AI economic gains likely to outweigh emissions cost, says IMF
An IMF report released at its annual spring meeting in Washington nonetheless noted that those output gains would not be shared equally across the world, and called on policymakers and businesses to minimise costs to broader society.
here.
"Despite challenges related to higher electricity prices and greenhouse gas emissions, the gains to global GDP from AI are likely to outweigh the cost of the additional emissions," it said.
"The social cost of these extra emissions is minor compared with the expected economic gains from AI, yet it still adds to the worrisome buildup of emissions," it said in the report titled "Power Hungry: How AI Will Drive Energy Demand".
Takeup of AI is seen driving a surge in demand for energy-intensive data processing power in coming years, even as the world struggles to keep promises on reducing carbon emissions.
The IMF report noted that the space dedicated to server-filled warehouses in northern Virginia, which has the world's largest concentration of data centres, was already roughly equivalent to the floor space of eight Empire State Buildings.
It estimated that AI-driven global electricity needs could more than triple to around 1,500 terawatt-hours (TWh) by 2030 - about the same as India's current electricity consumption and 1.5 times higher than expected demand from electric vehicles over the same period.
The carbon footprint of that rise will in part depend on whether tech firms can keep promises to slash emissions from data centres by increased use of renewables and other means.
COULD AI LEAD TO ENERGY EFFICIENCY GAINS?
The IMF estimated that strong takeup of AI would, under current energy policies, mean a global cumulative increase of greenhouse gas emissions of 1.2%, between 2025 and 2030. Greener energy policies would limit that increase to 1.3 Gt, it estimated.
Using a figure of $39 per ton to quantify the social cost of those emissions, it put that extra cost at $50.7 to $66.3 billion - smaller than the income gains associated with the 0.5% point annual boost to global GDP it said AI could yield.
Independent analysts say the economic and environmental impact of AI will depend to a large extent on how it is put to use - and notably whether it can lead to efficiency gains in energy use or more sustainable overall consumption patterns.
The Grantham Research Institute on Climate Change and the Environment said it could even lead to an overall reduction in carbon emissions if it accelerated advances in low-carbon technologies in the power, food and transport sectors.
"But market forces alone are unlikely to successfully drive AI's application toward climate action," said Grantham policy fellow Roberta Pierfederici.
"Governments, tech companies and energy companies must play an active role in ensuring AI is used intentionally, equitably and sustainably," she said, citing the need for R&D funding and policies to address inequalities exacerbated by AI advances.
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Reuters
an hour ago
- Reuters
Trump administration recommends location verification for AI chips
SAN FRANCISCO, July 23 (Reuters) - U.S. President Donald Trump's administration on Wednesday recommended implementing export controls that would verify the location of advanced artificial intelligence chips, a move that was applauded by U.S. lawmakers from both parties in both houses of Congress. The recommendation was part of a broader AI blueprint released on Wednesday that aimed to boost exports of AI hardware and software to U.S. allies and relax U.S. environmental rules to speed the construction of new AI data centers. But the plan released Wednesday also said the U.S. should continue denying access to advanced U.S. AI chips made by companies like Nvidia (NVDA.O), opens new tab and AMD (AMD.O), opens new tab to foreign adversaries. It added the U.S. government should "explore leveraging new and existing location verification features on advanced AI compute to ensure that the chips are not in countries of concern." The recommendation drew support from two lawmakers who previously introduced bills that would require location verification of chips after sale over concerns that they are finding their way to countries such as China, where their export is banned. Key details - such as how the technology would be implemented and how much cost it would add - remain to be worked out, both in the proposed bills and the Trump administration's recommendations. "I was encouraged to see that the recommended export control policy includes location verification mechanisms and aligns closely with our bipartisan Chip Security Act. I look forward to learning more of the technical details and next steps for end-use verification," Representative Bill Foster, an Illinois Democrat who helped introduce a chip-location bill in May, told Reuters. "Senator Cotton was pleased to see verification included in President Trump's AI Action Plan, as it's a vital part of his bipartisan, bicameral Chip Security Act and an important tool to keep advanced American technology out of the hands of Communist China," said Patrick McCann, a spokesperson for Senator Tom Cotton, an Arkansas Republican who introduced a similar bill in the U.S. Senate.
Reuters
an hour ago
- Reuters
Nvidia supplier SK Hynix plans to boost spending after record Q2 profit
SEOUL, July 24 (Reuters) - SK Hynix ( opens new tab flagged plans to boost spending this year after posting on Thursday a record quarterly profit, as the Nvidia (NVDA.O), opens new tab supplier seeks to alleviate investor concerns about slowing growth for artificial intelligence chipsets. The South Korean chipmaker said demand growth would be driven by new model launches by customers and that it was on track to double high-bandwidth memory (HBM) chip sales for the full year compared to 2024. Its shares climbed more than 3% in early trade, compared to the 0.8% rise in the benchmark South Korean KOSPI index (.KS11), opens new tab Hynix did not quantify its new investment plan for 2025. Ryu Young-ho, a senior analyst at NH Investment & Securities, said its proactive response to customer demand for next year appeared to reflect its confidence, as it faces major competition from Samsung Electronics ( opens new tab. At an earnings conference, SK Hynix also said it was in talks with a major customer regarding sales next year which are "proceeding as planned". It did not elaborate. In March, SK Hynix said it planned to finalise sales with customers for 2026 within the first half of this year. "SK Hynix foresees that increasing competition among big tech companies to enhance inference of AI models would lead to higher demand for high-performance and high-capacity memory products," it said in a statement. Chaotic U.S. policy and turbulence over tariffs have overshadowed the outlook for many companies, and SK Hynix said its earnings were helped by demand from customers to increase inventory ahead of potential tariffs. Earlier this month, U.S. President Donald Trump threatened to soon introduce tariffs on semiconductors. SK Hynix said in April that the proportion of its exports to the United States was not high, but analysts said the company could face pricing pressure from customers squeezed by U.S. tariffs. A much-anticipated meeting between U.S. and South Korean officials scheduled for Friday to discuss tariffs was cancelled. Hopes for a deal had risen after Japan and the United States reached a deal on tariffs this week. Hynix reported a 9.2 trillion won ($6.69 billion) operating profit for the April-June period, up 69% from 5.5 trillion won a year earlier. That compared with a 9.0 trillion won average forecast by LSEG SmartEstimate, which is weighted toward analysts who are more consistently accurate. Revenue rose 35% to 22.2 trillion won during the quarter. Its profit is double the quarterly operating profit expected by crosstown rival Samsung Electronics, which this month projected a worse-than-expected 56% plunge in second-quarter operating profit due to weak AI chip sales. SK Hynix overtook Samsung Electronics as the world's top memory chipmaker in the first quarter due to its leadership in HBM chips, a crucial component of AI chipsets designed by the likes of Nvidia that assist the processing of vast amounts of data to train AI models. After posting a series of record profits boosted by strong AI demand, SK Hynix is bracing for potential U.S. tariffs and rising competition from rivals in supplying advanced chips to Nvidia, analysts say. Last Thursday, SK Hynix saw its shares close about 9% lower after Goldman Sachs downgraded the stock to "neutral", expecting HBM prices would decline for the first time next year. Shares of SK Hynix are up 54.7% so far this year, outperforming the KOSPI's 32.7% rise. ($1 = 1,374.5800 won)
Reuters
an hour ago
- Reuters
Yen, euro lifted by progress on trade
SINGAPORE, July 24 (Reuters) - The euro crept toward its highest level in nearly four years on Thursday while the yen held to gains following more progress on trade deals between the United States and its largest trading partners, which in turn lifted the broader market mood. The European Union and the U.S. are moving towards a trade agreement that could include a 15% U.S. baseline tariff on EU goods and possible exemptions, two European diplomats said on Wednesday. That came on the heels of Washington's trade deal with Tokyo that lowers tariffs on auto imports and spares the latter from punishing new levies on other goods in exchange for a $550 billion package of U.S.-bound investment and loans. Global markets took to the latest developments positively, as risk assets rallied and investors sold the U.S. dollar. The risk-sensitive Australian dollar rose to an eight-month high of $0.6604 early on Thursday. The euro steadied at $1.1768, hovering near a high of $1.1830 it hit earlier this month, which marked its strongest level in more than three years. "These trade frameworks agreed between the U.S. and the major economies are definitely positive for risk sentiment," said Carol Kong, a currency strategist at Commonwealth Bank of Australia. "We actually anticipated a risk of the U.S. and the European Union getting into retaliation mode ... but that risk of a retaliation seems to have dissipated." Against the yen , the dollar dipped 0.03% to 146.38, extending its fall against the Japanese currency to a fourth straight session. While news of Japan's trade deal has lit a fire under domestic stocks, gains in the yen have been capped by lingering political uncertainty at home. Japanese Prime Minister Shigeru Ishiba denied on Wednesday he had decided to quit after a source and media reports said he planned to announce his resignation to take responsibility for a bruising upper house election defeat. "In the near term, the yen will still face headwinds from ongoing political uncertainty. We still don't know what Prime Minister Ishiba will do ... so I think there is still some uncertainty with regard to the fiscal outlook in Japan and Bank of Japan policy," said Kong. Elsewhere, sterling was firm at $1.3582, after having gained 0.36% in the previous session. The dollar index was last little changed at 97.21, while the New Zealand dollar dipped 0.01% to $0.6046. Trade negotiations aside, markets will also be focused on a rate decision from the European Central Bank later in the day. Expectations are for policymakers to stand pat on rates, though markets will look out for what they say regarding the outlook for monetary policy. Investors generally expect one more ECB rate cut by the end of the year, most likely in December.
