Industrial demand accounts for about 30% of total final energy demand in Thailand, which experienced rapid increases in energy demand in the past two decades. This paper analyzes the changes in industrial energy demand over a period of 20 years from 1981 to 2000 by considering changes in demand pattern, fuel consumption and energy intensities. It identifies the factors affecting the energy consumption by employing the factor decomposition technique using Laspeyres approach. It is found that the share of food and beverage industry declined in terms of value addition and energy demand, while the shares of chemical and non-metallic minerals industries have increased. The energy intensity of industry has followed a U-shaped curve but post-1997, the trend is upward looking. At the overall industry level, the activity effect was the major factor affecting energy demand, followed by the energy intensity effect. Changes in the food and beverage industry and non-metallic industry have significantly influenced the energy demand of the industrial sector. © 2004 Elsevier Ltd. All rights reserved.