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How does artificial intelligence affect manufacturing firms' energy intensity?

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  • Li, Hongyu
  • Lu, Zhiqiang
  • Zhang, Zhengping
  • Tanasescu, Cristina

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.

Suggested Citation

  • Li, Hongyu & Lu, Zhiqiang & Zhang, Zhengping & Tanasescu, Cristina, 2025. "How does artificial intelligence affect manufacturing firms' energy intensity?," Energy Economics, Elsevier, vol. 141(C).
    • Handle: RePEc:eee:eneeco:v:141:y:2025:i:c:s0140988324008181
    DOI: 10.1016/j.eneco.2024.108109
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    • G30 - Financial Economics - - Corporate Finance and Governance - - - General
    • O30 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - General
    • O32 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Management of Technological Innovation and R&D
    • Q50 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - General
    • Q56 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environment and Development; Environment and Trade; Sustainability; Environmental Accounts and Accounting; Environmental Equity; Population Growth
    • Q58 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Government Policy

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