Digitalization, innovation and renewable energy transition in Nordic region: a driscoll standard error analysis

This study examines the associations between digitalization, innovation, and the transition toward renewable energy in the Nordic region using a panel-econometric framework covering the period from 2000 to 2024. A fixed-effects estimator with Driscoll-Kraay standard errors is applied to address heteroskedasticity, autocorrelation, and cross-sectional dependence across five Nordic economies. Unit-root and cointegration tests confirm a long-run equilibrium relationship among renewable energy use, internet penetration, R&D investment, trade openness, CO2 emissions, and energy use. The results indicate statistically significant associations, where higher levels of digitalization, innovation, trade openness, and energy demand correspond with a greater share of renewable energy, whereas higher CO2 emissions are inversely related. The robustness of these associations is supported by PCSE, FE-OLS, and Difference-GMM estimations, while Dumitrescu-Hurlin causality tests suggest dynamic interdependencies among renewables, innovation, and emissions. Within the Nordic context, the findings imply that digital integration, innovation capacity, and institutional coordination are important factors accompanying the region’s renewable energy transition. The study concludes that digital infrastructure, targeted R&D support, and coordinated trade frameworks may strengthen ongoing sustainability initiatives, although the relationships observed should be interpreted as context-specific statistical associations rather than universal causal effects.