Climate policy and corporate artificial intelligence: Evidence from low-carbon city pilots in China

The Low-Carbon City Pilot (LCCP) program in China is a climate policy implemented at the city level, and its impact on the development of corporate artificial intelligence (AI) remains to be studied. The LCCP program aims to promote low-carbon transformation in multiple Chinese cities and serves as a quasi-natural experiment to determine whether similar city-level climate policies can foster the development of corporate AI. This study employs a multi-period differences-in-differences (DID) approach to evaluate the impact of China’s LCCP program on the development of corporate AI. By redirecting attention from national-level policies to city-level initiatives, this study provides unique insights into the localized effects of climate policies on technological innovation within firms. The research findings indicate that the LCCP program has a significant promoting effect on the development of corporate AI. These results underscore the potential of city-level climate policies, such as the LCCP program, to drive advancements in corporate AI technologies. By demonstrating a positive correlation between the implementation of the LCCP program and increased levels of AI development within companies, the study provides valuable insights into the intersection of environmental policies and technological innovation. Policymakers and businesses can use these findings to guide the design and implementation of initiatives aimed at promoting sustainable economic growth through enhanced AI adoption. This study not only contributes to the academic discourse on environmental policy and technological innovation but also offers practical recommendations for achieving a balance between environmental sustainability and technological advancement. •LCCP impact on corporate AI in China's cities evaluated using multi-period DID.•LCCP boosts corporate AI, showing positive correlation.•City-level climate policies drive AI, linking environmental policies and innovation.•Findings guide sustainable growth via enhanced AI adoption for policymakers and businesses.