From twin transition to twice the burden? Digitalisation, energy demand, and economic growth

This paper evaluates the potential of digitalisation to drive structural transformations towards a sustainable economy. We apply an index decomposition analysis (IDA) to understand the factors influencing energy demand in a panel of 31 high-income countries (1971-2019). The IDA framework includes four factors related to the scale and sectoral composition of the economy and technical improvements, accounting for the quality of energy flows and actual work potential through useful exergy measures. We apply the model at the sector level across 16 productive industries to explore cross-sector heterogeneity in energy demand, and then compare results across digitial intensity categories. We find that value added growth is the primary driver of energy use. While digitalisation alone does not fully explain trends in energy demand, it is strongly associated with value added growth in high digital intensity sectors and amplifies the use of energy. Left ungoverned, digitalisation risks intensifying economic-ecological tensions, but if steered towards socioecological priorities-while addressing the environmental costs of growth-it holds potential to deliver real benefits. We discuss these findings in the context of recent policy actions promoting the ''twin" green and digital transition.