AI Adoption, Carbon Intensity, and Rebound Effect: Evidence from China

Sébastien Houde and Wenjun Wang

No 12803, CESifo Working Paper Series from CESifo

Abstract: This paper investigates the relationship between AI adoption and carbon emission intensity. Using micro-level data from Chinese firms, we find that carbon intensity decreases following the adoption of AI. The effect is particularly pronounced among large firms, those headquartered in AI hubs, and those in high-carbon intensity sectors. We investigate several mechanisms and find that AI adoption is also associated with increases in energy management processes, green innovation, inventory efficiency, overall productivity, and the share of specialized labor. We find that AI-induced carbon reductions are subject to a large rebound effect of approximately 70%.

Keywords: artificial intelligence; carbon emissions; energy intensity; green innovation (search for similar items in EconPapers)
JEL-codes: D22 L11 O33 Q54 Q55 (search for similar items in EconPapers)
Date: 2026
New Economics Papers: this item is included in nep-mac and nep-sbm
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