The Impact of Disaggregated ICT Capital on Electricity Intensity of Production: Econometric Analysis of Major European Industries

FCN Working Paper No. 4/2008

15 Pages Posted: 4 Jun 2010 Last revised: 13 Jul 2015

See all articles by Ronald Bernstein

Ronald Bernstein

RWTH Aachen University - E.ON Energy Research Center

Reinhard Madlener

RWTH Aachen University

Date Written: September 1, 2008

Abstract

In this paper we empirically analyse the impact of disaggregated ICT capital on the electricity intensity in five major European industries (chemical, food, metal, pulp & paper and textile). The analysis of each industrial sector is based on an unbalanced panel including data for eight EU member countries (Denmark, Finland, Germany, Italy, Portugal, Slovenia, Sweden and the UK) for the period 1991-2005. The panel-econometric approach, in which we account for country-specific fixed effects, is based on a factor demand model that is similar to the one derived in Collard et al. (2005) [Energy Economics 27 (2): 541-550] for the French services sector. On the one hand, the analysis provides evidence for an electricity-saving effect on production induced by communication technologies in all of the sectors considered. On the other hand, the effect of computers and software on the electricity intensity of industrial production is not that clear-cut, but rather seems to be strongly dependent on the sector-specific production processes involved. Overall, the net effect of ICT diffusion on electricity intensity of production appears to be in favour of an enhancement of electricity efficiency in production.

Keywords: Information and Telecommunication Technology, ICT, Electricity Intensity, Panel Data

JEL Classification: Q41, Q43

Suggested Citation

Bernstein, Ronald and Madlener, Reinhard, The Impact of Disaggregated ICT Capital on Electricity Intensity of Production: Econometric Analysis of Major European Industries (September 1, 2008). FCN Working Paper No. 4/2008. Available at SSRN: https://ssrn.com/abstract=1620468 or http://dx.doi.org/10.2139/ssrn.1620468

Ronald Bernstein (Contact Author)

RWTH Aachen University - E.ON Energy Research Center ( email )

Mathieustrasse 6
Aachen, 52074
Germany

Reinhard Madlener

RWTH Aachen University ( email )

School of Business and Economics / E.ON ERC
Mathieustra├če 10
Aachen, 52074
Germany
+49 241 80 49 820 (Phone)
+49 241 80 49 829 (Fax)

HOME PAGE: http://www.eonerc.rwth-aachen.de/fcn

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