Digital economy, technical progress reversal, and climate change governance–insights on digital technology and data factor

The rise of the digital economy has undoubtedly created favorable conditions for advancing low-carbon development and strengthening climate change governance. This study develops a model of directed technical change that incorporates both digital technology and the data factor to explore the dynamic relationships among the digital economy, directed technical progress, and climate change. Building on these theoretical insights, the study further proposes a policy mix for effective climate governance enabled by the digital economy. The results suggest that: (1) The application of digital technology and the data factor generates a “multiplier effect”, causing technical progress to favor the sector that accumulates more data. (2) In the absence of climate policies and with equivalent levels of digital technology application across sectors, climate deterioration will accelerate. (3) Governments can reverse the direction of technical progress by implementing a mix of policies, including temporary carbon and resource taxes, temporary clean R&D subsidies, and permanent subsidies for data usage and machinery purchases. Through the mechanism of the multiplier effect, the use of pollution-intensive intermediate goods will decline more rapidly, thereby helping to avert potential climate disasters. (4) The development of the digital economy can reduce the intensity of required climate policies while improving social welfare. The findings of this study provide policy guidance and a theoretical basis for effective climate governance in the era of the digital economy.