Digitalization uses digital technologies and systems to improve, transform, or create processes, operations, and services. It involves integrating digital tools and technologies, especially computers and the Internet, into various aspects of business, society, and everyday life. With globalization, dematerialization, and decarbonization, digitalization is a “megatrend” producing sweeping changes in society and the environment.1
What is the relationship between digitalization and energy use? This is not a simple question to answer due to a measurement problem. Energy use is easily measured (joules, kilowatt-hours). But how does one measure digitalization? A measurable proxy for digitalization is information and communication technologies (ICTs). An ICT is any means of storing, processing or transmitting units of information. It could be anything from a Sumerian tablet in the distant past to a supercomputing facility in the present.2
Digitalization leverages ICT tools and systems to transform traditional, manual, or analog processes into digital ones. This transformation can improve efficiency, communication, accessibility, and decision-making by integrating technologies such as the Internet, software, hardware, and telecommunications. In the realm of economics, ICT is synonymous with common terms like the “knowledge economy” and the “information economy. Realization of the potential social and environmental benefits of digitalization depends in large part on how humans develop and deploy those technologies.3
The energy historian Roger Fouquet examined the relationship between energy and information–as proxied by ICT–in the global economy.4 Communication use is based on collecting statistics on the number of letters, telegrams, text messages, and emails, and on the minutes of telephone, mobile and mobile app conversations. These messages and conversation minutes are converted into bytes of information.5
The consumption of global communication increased 112-fold since 1950, and nearly 20,000-fold since 1850. Global communication intensity is the quantity of information (bytes) divided by the global Gross Domestic Product (GDP) measured in dollars. Communication intensity increased 10-fold since 1950 and 243-fold since 1850.
Energy intensity, measured by primary energy use (joules) divided by global GDP, has been declining for the past century. The industrial transformation of Western economies during the nineteenth and early twentieth centuries was very energy-intensive. However, since World War I, energy consumption has risen less rapidly than economic activity. Energy use rose six-fold while the global economy grew thirteen-fold since 1950.6
Comparing the intensity of communication and the intensity of energy use provides insight into the impacts of the shift to a “knowledge economy” on overall energy use.
In the late nineteenth and early twentieth centuries, the energy intensity and communication intensity of GDP increased together. Starting in the early twentieth century, there was a period of rapid substitution away from energy and gradually towards communication. Since the 1980s reductions in energy intensity have slowed while increases in communication intensity rapidly increased.
The historical record indicates that we are in a period of diminishing returns to the substitution of information for energy. On average across the global economy, it initially required little information to replace energy in production. However, the ability to generate output using information rather than energy has been declining and now requires greater quantities of information to reduce energy use. This suggests that digitalization will play a declining role in both the decoupling of energy use and GDP as well as the decarbonization of the global energy system.7
These conclusions must be qualified in several important ways. First, the shift to the information economy reduces energy, but it may also stimulate GDP growth, which in turn will increase energy demand. This so-called “rebound effect” could offset some or all of the gains in energy intensity due to increases in information intensity.8
Second, the measurement of ICT is imperfect, and ICT itself is only a proxy for the overall impacts of digitalization.
Finally, it is important to keep in mind that digitalization has both positive and negative impacts on society and the environment. Automation and artificial intelligence can lead to job losses in sectors that rely heavily on repetitive or manual tasks, so workers in traditional industries may struggle to adapt to the information economy. Unequal access to the Internet and digital tools and technologies creates inequities in education, health care, and economic opportunities. There is growing concern that extensive data collection by companies and governments leads to the loss of personal privacy, mass surveillance, identity theft, and discrimination.
1 Tjiptadi, Jason and Tim Chuah, “Understanding the Digital Living Megatrend,” Euromonitor International, 8/30/2023, https://tinyurl.com/vhdjs8uh
2 Creutzig, Felix, Daron Acemoglu, Xuemei Bai, Paul N. Edwards, Marie Josefine Hintz, Lynn H. Kaack, Siir Kilkis, et al. “Digitalization and the Anthropocene.” Annual Review of Environment and Resources 47, no. Volume 47, 2022 (October 17, 2022): 479–509. https://doi.org/10.1146/annurev-environ-120920-100056.
3 German Advisory Council on Global Change (2019): Towards Our Common Digital Future. Flagship Report. Berlin: WBGU, https://tinyurl.com/yck3bcae
4 Fouquet, Roger. “The Digitalisation, Dematerialisation and Decarbonisation of the Global Economy in Historical Perspective: The Relationship between Energy and Information since 1850.” Environmental Research Letters 19, no. 1 (December 2023): 014043. https://doi.org/10.1088/1748-9326/ad11c0.
5 Fouquet, Roger, and Ralph Hippe. “Twin Transitions of Decarbonisation and Digitalisation: A Historical Perspective on Energy and Information in European Economies.” Energy Research & Social Science 91 (September 1, 2022): 102736. Link
6 Fouquet (2023) op. cit.
7 Fouquet (2023) op. cit.
8 Peng, Hua-Rong, Yue-Jun Zhang, and Jing-Yue Liu. “The Energy Rebound Effect of Digital Development: Evidence from 285 Cities in China.” Energy 270 (May 1, 2023): 126837. Link
