Examining the Direct and Indirect Effects of Information and Communication Technology on Carbon Dioxide Emissions with an Emphasis on the Role of Renewable Energy

The objective of this study is to examine the effects of Information and Communication Technology (ICT) indicators, including Internet use, mobile phone subscriptions, and fixed-line telephone subscriptions, on environmental quality in twenty selected Asian countries with the largest shares of global carbon dioxide emissions over the period from 1990 to 2022. The cointegration test indicates the existence of a long-run relationship among the model variables. The N-shaped Environmental Kuznets Curve (EKC) is confirmed for this group of countries, and renewable energy consumption leads to a significant reduction in carbon dioxide emissions. The results show that the direct effects of ICT indicators on CO₂ emissions are negative and statistically significant, whereas their indirect effects through the trade channel are positive and statistically significant. The net effect is negative up to the trade threshold level, becomes zero at the threshold level, and turns positive beyond the threshold, thereby helping to resolve the ambiguity surrounding the impact of ICT on the environment. The results are confirmed using a composite ICT index based on Principal Component Analysis (PCA), and trade has a positive and statistically significant effect on carbon dioxide emissions. Internet use makes the largest contribution to the composite ICT index, accounting for 66.25%. Policymakers are advised to promote the use of ICT to reduce emissions while, as economies move toward globalization and increased trade, replacing fossil fuels with renewable energy sources in order to mitigate the indirect environmental effects of ICT through the trade channel.