Ethiopia’s industrial sector remains highly dependent on fossil fuels, particularly imported coal and diesel, which account for a dominant share of industrial energy use and pose significant challenges to national decarbonization goals. At the same time, Ethiopia is pursuing rapid industrial expansion supported by large-scale investments in renewable electricity generation. This study applies the Open Source Energy Modelling System (OSeMOSYS) to assess how Ethiopia can balance industrial growth with energy efficiency improvements and fuel switching under conditions of expanding renewable power supply. An Ethiopian industrial reference energy system was developed and analyzed under multiple scenarios, including a business-as-usual case, an industrial expansion scenario, and a renewable-led industrial expansion pathway. The model assumes a 5 percent annual growth rate during the industrial parks expansion phase and introduces policy-driven constraints that progressively reduce coal and diesel use by 8 percent from 2025 onward. Results indicate that industrial decarbonization is technically feasible without constraining output growth. Increased electrification, aligned with Ethiopia’s renewable-dominated power system, substantially reduces fossil fuel consumption while total industrial energy demand continues to rise through 2050. The findings highlight the importance of coordinated planning between industrial policy and power sector expansion to avoid infrastructure and capacity bottlenecks. The study demonstrates that OSeMOSYS provides a transparent and robust framework for evaluating trade-offs between industrial growth, investment costs, energy demand, and emissions. Well-designed policy constraints that promote electrification, rather than rigid fossil fuel requirements, are critical to enabling a low-carbon industrial development pathway in Ethiopia.