Climate Protection Potential of Digital Transformation

Research Seminars

The Role of Production Relocation

Information and communication technologies (ICTs) are a potential source of energy efficiency improvements as they enhance both the quantity and the quality of data and therefore the overall efficiency of production processes. Previous sector-level studies find large energy saving contributions of ICTs. However, existing literature relies on data for the early phase of digitalisation, and does not sufficiently control for the facilitated possibility of relocating energy intensive production processes to low-cost countries due to the diffusion of ICT. The presented paper analyses the relationship between ICT/digitalisation and energy demand at the industry level. The cross-country cross-industry panel data set for nine OECD countries, 28 industries and the period 2000 to 2014 also includes data about energy demand along the global value chain (GVC). We are therefore able to provide a more realistic view on the impact of digitalisation on the relative energy demand. The econometric analysis confirms the negative association between ICT and energy demand (meaning less energy consumption) found in previous studies but with a much smaller effect size. Controlling for the energy use for the production of intermediate inputs along whole global value chain for the goods and services produced in their nine OECD countries, the authors still find a significant relationship between ICT and energy demand.


ZEW – Leibniz-Zentrum für Europäische Wirtschaftsforschung