How does the digital economy drive CO2 reduction in China? Evidence from a novel decomposition model and scenario analysis

Abstract

Research background: Increasing CO₂ emissions place considerable strain on environmental performance, whereas the digital economy, as a transformative economic paradigm, has been identified as an essential catalyst for mitigating environmental effects. However, the inherent limitations of conventional decomposition models have led previous decomposition analyses to overlook the driving effect of the digital economy on CO₂ emissions.

Purpose of the article: Examining the impacts of the digital economy within the framework of CO₂ emissions disaggregation and subsequently projecting the future pathways of CO₂ emissions. Ultimately, the research aims to offer scientific insights and recommendations for achieving low-carbon development through digital economic support.

Methods: The actual contribution of the digital economy to CO₂ emissions is assessed through a novel Generalized Divisia Index (GDI) model. Further, the Stochastic Impacts by Regression on Population, Affluence, and Technology (STIRPAT) model is extended to project the CO₂ trajectories across distinct scenarios.

Findings & value added: The results unveil that the digital economy plays a weaker driving force in cutting CO₂ emissions. Carbon intensity and energy intensity within the digital economy show substantial potential to deliver CO₂ emission abatement, especially in the provinces of eastern and western regions. The carbon factor is manifested as the main accelerator of increasing CO₂ emissions. Under the low-CO₂ scenario, CO₂ emissions driven by the digital economy will meet the emission goals ahead of schedule, while reductions will suffer constraints in the baseline and high-CO₂ scenarios. The findings provide an empirical basis and scientific reference at the factor decomposition level for the digital economy to support CO₂ reduction.