Internet usage, electricity consumption and economic growth in Australia: A time series evidence

Abstract

This study estimates the short- and long-run effects of the Internet usage and economic growth on electricity consumption using annual time series macro data for Australia for the period 1985–2012. ARDL bounds test for cointegration and Granger causality test for causal link are applied. Results from ARDL estimates indicate that the Internet use and economic growth stimulate electricity consumption in Australia. Internet usage and economic growth have no significant short-run relationship with electricity consumption. Multivariate Granger causality test confirms unidirectional causal link running from Internet usage to economic growth and electricity consumption. The findings are robust across different econometric specifications. The findings imply that Australia is yet to achieve electricity efficiency gains from ICT expansion and that it may pursue energy conservation policy without any adverse effect on its economy. Australia needs to promote its existing carbon capture and storage facilities, significantly boost investment in the renewable energy sector, in particular, in solar energy and build nuclear power plants for electricity generation to reduce CO2 emissions. Also promoting green IT and IT for green might be potential means to curb environmental damage from Internet usage. A coordination between ICT policy, energy policy and growth policy is also recommended.