International Journal of Environmental Science and Development

Abstract—India launched the Perform-Achieve-Trade (PAT) scheme for firms in the eight most energy intensive industries in 2007, Cement industry being one of the industries. The purpose was to induce efficient use of energy through trade in Energy Saving Certificates (ESCerts). The scheme identified the most polluting firms from each of these industries and set individual energy intensity reduction targets. The first PAT cycle runs from 2012-2015 and targets have to be met within this period. This is the first time India has adopted tradable permit scheme for dealing with an environmental problem. It will help India achieve its objective of sustainable development along with economic growth. The objective of this paper is to determine the factors that influence the energy intensity of firms of the Cement Industry and quantify the PAT effect. We use panel data fixed effects model and difference-in-differences estimate. The method of Propensity Score matching is used as a robustness check of the results. The results show that the Cement industry as a whole did not become more energy efficient after the scheme was launched. The firms that were identified have higher energy intensity than the other firms, which suggest that they were correctly identified by the government.

Index Terms—Energy intensity, India, perform achieve and trade, tradable permits.

Hena Oak is with the Department of Economics, Miranda House, University of Delhi, India (e-mail: henaoak@ gmail.com).

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Cite: Hena Oak, "Factors Influencing Energy Intensity of Indian Cement Industry," International Journal of Environmental Science and Development vol. 8, no. 5, pp. 331-336, 2017.