Internet infrastructure, digital development and urban energy efficiency

Abstract

China exhibits suboptimal energy efficiency levels in comparison to developed countries, while the advancement of internet infrastructure might lead to a notable enhancement in energy efficiency. We take the implementation of China's broadband pilot policy (BCPP) as an exogenous policy shock and use a difference-in-differences (DID) model to investigate how BCPP affects urban energy efficiency and underlying mechanisms. We find that in the pilot regions, the BCPP significantly improves urban energy efficiency. After employing instrumental variable methods to mitigate endogeneity issues, the results remain robust. The further mechanism analysis indicates that the implementation of BCPP improves energy efficiency through the digital elements dividends (i.e., digital talents, digital capital, and digital technology) induced by internet development. Additionally, the heterogeneity results unveil that BCPP has a more significant promotion effect on energy efficiency in cities on the right side of the Hu Huanyong line and in cities with high administrative levels and a smaller share of secondary industry output. However, the policy effect of BCPP on urban energy efficiency is less significant in resource-based cities and old industrial-based cities. These findings provide some policy implications for the coordinated development of “digital-energy” and a scientific basis for accelerating the transformation of energy structure.