Digital economy in reducing energy inequality and enhancing energy security for environmental sustainability

Abstract

Energy inequality and energy security are critical challenges in developing nations, where rural-urban disparities and unreliable energy systems hinder socio-economic progress and environmental sustainability. Although the digital economy's role in addressing energy challenges has been discussed in previous studies, empirical evidence on its potential to reduce energy inequality and enhance energy security remains limited. Previous research has largely focused on energy access, efficiency, and energy transitions, often overlooking how broader digital transformation influences energy inequality and energy security, especially in developing countries. Furthermore, most existing studies rely solely on traditional econometric methods and lack a deeper analysis of the underlying mechanisms or regional heterogeneity. To fill these gaps, this study draws on the established literature to measure relevant indices and employs both econometric and machine learning techniques to provide a comprehensive analysis. This study analyzed data from 67 developing countries between 2001 and 2021. Using econometric and machine learning approaches, the findings show that a 1 % increase in digitalization reduces electricity access inequality by 0.26 %, clean cooking inequality by 0.13 %, and improves energy security by 0.17 %. These effects are particularly pronounced in regions with severe energy disparities, demonstrating the digital economy's capacity to advance energy equity and reliability while contributing to environmental sustainability. For example, in low-income and lower-middle-income countries, a 1 % increase in digital economy reduces energy inequality by 0.48 % and 0.56 %, respectively. Mediation analysis indicates that addressing income and gender inequalities amplifies the positive impact of the digital economy on energy outcomes. For instance, reducing gender inequality in empowerment enhances digitalization's effectiveness in bridging energy access gaps and improving reliability. This study emphasizes the integration of digital infrastructure with renewable energy systems as a strategic solution for mitigating energy disparities and enhancing energy security. Policymakers should prioritize investments in digital technologies designed for rural and underserved populations, foster digital literacy, and address socio-economic barriers, including income and gender inequalities. By adopting these strategies, governments can optimize the role of the digital economy in achieving equitable and secure energy systems, aligning with sustainable development goals, and promoting environmental sustainability.