Investigating the Link Among ICT, Electricity Consumption, Air Pollution, and Economic Growth in EU Countries

Abstract

This study investigates the relationship between Information and Communication Technology (ICT) penetration, electricity consumption, economic growth, and environmental pollution within a multivariate framework. A panel of 16 EU countries was analyzed over the 1990–2017 period. The results of the Dumitrescu-Hurlin panel causality tests reveal the existence of a one-way causality running from ICT usage and electricity consumption and which, in turn, causes a rise in CO2 emissions and improves GDP. Panel Mean-Group regression results highlight that economic growth is also an important driver of electricity demand as a 1% economic growth rate is associated with a 0.13% increase in per capita electricity consumption. These results demonstrate for the first time in the literature a single assessment on the linkages among ICT, electricity use and environmental pollution with a novel focus on the EU. Based on these results, adequate measures should encompass the adverse environmental effects of ICT, while energy saving policies must be carefully implemented in order not to hinder economic growth.

Keywords: Electricity consumption; CO2 emissions; internet usage; economic growth; EU; panel data