Drivers and effects of digitalization on energy demand in low-carbon scenarios

Noam Bergman and Timothy Foxon

Climate Policy, 2023, vol. 23, issue 3, 329-342

Abstract: The world is currently facing two socio-technical transitions: shifting to a low-carbon society, and a digital revolution. Despite some claims to the contrary, evidence suggests that spread and adoption of information and communication technology (ICT) does not automatically lead to reduction in energy demand, if this stimulates new energy-using practices or wider economic growth. Despite this policy challenge, the two transitions are often considered separately. This study examines potential drivers of reductions or increases in energy demand due to digitalization identified in recent leading global and UK net-zero transitions scenarios. We analyse the scenarios in terms of effects of digitalization on energy demand by identifying specific direct effects of ICT; indirect and rebound effects in transport and home energy use; and wider effects via economic growth. This analysis implies that the future pathways adopted for digitalization will have a significant impact on future energy demand and hence on the feasibility and acceptability of achieving net-zero goals. We find there are different assumptions and development pathways between scenarios. We also identify a need for better inclusion of behavioural effects and other social science understanding in scenarios on the one hand, and recognition that policy can affect digitalization pathways on the other. Overall, our work suggests opportunities for further research and potential for improving policy interactions between these two transitions, and stimulating greater public debate on the different framings for an ICT-driven low-carbon transition.Key policy insights Modelling and scenario development of low-carbon pathways need to pay more attention to drivers of energy demand, including direct and indirect effects of digitalization.Social science understanding of the behavioural change effects of digitalization needs to be considered in assessing energy demand changes.Different pathways of digitalization result from individual and collective choices, including technology development, business models and data protection.Policy makers should seek to promote pathways that deliver social wellbeing and local environmental benefits, not just economic gains.

Date: 2023
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Working Paper: Drivers and effects of digitalisation on energy demand in low carbon scenarios (2021)
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DOI: 10.1080/14693062.2022.2145260

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