Publication
The Korean Economic Forum
The Impact of Digitalization on GHG Emissions in the Manufacturing Sector
Hyungna Oh (Kyung Hee University) and Jong Ho Hong (Seoul National University)Year 2022Vol. 14No. 4
Abstract
The digital transition has been transforming the nature of energy and resource
use in the production process. Existing literature have presented different views
on the digital transition’s impact on greenhouse gas (GHG) emissions. Some
have welcomed the wave of digitalization with the expectation that ICT
technologies will contribute to climate mitigation by improving the efficiency of
energy and resource use in the production sector. Others, on the contrary, have
shown concern that the resulting surge in electricity consumption, water use and
e-waste generation in digital sectors will do more bad than good in regards to
GHG emissions. With the present study, we investigate how ICT technologies
affect energy consumption and GHG emissions in the manufacturing sector. Two
datasets, the Survey of Business Activities (2013-2019) and the National Energy
Total Information System (2013-2019) are employed in the empirical exercise of
this study. Estimation outcomes suggest that utilizing ICT technologies in the
manufacturing sector will help reduce overall energy consumption and energy
intensity, implying that the twin deals (Digital New Deal and Green New Deal)
are complementary. However, this positive synergy effect of digitalization in
green transformation was not found within electricity consumption, the dominant
fuel of digital technologies, as its carbon intensity is higher than that of most
other fuels. As a result, the digital transition will show an exigent need to green
electricity production.