How does artificial intelligence affect manufacturing firms' energy intensity?

Hongyu Li, Zhiqiang Lu, Zhengping Zhang and Cristina Tanasescu

Energy Economics, 2025, vol. 141, issue C

Abstract: This paper investigates the effects of artificial intelligence (AI) on manufacturing firms' energy intensity (EI) by examining the substitutive role of AI in factor inputs. We assess how AI advancements and the assimilation can improve productivity and enhance energy efficiency, potentially reducing EI. Using a dataset of Chinese listed manufacturing companies from 2006 to 2020, this study quantifies AI adoption through text analysis of firms' annual reports. The findings indicate that AI applications can significantly improve production efficiency and energy efficiency, thereby significantly diminishing firms' EI. This trend is more pronounced for private sector companies and for firms in cities not included in the smart city pilot project. The study concludes with policy recommendations to advance energy conservation and emissions reduction.

Keywords: Artificial intelligence (AI); Energy intensity (EI); Production efficiency; Energy efficiency (search for similar items in EconPapers)
JEL-codes: G30 O30 O32 Q50 Q56 Q58 (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:eee:eneeco:v:141:y:2025:i:c:s0140988324008181

DOI: 10.1016/j.eneco.2024.108109

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