Carbon Dioxide Emissions from Indian Manufacturing Industries: Role of Energy and Technology Intensity

Industrial energy efficiency has emerged as one of the key issues in India. The increasing demand for energy that leads to growing challenge of climate change has resulted major issues. It is obvious that high-energy intensity leads to high carbon intensity of the economy. This paper is an attempt to compute Carbon Dioxide (CO2) emission from fossil fuel consumption for firms in Indian manufacturing sector from 2000 to 2011 by adopting the IPCC Reference Approach. The contribution of this paper lies in estimating CO2 emission at the firm level and analyzing the factors that explain inter-firm variation in CO2 emission. The results indicate that there are differences in firm-level emission intensity and they, in turn, are systematically related to identifiable firm specific characteristics. This study found size, age, energy intensity and technology intensity as the major determinants of CO2 emission of Indian manufacturing firms. In addition, capital and labour intensity of the firms are also related to the firms’ CO2 emission intensity. We conclude the short run policy implications should be aimed at encouraging firms to invest more in R&D and technology sourcing and at long run firm should be able to adapt cleaner energy to reduce CO2 emission from the fuel consumption.