Nearly one-third of energy demand and carbon emissions can be attributed to the manufacturing sector, primarily the petrochemicals, iron and steel, paper, and aluminum industries. This very fact also presents an opportunity to make the manufacturing sector energy-efficient through several policy interventions. These policy interventions can be divided into two categories, voluntary and mandatory.

• Voluntary: Voluntary actions are the actions taken by industries without any explicit policy mandate. Many industries make decisions to reduce the energy/carbon intensities of their processes to save on their energy costs or by anticipating future policies that could impose high costs on them. An example could be a coal-powered plant switching to a natural gas-powered plant anticipating a carbon tax in the future. However, to encourage such voluntary actions, proactive measures must be taken by policymakers to send out the right signals to the industry. These could include levying a 'green' surcharge on energy prices; recognizing efficient industries through energy efficiency awards, by providing technical assistance to industries to help them reduce their energy efficiency, etc.

• Mandatory: Mandatory actions are taken by industries by taking into account an explicit policy mandate. Such policies could direct industries to reduce the energy intensity of their processes, reduce the carbon intensity of their processes, adopt new best available technologies in the market, etc. Industries flouting such mandates can be penalized. Mandatory actions very often have a high rate of compliance. However, implementing mandatory actions also comes with the costs of monitoring and evaluating industries which makes it more expensive than voluntary actions. Thus an optimal industrial energy efficiency strategy must implement both voluntary and mandatory policy interventions.

Some strategies to improve industrial energy efficiency are given below;

• Encourage industries for Eco-efficiency, energy efficiency, and green accounting at a firm/industry level, where Eco-efficiency refers to the management philosophy that encourages businesses to search for environmental improvements that yield parallel economic benefits.

• Reduce the energy intensity of industrial production by 30-50% with the help of advanced technologies in industrial reactions and separations, high-temperature processing, waste heat minimization and recovery, and sustainable manufacturing.

• Improve efficiency of industrial systems by decreasing energy use and pollution, while increasing the economic viability of the company.

• Promote industrial symbiosis within the new town-based industries as well as at the regional level for inter-industry/sector integration/cogeneration/reuse of various resources and byproducts. Pooling the waste stream may provide new, efficient uses of what used to be waste that had to be removed.