Promoting decarbonization in the power sector: How important is digital transformation?

Abstract

The application of digital technologies to help improve new energy integration and generation efficiency is critical to decarbonizing the power sector. Many studies have explored the drivers of carbon emissions in the power sector, but the role of digitalization has been overlooked. To investigate digitalization's impact on electricity production's carbon intensity, this paper measures the level of digitalization in the electricity sector for 93 countries in 2010 and 2015–2019. A two-way fixed effects model was constructed to analyze the panel data. According to the empirical findings, digitalization can significantly reduce the carbon intensity of power generation. Optimizing the energy structure is an important mechanism for decarbonization. It is found that the energy structure enhances the carbon reduction effect of digitalization in the power sector. The impact of digitalization on reducing carbon intensity increases with the quantity of renewable energy. The heterogeneity analysis results suggest that digitalization's impact on reducing carbon emissions is stronger in nations with higher levels of digital investment, digital service investment, industrial proportion, or industrial electricity compared to residential electricity. The research offers empirical evidence and targeted policy recommendations for promoting decarbonization and digital transformation of the power sector.