The Relationship between Input Prices and Energy Intensity in Canadian Manufacturing Industries

This study analyses the roles that energy and other input prices play in reducing the energy intensity of manufacturing industries in Canada. I find that the average energy price elasticity of energy intensity is about -0.39 for the manufacturing sector, with a 95 percent CI of -0.43 to -0.34. The calculated average elasticities of substitutions indicate that both capital and labour are complementary with energy while both materials and services inputs are substitutes. The industry-specific estimates, however, reveal widespread differences in terms of both the magnitude of the elasticities and the patterns of the relationships among the inputs.