Assessing Energy efficiency of Indian paper industry and influencing factors: a Slack-based firm-level analysis

Abstract This study estimates efficiency in energy utilization at firm level and feasible energy saving target of the pulp and paper industry in India. For this analysis, data is extracted from prowess database for a panel of 67 major pulp and paper producing firms over the period of 2003–04 to 2013–14. We employed radial and non-radial variants of data envelopment analysis to assess the feasible energy saving target with the current level of output. Particularly, we employed slack-based method with variable returns to scale as a flexible and pragmatic approach to performance analysis. Results reveal no significant improvement in the energy efficiency level of the firms over the study period and show vast energy saving potential. Results of slack-based measure of energy efficiency show the feasible energy saving potential of 40%. Further, size of the firm, age and financial performance are important factors that influence energy efficiency. Therefore, this study recommends special attention to the paper industry while implementing energy efficiency programme. We also reviewed four major policies for industrial energy efficiency improvement initiated by Bureau of Energy Efficiency, India.