Artificial intelligence and energy intensity in China’s industrial sector: Effect and transmission channel

Liang Liu, Kun Yang, Hidemichi Fujii and Jun Liu

Economic Analysis and Policy, 2021, vol. 70, issue C, 276-293

Abstract: The continued development of artificial intelligence (AI) has changed production methods but may also pose challenges related to energy consumption; in addition, the effectiveness of AI differs across industries. Thus, to develop efficient policies, it is necessary to discuss the effect of AI adoption on energy intensity and to identify industries that are more significantly affected. Using data on industrial robots installed in 16 Chinese industrial subsectors from 2006 to 2016, this paper investigates both the effect of AI on energy intensity and the channel through which this effect is transmitted. The empirical results show, first, that boosting applications of AI can significantly reduce energy intensity by both increasing output value and reducing energy consumption, especially for energy intensities at high quantiles. Second, compared with the impacts in capital-intensive sectors (e.g., basic metals, pharmaceuticals, and cosmetics), the negative impacts of AI on energy intensity in labor-intensive sectors (e.g., textiles and paper) and technology-intensive sectors (e.g., industrial machinery and transportation equipment) are more pronounced. Finally, the impact of AI on energy intensity is primarily achieved through its facilitation of technological progress; this accounts for 78.3% of the total effect. To reduce energy intensity, the Chinese government should effectively promote the development of AI and its use in industry, especially in labor-intensive and technology-intensive sectors.

Keywords: Artificial intelligence; Energy intensity; Energy consumption; Industrial robot; China (search for similar items in EconPapers)
Date: 2021
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (25)

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0313592621000370
Full text for ScienceDirect subscribers only

Related works:
Working Paper: Artificial Intelligence and Energy Intensity in China’s Industrial Sector: Effect and Transmission Channel (2021)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:ecanpo:v:70:y:2021:i:c:p:276-293

DOI: 10.1016/j.eap.2021.03.002

Access Statistics for this article

Economic Analysis and Policy is currently edited by Clevo Wilson

More articles in Economic Analysis and Policy from Elsevier
Bibliographic data for series maintained by Catherine Liu ().