Magnitude and determinants of energy intensity: evidence from Indian firms

Abstract

The topmost challenge for Indian manufacturing industries is to reduce the pace of energy intensity to deal with environmental degradation and climate change problems. In this light, we examine the firm-specific determinants influencing energy intensity of Indian manufacturing firms and suggest measures to minimize the energy intensity. To do so, we use aggregate firm-level data ranging between 2010 and 2021 and employ panel quantile regression. We found that the determinants, namely LI, RMPMI, PMI, and OI, have a statistically positive and significant impact on energy intensity. Other factors such as RMSSI, PATI, TDI, SI, and LNTA were found to show mixed results. Besides, we observed RMPMI as the most dominant factor driving energy intensity among Indian manufacturing firms. The findings of this paper endorse effective policymaking pertaining to energy intensity for Indian manufacturing firms and necessitates the modifications in energy conservation regulations.