IMF: AI Economic Boost to Outweigh Carbon Emissions Costs by 2030
The International Monetary Fund (IMF) has projected that artificial intelligence (AI) will significantly boost global economic output over the next decade. According to its latest report, AI is expected to increase global GDP by around 0.5% annually between 2025 and 2030. These gains are anticipated to surpass the environmental costs caused by rising carbon emissions from energy-intensive data centres.
Global Gains with Uneven Distribution
The IMF’s findings, presented during its spring meeting in Washington, stress that while AI will deliver strong economic benefits, these will not be evenly shared across countries. The report, titled “Power Hungry: How AI Will Drive Energy Demand”, highlights the need for governments and businesses to adopt inclusive and sustainable strategies.
Despite concerns over electricity prices and greenhouse gas emissions, the economic upside of AI is seen as dominant. Still, the IMF warned that even modest increases in emissions contribute to the global climate challenge.
AI to Drive Energy Demand Surge
One of the key issues raised is the rising demand for electricity. AI development requires significant computing power, most of which is housed in data centres. The report cited northern Virginia as a major hub, where data centre floor space already matches eight Empire State Buildings.
Global electricity demand linked to AI could triple by 2030, reaching 1,500 terawatt-hours (TWh). This figure is equivalent to India’s current electricity usage and exceeds expected electric vehicle consumption over the same period by 50%.
Whether this increase results in high emissions will depend largely on the energy sources used. Tech firms have pledged to transition to renewable energy, but the pace and scale of this shift remain uncertain.
Balancing Innovation and Sustainability
The IMF estimates that the cumulative increase in emissions from AI could reach 1.2% by 2030 under existing energy policies. Greener approaches could cap this rise at 1.3 gigatonnes. Using a $39 per tonne cost of carbon, this would equate to a financial burden of $50.7 to $66.3 billion—far less than the GDP gains expected from AI.
Experts argue that AI’s real environmental impact will depend on how it is applied. Used wisely, AI could promote energy efficiency and speed up progress in low-carbon sectors like transport and agriculture.
Roberta Pierfederici from the Grantham Research Institute noted that AI might even reduce total emissions if directed towards sustainable innovation. However, she stressed that this outcome is unlikely without active government and industry intervention.
Policymakers must guide AI adoption to ensure it supports climate goals and reduces inequality. This includes investing in research, regulating energy use, and crafting fair technology policies.
with inputs from Reuters