AI Adoption and Carbon Emissions: Firm-level Analysis
Published:
This paper investigates the relationship between AI adoption and carbon emissions intensity. Using a micro-level dataset of Chinese firms, we find that a firm’s carbon intensity decreases following the adoption of AI. The effect is particularly pronounced among large firms, those headquartered in regions near an AI hub, and those in high-carbon industries. We investigate several mechanisms and find that AI adoption is associated with increases in energy management processes, green innovation, inventory efficiency, overall productivity, and the share of specialized labor. Finally, we show that AI-induced carbon reductions are subject to a rebound effect of about 50%.