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Cloud computing adoption and pollution emissions: Evidence from Chinese manufacturing firms

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  • Cao, Zengdong

Abstract

This paper develops a theoretical model to examine the environmental effects of cloud computing adoption and decomposes its impact into three channels: scale effect, structural effect, and technological effect. Using data on Chinese A-share listed manufacturing firms, we empirically test the model’s predictions. The results show that cloud adoption increases pollution emissions by 8% through the scale effect, while it reduces emissions by 6.5% and 2.9% through the structural and technological effects, respectively, by facilitating cleaner energy use and green technological innovation. Overall, these offsetting forces imply a net 1.4% reduction in pollution emissions following cloud adoption. This paper provides the first systematic decomposition of the environmental effects of cloud computing as a concrete manifestation of data elements in production. By explicitly quantifying both emission-increasing and emission-reducing mechanisms, this paper helps reconcile mixed findings in the digitalization–environment literature and offers new micro-level evidence on the role of data as a production factor in green development.

Suggested Citation

  • Cao, Zengdong, 2026. "Cloud computing adoption and pollution emissions: Evidence from Chinese manufacturing firms," Economic Analysis and Policy, Elsevier, vol. 90(C), pages 576-599.
    • Handle: RePEc:eee:ecanpo:v:90:y:2026:i:c:p:576-599
    DOI: 10.1016/j.eap.2026.01.051
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