Clicks, Bricks, and Carbon: Digitalization’s Double-Edged Impact on Supply Chain Emissions Intensity

This paper assesses whether national level digitalization is associated with lower greenhouse gas emissions intensity, and under which conditions the association holds, using an unbalanced panel for twenty-seven European countries from 2014 to 2022. Digitalization is measured through a principal component index constructed from enterprise information technology adoption and fixed broadband subscriptions per capita. The outcome is the logarithm of emissions per unit of gross domestic product. Identification is implemented with two-way fixed effects and Driscoll–Kraay standard errors to exploit within country variation, and dynamic bias and potential endogeneity are probed through parsimonious difference GMM designs. Robustness is assessed through alternative outcomes, country specific linear trends, clustered inference, and leave one out checks. Evidence for an unconditional reduction in emissions intensity associated with digitalization is not found. It is predicted that the relationship between digitalization and e-commerce will be positive and statistically significant, thus meaning that at the median and the upper quartile of e-commerce a one standard deviation increase in digitalization relates to increases in intensity of about 2.4% and 3.3%, respectively. More renewable energy shares come with lower intensity and mitigate the digitalization effect. The contribution here attempts to quantify such conditional associations within a multi-country setting and thereby infer design and energy contexts wherein environmental gains from digital expansion would most likely take place.