The Influence of Digitalization on Greenhouse Gas Emissions in European Union. The Analysis of Mediating Effect of Renewable Energy Consumption

Abstract The purpose of the study is to investigate the impact of digitalization on greenhouse gas (GHG) emissions, taking into consideration the mediating effect of renewable energy consumption in the 27 European Union (EU) countries between 2000 and 2021, by employing generalized method of moments (GMM), panel-corrected standard error (PCSE) estimators, and mediating effect models. The findings show that digitization has both a direct and a partially mediating effect on net GHG emissions. This means that to reduce GHG emissions, digitalization should be used along with clean energy, environmentally friendly innovations, and low-carbon technologies. Digitalization represents a driver for increased energy consumption towards renewable energy, which in turn has a significant contribution to pollution reduction. However, the effect could be mixed, depending on the way in which digitalization is used and the country’s economic model. These findings suggest that EU countries should create a secure environment conducive to digitalization and innovation, support digital and green startups, digital transformation, and traditional industry upgrades. Also, EU governments should consider renewable energy caused by digitalization as a critical factor in preventing pollution and climate change policies, in addition to energy savings, energy efficiency, and innovation. Additionally, EU countries should improve their research and innovation policies to develop green technologies, which are essential for accelerating the transition to clean energy, improving environmental quality, and preventing climate change. Furthermore, the EU countries should consider information and communication technology (ICT) trade as an important driver for their clean energy policies.