment of the change in aggregate intensity index is explained by the reduced energy intensity index.

• Item Type: MPRA Paper
• Language: English
• Keywords: Energy consumption, Divisia decomposition method, India, Efficiency
• Subjects: Q - Agricultural and Natural Resource Economics ; Environmental and Ecological Economics > Q4 - Energy > Q43 - Energy and the Macroeconomy

References

Ang, B.W. (1994), “Decomposition of Industrial Energy Consumption: the Energy Intensity Approach”, Energy Economics, Vol. 16, No. 3

Ang, B.W. and F. Liu (2001), “A New Energy Decomposition Method: Perfect in Decomposition and Consistent in Aggregation”, Energy, Vol. 26, No.6, 537-548

Ang, B.W. and F. Zhang (2000),”A Survey of Index Decomposition Analysis in Energy and Environmental Studies”, Energy, Vol. 25, No.12, 1149-1176

Ang, B.W. and Ki-Hong Choi (1997), “Decomposition of Aggregate Energy and Gas Emission Intensities for Industry: A Refined Index Method”, The Energy Journal, Vol. 18, No. 3, 59-73

Berndt, E.R., C.J. Morrison and G.C. Watkins (1981), Dynamic Models of Energy Demand: An Assessment and Composition, In Berndt, E.R. and B.C. Field (Eds) Modeling and Measuring Natural Resource Substitution. Cambridge: The MIT Press . Boyd, G. A., J.F. McDonald, M. Ross, and D. Hanson (1987), “Separating the Changing Composition of U.S. Manufacturing Production from Energy Efficiency Improvements: A Divisia Index Approach”, The Energy Journal, Vol. 8, No. 2, 77-96

Boyd, G.A. and Joseph M. Roop (2004), “A Note on the Fisher Ideal Index Decomposition for Structural Change in Energy Intensity”, The Energy Journal, Vol. 25, No.1, 87-101

Diewert, W.E. (1974), “Functional Forms for Revenue and Factor Requirements Functions”, International Economic Review, Vol.15, No.1, 119-130

Lermit, Jonathan and Nigel Jollands (2001), Monitoring Energy Efficiency Performance in New Zealand: A conceptual and Methodological Framework. Report prepared for the Energy Efficiency and Conservation Authority. Web address: http://www.energywise.co.nz

Myers, J. and L. Nakamura (1978), Saving Energy in Manufacturing. Cambridge, MA: Ballinger

Padfield, C.J. (2001), The Canadian Decomposition Experience: from 10 to 54 Industries, paper presented at the 2001 ACEEE Summer Study on Energy Efficiency in Industry. Proceedings Volume 1, July 621-630

Sun, J.W. (1998), “Changes in Energy Use in China: 1984-94”, Energy, Vol.23, No.10, 835-949 U.S. Department of Energy (DOE) (1989), Energy Conservation Trends: Understanding the Factors that Affect Conservation Gains in the U.S. Economy. DOE/PE-0092. Washington, DC.