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Digital Technology Adoption and Changes in Energy Intensity in German Manufacturing Firms

Author

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  • Janna Axenbeck
  • Thomas Niebel

Abstract

Information and communication technologies (ICT) are generally believed to have significant potential to reduce energy intensity. In contrast to previous empirical studies, which have relied on aggregated data, we conduct the first large-scale firm-level investigation into this relationship. Our results, which are based on administrative panel data on 28,600 German manufacturing firms, confirm a robust negative relationship between software capital (our proxy for the degree of firm digitalization) and energy intensity for the years 2009 to 2017. However, the effect size is rather small. For the average firm, we find that a 1 percent increase in software usage relates to a decrease in energy intensity by 0.003 percent. Hence, contrary to previous industry-level results, we do not observe substantial energy intensity improvements in connection with ICT adoption. Moreover, we find that the relationship between ICT and energy intensity exhibits properties that can lead to an aggregation bias. JEL Classification: C32, H23, O33, O38, Q56, Q58.

Suggested Citation

  • Janna Axenbeck & Thomas Niebel, 2025. "Digital Technology Adoption and Changes in Energy Intensity in German Manufacturing Firms," The Energy Journal, , vol. 46(3), pages 73-102, May.
    • Handle: RePEc:sae:enejou:v:46:y:2025:i:3:p:73-102
    DOI: 10.1177/01956574241307951
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    References listed on IDEAS

    as
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    3. Wurlod, Jules-Daniel & Noailly, Joëlle, 2018. "The impact of green innovation on energy intensity: An empirical analysis for 14 industrial sectors in OECD countries," Energy Economics, Elsevier, vol. 71(C), pages 47-61.
    4. Robert Germeshausen, 2020. "The European Union Emissions Trading Scheme and Fuel Efficiency of Fossil Fuel Power Plants in Germany," Journal of the Association of Environmental and Resource Economists, University of Chicago Press, vol. 7(4), pages 751-777.
    5. Diewert, W E, 1971. "An Application of the Shephard Duality Theorem: A Generalized Leontief Production Function," Journal of Political Economy, University of Chicago Press, vol. 79(3), pages 481-507, May-June.
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    Citations

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    Cited by:

    1. Ning, Jiajun & Xiong, Lixin & Shao, Changhua, 2025. "Dynamic evolution analysis of enterprises digital technology innovation strategies in energy supply chain collaboration: A bargaining theory perspective," Energy Economics, Elsevier, vol. 151(C).
    2. Sodiq Olaiwola Jimoh & Soo Khoon Goh & Oluwasegun Olawale Benjamin, 2026. "Trade integration and energy intensity in ASEAN: the moderating role of the digital economy," Eurasian Economic Review, Springer;Eurasia Business and Economics Society, vol. 16(1), pages 447-472, March.

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    Keywords

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    JEL classification:

    • C32 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes; State Space Models
    • H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes
    • O38 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Government Policy
    • Q56 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environment and Development; Environment and Trade; Sustainability; Environmental Accounts and Accounting; Environmental Equity; Population Growth
    • Q58 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Government Policy

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