The impact of digitalization on energy intensity in manufacturing sectors – A panel data analysis for Europe

Abstract

Digitalization of industrial production, also known as Industry 4.0, may have profound environmental impacts, raising both hopes and fears with regards to the environmental friendliness of manufacturing. We investigate the relationship between Industry 4.0 and manufacturing energy intensity using panel data covering 15 countries and 8 manufacturing sectors or clusters for the years 2012–2020, providing insights for three different variables related to Industry 4.0. Firstly, we find a significant negative association (−0.059 in the preferred specification) between robot density and energy intensity. Secondly, we find a significant positive association (+0.025 in the preferred specification) between digital capital intensity and energy intensity. Lastly, the relationship between the share of companies employing ICT specialists and energy intensity is insignificant in our data sample. We thus highlight the potentially varying effects of Industry 4.0 on manufacturing energy intensity, encouraging further investigations to provide a more nuanced view of the environmental impacts of digital technology utilization in industry.