The effect of disaggregated information and communication technologies on industrial energy demand

The net energy-saving effect of information and communication technologies (ICTs) remains unclear. This is because while ICTs can be energy efficient and contribute towards energy savings, at the same time, they can be associated with a growing energy footprint due to an increase in the quantity of devices used. Therefore, this paper examines the net impacts of disaggregated ICTs, measured by computing equipment, communication equipment, and software, on energy demand. Specifically, the research estimates the energy cost share equations and derives elasticities of energy use with respect to the disaggregated ICTs. Using a panel dataset of 13 countries within 28 industrial sectors for 13 years, the quantile regression with fixed effects, fixed effects ordinary least squares, the generalised method of moments, and the two-stage least squares techniques are employed. The results demonstrate that disaggregated ICTs reduce industrial energy demand, contributing to greater energy efficiency. For example, the average elasticity of total energy demand with respect to communication devices is −0.58 for the 10th percentile and reduces to −0.17 for the 75th percentile. Similarly, the average elasticity of electricity demand with respect to communication devices is −0.82 for the 10th percentile and −0.15 for the 75th percentile. The analysis shows that the results are robust, while also addressing the potential endogeneity issues. These results provide useful insights to policymakers on the role of digitalisation in addressing climate change, contributing to the low carbon transition, and supporting the global environmental objectives of net-zero emissions.