Environmental effects of Information and Communication Technology - Exploring the roles of renewable energy, innovation, trade and financial development

The increasing energy demand of the Information and Communication Technology (ICT) devices, has drawn the attention of researchers and policymakers. Given that ICT devices are used in almost all sectors of the economy, any effort towards climate-change mitigation should consider the carbon-footprint of the ICT sector. In this study, we analyze the direct effects of ICT on environment as well as the indirect effects through interaction with renewable energy, innovation, trade, and financial development using Driscoll-Kraay Panel Corrected Estimators for 16 emerging countries from 2000 to 2018. We also examine the presence of Environmental Kuznets' Curve (EKC) hypothesis for the entire sample. We find that increasing internet-use, renewable-energy consumption and trade significantly reduces CO2 emission, while increase in non-renewable energy consumption significantly increases emission. Interaction between innovation and internet-use jointly reduces CO2 emission. Similarly, renewable-energy, innovation, trade and financial-development reduce the CO2 emission from increased mobile use. EKC hypothesis is found to be present for both internet and mobile-use. For internet-use, the emerging economies have already reached the turning point of EKC whereby increasing internet-penetration reduces CO2 emission. However, mobile-use has not yet reached its turning point of the EKC curve. Robustness check using Bootstrapped Panel-Quantile Regression also confirms that internet-use and renewable-energy consumption reduces CO2 emission, whereas innovation and non-renewable energy consumption increases emission across all quantiles. The results suggest that the emerging economies can safely increase internet-use and related applications to reduce emission. They should also increase the use of renewables and green-innovation technologies in telecommunication-sector to reduce their adverse effects on the environment.