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

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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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    More about this item

    Keywords

    ICT; firm-level panel data; energy intensity improvements; manufacturing;
    All these keywords.

    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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