Energy savings potential and policy for energy conservation in selected Indian manufacturing industries

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.

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