Digital economy: An innovation driving factor for low-carbon development

Abstract

As an emerging driving factor, the positive impact of digital economy on low-carbon development (LCD) may be undervalued or even neglected. In the context of global Internet development and the widespread use of digital technologies, this study develops an evaluation system to measure China's digital economy by using provincial panel data from 2007 to 2019. Four dimensions are covered, including digital economy development carrier, digital industrialization, industrial digitalization, and digital economy development environment. Based on a comprehensive explanation of the influence mechanism, generalized method of moments and other econometric methods are used to examine the direct effect of digital economy on LCD. An intermediary effect model is then applied to explore its indirect transmission mechanism, followed by several heterogeneity analyses. The results show that digital economy is gradually becoming an essential driver for regional low-carbon development. Environmental governance, technological innovation, and industrial structure upgrade are the three primary channels for digital economy to influence LCD. The intermediary role of industrial structure upgrade is the largest, while technological innovation is the smallest. Results of heterogeneity analysis show that the decarbonization of digital economy is better in the eastern region but not significant in the central and western regions. In addition, since the launch of the carbon emissions trading pilot in China, digital economy has significantly contributed to low-carbon development. This study provides valuable implications for China to achieve low-carbon development and valuable insights to other countries so that they can actively engage in energy conservation and emissions reduction.