Smarter and Cleaner: The Digital Economy and Environmental Pollution

Abstract The ongoing diffusion of digital technology into socio‐economic activity has triggered hopes of minimizing environmental pollution. This research aimed to investigate the relationship between the digital economy and the intensity of SO 2 pollutant emissions and to examine the mechanism that explains how digitalization leads to the reduction of pollutants from the perspective of environmental regulations. We applied the criteria importance through intercriteria correlation approach to construct a comprehensive index system to measure the digital economy in China. Then we examined the correlation between the digital economy and SO 2 pollution intensity. To analyze the mechanism, we investigated the moderating effect of environmental regulations and also took macroscopic mechanisms (such as innovation and industrial structure) into consideration. Our empirical results indicated that the digital economy had a negative effect on SO 2 pollution intensity. The negative impact was greater for medium‐sized provinces with abundant resources in eastern and southern China. We also found that environmental regulations (e.g., environmental legislation and environmental penalties) moderated the impact of the digital economy on SO 2 pollution intensity, and the same was true for several macro mechanisms (e.g., innovation, industrial structure, and labor productivity, etc.). This has implications for how the government implements environmental regulations in the future.