Is digitalization leading to CO2 emission cutting?

Purpose Our article aims to contribute to the main research question of whether digitalization can be used to mitigate carbon emissions. One of the main challenges in capturing the effects of digitalization on carbon emissions lies within the measurement. Design/methodology/approach We create six proxies to measure digitalization that represent the dynamics of the ICT sector, relative size, relative business expenditures of R&D in the ICT sector, the relative imports and exports of ICT goods and relative digital capital. We perform OLS regression on a sample covering 26 European Union countries during the time period 2003–2019. To add statistical robustness, we perform the quantile panel regression. Findings Our results show that the relative size of the ICT sector and digital capital have a neutral impact on the country’s carbon emissions. An increase in ICT imports of goods and ICT exports of goods as a ratio of the overall country’s imports and exports, on the other hand, could lead to an increase in carbon emissions. On the other hand, the net trading balance of ICT goods (ICT exports minus ICT imports) in our data set for EU countries lowers carbon emissions. Our results provide no conclusive evidence for a relationship between business expenditures on R&D in the ICT sector and carbon emissions. Originality/value We contribute to existing literature by creating new measurements to capture digitalization and identifying which digitalization aspects either enhance or diminish carbon emissions, and we apply this approach to the European Union based on 26 countries for the period of 2003–2019.