A blessing or a curse? The impact of artificial intelligence innovation on corporate energy efficiency

This study examines how artificial intelligence (AI) innovation influences corporate energy efficiency and the underlying mechanisms. We develop a general equilibrium model incorporating energy input and endogenous AI technology to explain how AI innovation improves energy efficiency through production process optimization. Using a deep-learning-based text identification, we develop a firm-level measure of AI innovation for Chinese listed companies over the period 2008–2022. Our empirical results show that AI innovation significantly improves corporate energy efficiency, while the mechanism analysis provides evidence consistent with production process optimization as an important transmission channel. This positive effect is stronger among firms operating in key technological sectors and capital-intensive industries. Further, we find that disruptive AI innovation produces a larger effect than general AI innovation. We also document that local governments' attention to AI development and intra-firm data sharing strengthen the energy-efficiency gains associated with AI innovation. This study contributes to research on digital innovation and firm sustainability by showing how AI-driven innovation translates into efficiency-enhancing outcomes through organizational and data-governance mechanisms.