Information Technology Investment and Carbon Intensity in the Era of Cloud Computing: A Cross-National Study

To tackle climate change in the digital economy, there has been increasing attention to the role of information technology (IT) investment in decoupling economic growth from greenhouse gas emissions, or reducing carbon intensity. This research examines the impact of cloud computing on carbon intensity and further scrutinizes how the advent of cloud computing has altered the relationship between IT capital and carbon intensity. We combine data on IT capital stock for 51 countries during 1995-2014 with a natural experiment involving the staggered launches of cloud data centers across countries. Our preliminary findings suggest that cloud on-ramps availability is positively associated with carbon intensity, whereas it negatively moderates the impact of IT capital on carbon intensity. Taken together, our preliminary evidence implies that the environmental impact of cloud computing may not be as adverse as conjectured if we factor in its indirect effect on making overall IT capital greener.