Digitalization efforts in low-income countries fail to reduce carbon emissions and can even make environmental outcomes worse.
Digitalization only helps the environment within a specific middle-income sweet spot. Advanced economies see diminishing returns from new tech while the poorest nations see no climate benefit at all. The blanket assumption that a digital transition is a universal win for the planet ignores these national differences. Policymakers in developing regions may be wasting resources on tech solutions that do not move the needle on CO2. True decarbonization depends more on a country's starting income level than its internet penetration.
Can Digitalization Help Decarbonize? Evidence from Causal Forest Analysis
SSRN · 6107766
Digital transformation promises decarbonization, but global data centers now emit more CO2 than the aviation industry—raising a critical question: Does digitalization actually reduce emissions, or merely displace them? This paper provides causal evidence that the answer depends fundamentally on where you look. Using a Causal Forest framework (2,000 trees with rigorous overfitting controls: honest splitting, country-clustered cross-fitting) on a panel of 40 major economies (2000–2023, N=840), we