How Can the Digital Economy Reduce China’s Carbon Emissions?

China is transitioning into the digital economy era. The digital economy can significantly diminish carbon emissions, with green tech innovations and industrial transformation being key contributors. The influence of the digital economy has better performance in lowering carbon emissions in mid-western China than in the eastern area. 

As the digital economy continues to integrate with the real economy, digital technology is producing on-going changes to industry, which are driven by innovations in digital technology, energy efficiency, and the improved conversion rates of pollutants. The digital economy can decrease industrial pollution without affecting industrial output. 

Digitalization is a critical driver for China’s economic transformation and development, and greening is a great aim for China’s high-quality growth. It offers valuable policy insights and guidance for globally achieving digital economy growth, China strives to achieve carbon peak by 2030 and achieve carbon neutrality by 2060.

The Effects between the Digital Economy and Carbon Emissions

The effect of digital economy has on carbon emissions directly. The digital economy development has become one of the main engines to promote economic growth, sustainable and low-carbon urban growth can be efficiently supported by the digital economy. 

The rise of carbon emissions is inhibited because the negative population effect outweighs the benefits of economic growth and rebound. Energy usage in middle-income and high-income nations is significantly moderated by digitization. Although increasing energy efficiency can reduce carbon emissions, the digital economy’s expansion is unfavourable for achieving this, which indirectly results in higher carbon emissions.

The main routes through which the digital economy influences low-carbon growth include environmental governance, technical innovation, industrial structure upgrading. The digital economy can influence the manufacturing industries to undergo a green and low-carbon transformation through enhanced technological innovation. Developing digital product trade also helps to reduce carbon emissions through technological effects. 

Carbon emissions are inhibited through innovation and industrial structure upgrading effects and show significant spatial spill over effects. Comprehensive development of the digital economy can restrain regional carbon emissions through industrial progress and energy consumption optimization. And through increasing green technology innovation, decreasing the amount of coal use, and growing the tertiary industry’s economy, carbon emissions can be indirectly reduced.

How is Carbon Emissions Reduced?

The digital economy can play a direct role in carbon reduction, and this role frequently has a spatial effect. The digital economy may potentially influence carbon emissions through scientific and technological progress, green technological innovation, industrial structure optimization, environmental regulation, financial development, foreign trade and energy consumption.

A reduction of 55% is needed by 2030 to keep the goals of the Paris Agreement on track. Filling this gap will require rewiring high-emitting sectors around efficiency, circularity, and sustainability. Digital technology can help accelerate this transformation.

The United Nations’ Kyoto Protocol calls for a 5.2% decrease in greenhouse gas emissions from 1990 to 2012. The greenhouse gases mentioned mainly include CO2, CH4, N2O, PFCs, HFCs and SF6. The Paris Agreement’s long-term goal is to keep the rise in average world temperature to 1.5–2 °C below what it was throughout the industrial era.

At the 75th UN General Assembly, China publicly presented the double carbon goal, which aims to reach the peak of carbon emissions by 2030 and carbon neutrality by 2060. During the period from 2001 to 2010, China’s carbon emissions maintained the same high growth rate as its GDP, once reaching as high as 18%. 

Global warming is significantly impacted by traffic-related greenhouse gas emissions, which are increasing by around 16% per year in China. According to the Organization for Economic Co-operation and Development (OECD), China in 2019 was 24.6% lower than that in 2013, demonstrating that China has made great efforts and considerable contributions to reducing carbon emissions.

Digital Economy Adaptation Measures

In collaboration with the World Economic Forum, shows that digital technologies, if scaled across industries, could deliver up to 20% of the 2050 reduction needed to hit the International Energy Agency net-zero trajectories in the energy, materials and mobility industries. These industries can already reduce emissions by 4-10% by quickly adopting digital technologies. Energy, materials, and mobility constitute the three highest-emitting sectors, contributing 34%, 21% and 19% of total 2020 emissions respectively. 

In the energy sector, digital use cases can deliver up to 8% of greenhouse gas (GHG) reductions by 2050. This would be achieved via enhancing efficiency in carbon-intensive processes and enhancing energy efficiency in buildings, as well as by deploying and managing renewable energy using artificial intelligence powered by cloud computing and highly networked facilities with 5G.

In materials, digital use cases can provide up to 7% of GHG reductions by 2050. This would happen by improving mining and upstream production and relying on foundational technologies such as big data analytics and cloud/edge computing. And also by using cases leveraging block chain could enhance process efficiency and promote circularity.

In mobility, digital use cases could decrease up to 5% of GHG emissions by 2050. This would mean leveraging sensing technologies like IoT, imaging and geo-location to gather real-time data to drive system decision-making. It would ultimately improve route optimization and lower emissions in both rail and road transport.

Conclusion

Carbon emissions can be decreased through the growth of the digital economy, but it is also possible that regions with low carbon emissions are more inclined to develop digital technology, so raising the level of the digital economy’s development. The widespread implementation of digital technology spearheads the global fourth industrial revolution. As a competitive emerging global economy, China continues to spur the development of its Digital Economy (DE). 

The DE experienced notable growth in 2022, reaching 50.2 trillion Chinese yuan (CNY), with a yearly increase of 10.32%. These new industries, which focus on low-carbon development, have substantially integrated with the real economy, promoting an inclusive green transformation and achieving better development. The DE has become a crucial factor in high-quality economic development and addressing climate change.