Digital disruption and energy efficiency: The impact of regional digitalization on China's industrial sector

Abstract

Using the unique micro-data of industrial enterprises' Nitrogen oxides (NOx) and Sulfur oxides (SOx) emissions covering 58,725 enterprise-year observations, this paper investigates how digitalization affect energy efficiency. The empirical results show that regional digitalization can significantly promote the improvement of energy efficiency of industrial enterprises. Specifically, the result of PSM-DID method indicates that the impact of digitalization on energy efficiency is significantly enhanced by the “National innovative pilot cities” policy, while the dynamic result validates the continuity of industrial enterprises' energy efficiency. Moreover, regional digitalization has superior impact on enterprises within eastern region enterprises, the manufacturing sector, and with elevated liquidity and profitability levels. Finally, moderating effect suggests that technological innovation expand the positive impact of digitalization on enterprises’ energy efficiency. This study confirms regional digitalization can promote the energy efficiency of Chinese industrial enterprises, providing the policy suggestions to the energy transition in China.