Decomposition of energy consumption and energy intensity in Indian manufacturing industries

Of the total final energy consumption in India, the industrial sector accounts for about 36%, of which the manufacturing sector consumes about 66% (2004–2005 figures) with iron and steel, chemicals and petrochemicals, pulp and paper and cement industries being the largest energy users. In the recent past, energy intensity has been decreasing in the manufacturing sector, mainly due to fuel substitution away from coal in some sectors, most notably cement. Industrial output in developing countries like India continues to expand owing to rising populations and catching up on economic growth. This can result in higher energy use—energy provided primarily by the combustion of fossil fuels—and thereby to higher carbon dioxide (CO2) emissions. Using decomposition analysis, we show that most of the intensity reductions are driven purely by structural effect rather than actual improvement in energy efficiency.