Investigating the nonlinear carbon reduction effect of AI: empirical insights from China’s provincial level

Abstract

In the context of rapid advancement in automation and increasing global warming, understanding the impact of artificial intelligence (AI) on carbon emissions (CES) is a cutting-edge research topic. However, there is limited focus in existing research on the nonlinear carbon reduction effect (CRE) of AI. This paper first theoretically elaborates the dual impact mechanisms of AI on CES and illuminates the nonlinear carbon reduction mechanisms of AI. Then, this study employs panel data encompassing 30 Chinese provinces between 1997 and 2019 to empirically test the net effect of AI on CES and the nonlinear carbon reduction effect of AI through econometric models. The results are as follows: first, although AI can both reduce and increase CES, AI primarily helps decrease CES. This conclusion holds true even after considering robustness, endogeneity, and spatial heterogeneity. Secondly, relative to the central and western regions, AI has significant achievement in reducing carbon intensity and per capita CES in the eastern region. However, there is still room for improvement in terms of reducing the total CES in the eastern region. Thirdly, improving the AI development level (AIDL) can magnify the marginal CRE of AI and lead to a nonlinear CRE of AI. Lastly, even if the AIDL remains constant, improving the level of marketization, human capital, digital infrastructure, economic development, openness, and government intervention can also amplify the marginal CRE of AI and lead to a nonlinear CRE of AI. To fully harness the potential of AI for green development, concerted efforts should be directed towards enhancing the innovation and application of AI technologies with carbon reduction potential.