The contribution of this article lies in computing CO2 emission at the firm level for the Indian manufacturing sector from 2000 to 2011 and analysing the factors that explain the inter-firm variations 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. For a sustainable industrial development purpose, the short-run policy implications should be aimed at encouraging firms to invest more in research and development (R&D) and technology imports and in the long run, a firm should be able to adopt cleaner energy to reduce CO2 emission from the fuel consumption.
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