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
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.