What Drives the Relationship Between Digitalization and Industrial Energy Demand? Exploring Firm-Level Heterogeneity

56 Pages Posted: 14 Dec 2022 Last revised: 7 Feb 2023

See all articles by Janna Axenbeck

Janna Axenbeck

ZEW – Leibniz Centre for European Economic Research

Anne Berner

University of Goettingen (Göttingen)

Thomas Kneib

University of Goettingen (Göttingen)

Date Written: 2022

Abstract

The ongoing digital transformation has raised hopes for ICT-based climate protection within manufacturing industries, such as dematerialized products and energy efficiency gains. However, ICT also consume energy as well as resources, and detrimental effects on the environment are increasingly gaining attention. Accordingly, it is unclear whether trade-offs or synergies between the use of digital technologies and energy savings exist. Our analysis sheds light on the most important drivers of the relationship between ICT and energy use in manufacturing. We apply flexible tree-based machine learning to a German administrative panel data set including more than 25,000 firms. The results indicate firm-level heterogeneity, but suggest that digital technologies relate more frequently to an increase in energy use. Multiple characteristics, such as energy prices and firms’ energy mix, explain differences in the effect.

Keywords: digital technologies, energy use, manufacturing, machine learning

JEL Classification: C14, D22, L60, O33, Q40

Suggested Citation

Axenbeck, Janna and Berner, Anne and Kneib, Thomas, What Drives the Relationship Between Digitalization and Industrial Energy Demand? Exploring Firm-Level Heterogeneity ( 2022). ZEW - Centre for European Economic Research Discussion Paper No. 22-059, Available at SSRN: https://ssrn.com/abstract=4300866 or http://dx.doi.org/10.2139/ssrn.4300866

Janna Axenbeck (Contact Author)

ZEW – Leibniz Centre for European Economic Research ( email )

P.O. Box 10 34 43
L 7,1
D-68034 Mannheim, 68034
Germany

Anne Berner

University of Goettingen (Göttingen) ( email )

Platz der Gottinger Sieben 3
Gottingen, D-37073
Germany

Thomas Kneib

University of Goettingen (Göttingen)

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