Impacts of digitalization on energy security: evidence from European countries

Abstract

We are the first to empirically analyze the nexus of digital transformation and energy security (ES). This paper utilizes six indicators to reflect three aspects of ES, including acceptability, develop-ability, and sustainability. Applying the panel-corrected standard errors (PCSEs) and the feasible generalized least square estimates (FGLS) model to the international sample of 27 European countries over 2015 to 2019, this research reveals exciting findings. First, a promotion in digital transformation causes a significantly positive effect on the acceptability and sustainability of ES but a negative impact on develop-ability of ES. Second, the ES positively affects the digital transformation, especially the digital transformation in the business and public sectors. Third, results obtained from the dynamic fixed effects (DFEs) estimator for the autoregressive distributed lag (ARDL) method suggest that setting ES goals toward reducing energy consumption and pollution emission promotes the digital transformation process in the business sector of countries in the short run, while the promotion of renewable energy consumption helps countries enhance the digitalization process in the long run. Notably, digitalization is beneficial for sustainable economic development, reflected by a rise in non-fossil and renewable energy consumption and a diminish in CO2 emission, especially in the long run. Fourth, there is a nonlinear effect of the online transaction and digital public services on the acceptability, develop-ability, and sustainability of ES. In a similar spirit, the digital transformation is also accelerated more quickly if the efficiency of the energy system reaches a certain point.