DIGITALIZATION AND ENERGY INDICATORS IN THE EUROPEAN UNION

Abstract

Digitalization is increasingly recognized as a key driver of energy efficiency, renewable energy development, and the decarbonization of energy systems. Artificial intelligence, the Internet of Things, big data analytics, smart grids, and digital twins contribute to more efficient energy generation, transmission, and consumption while enhancing resource management and reducing operational costs. Nevertheless, significant differences remain among the EU Member States regarding their levels of digitalization, energy efficiency, renewable energy deployment, and greenhouse gas emissions. Assessing these differences is essential for designing effective policies that support both the digital and green transitions. The aim of this study is to develop the multidimensional measurement framework and to assess the EU Member states according to their digitalization, energy, and emissions performance. The analysis is based on the Eurostat data covering the period from 2010 to 2023. This study examines digitalization, energy and environmental sustainability in the 27 European Union Member States using the Eurostat data for 2010–2023. Principal component analysis was employed to reduce the dimensionality of the selected indicators and identify the key underlying dimensions, while hierarchical cluster analysis was applied to classify countries according to their digital, energy, and environmental characteristics. The four composite indicators were developed: energy intensity, renewable energy, digital innovation capacity, and digital business. EU Member States were classified into four groups with distinct development profiles. The Leaders cluster demonstrates the highest levels of digitalization and innovation capacity, while the Followers are characterized by strong digital business performance and highly developed economies. The Moderate group exhibits intermediate levels of technological and environmental performance, whereas the Modest group consists mainly of countries with comparatively lower digital innovation capacity and digital business development. The main contribution of this study is the development of a multidimensional framework integrating digitalization, energy, and environmental indicators to evaluate country’s performance and identify policy priorities. This analysis can help identify areas requiring improvement and support policy decisions aimed at maximizing the benefits of digital transformation for energy efficiency, penetration of renewables and environmental sustainability in separate countries and the whole region. The proposed framework offers a comprehensive approach for benchmarking EU Member States, identifying strengths and weaknesses, and supporting evidence-based policymaking aimed at accelerating digital transformation, improving energy efficiency, expanding renewable energy deployment, and achieving the European Union's climate neutrality and sustainable development objectives.