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ICT and the Demand for Energy: Evidence from OECD Countries

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  • Patrick Schulte
  • Heinz Welsch
  • Sascha Rexhäuser

Abstract

Information and communication technology (ICT) has been ascribed a crucial role for raising resource and energy efficiency and thereby contributing to environmental abatement. We investigate this conjecture by providing evidence on the relationship between ICT and energy demand. Using a cross-country cross-industry panel data set covering 13 years, 10 OECD countries, and 27 industries, our results show that ICT is associated with a significant reduction in total energy demand. This relationship differs with regard to different types of energy. ICT is negatively related to the demand for non-electric energy, but is not associated with a significant change in the demand for electric energy. Quantitatively, the effect of ICT on energy demand is greater than that on labor demand. The results survive several robustness checks which allow for various forms of heterogeneity and tackle the potential endogeneity of ICT capital. Copyright Springer Science+Business Media Dordrecht 2016

Suggested Citation

  • Patrick Schulte & Heinz Welsch & Sascha Rexhäuser, 2016. "ICT and the Demand for Energy: Evidence from OECD Countries," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 63(1), pages 119-146, January.
    • Handle: RePEc:kap:enreec:v:63:y:2016:i:1:p:119-146
    DOI: 10.1007/s10640-014-9844-2
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    More about this item

    Keywords

    Energy demand; Energy efficiency; Environmental policy; Green growth; ICT; OECD countries; Technical change; O33; O44; Q41; Q43;
    All these keywords.

    JEL classification:

    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes
    • O44 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Environment and Growth
    • Q41 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Demand and Supply; Prices
    • Q43 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Energy and the Macroeconomy

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