The Role of the Digital Economy in Energy Efficiency

ABSTRACT This paper investigates the direct, mediating, and nonlinear effects of digital economy development on energy efficiency using panel data from 30 Chinese provinces spanning 2011–2022. The empirical strategy integrates instrumental variable estimation, mediation analysis, and threshold regression, complemented by extensive robustness checks. The findings reveal three key results. First, the direct effect of digitalization on energy efficiency is significantly positive, confirming its average contributive role. Second, mediation analysis identifies the following four significant transmission pathways: Technological innovation and economic growth operate as competitive mediators, while energy consumption structure and industrial structure function as indirect‐only mediators. Third, threshold analysis uncovers a distinct nonlinear pattern: digitalization promotes energy efficiency at low development levels but exhibits a negative effect during intermediate stages, with marketization serving as the critical unlocking condition. These findings are validated through comprehensive robustness checks, including varying‐coefficient modeling, spatial spillover analysis, dynamic lag specifications, and COVID‐19 pandemic controls. This study demonstrates that digitalization's energy efficiency dividend is positive on average yet contingent on development stages and regional conditions. Market‐oriented institutional reforms are essential for unlocking this potential, and differentiated policies should be designed according to specific threshold conditions.