
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

Finextra
15 minutes ago
- Finextra
FNZ signs five-year cloud and AI deal with Microsoft
FNZ, a leading end-to-end wealth management platform has today announced a global, five-year strategic partnership with Microsoft to transform the wealth management industry through technology, innovation and AI-driven digital solutions. 0 The partnership combines FNZ's industry-leading technology, wealth management expertise and global reach with Microsoft's advanced AI capabilities, cloud infrastructure and engineering excellence. By integrating Microsoft Azure AI Foundry at the heart of its platform, FNZ is redefining how financial institutions, advisors and their clients interact by delivering more personalized, intelligent and resilient digital wealth management experiences. This collaboration with Microsoft accelerates this transformation by helping FNZ bring new solutions to market faster, enhance client outcomes, boost advisor productivity and drive innovation across industry. With more than 650 financial institution partners, over 26 million end investors and close to $2 trillion in assets under administration, FNZ brings scale to the partnership. This provides access to one of the largest wealth management data sets in the world, enabling the powerful application of AI, cloud technologies and analytics to deliver deeper insights, greater personalization and better outcomes for advisors, clients and institutions alike. Through the partnership, FNZ will work with Microsoft to deliver advanced AI tools, drive new technology development and collaborate on joint go-to-market initiatives, including: • Creating a next-generation advisor and investor experience: FNZ will integrate Azure AI Foundry capabilities, including Azure OpenAI in Foundry Models, into its market-leading platform to provide enhanced personalization, greater efficiency and a next-generation user experience. • Innovative applications for data and analytics: FNZ will utilize Microsoft Fabric to strengthen its data and analytics capabilities, delivering deeper insights tailored to the unique needs of wealth managers and advisors. • Co-development and joint engineering: FNZ will develop new digital wealth solutions by embedding Azure AI Foundry into FNZ's global platform. Joint engineering teams will accelerate product innovation, enhance platform intelligence, and deliver secure, scalable services that strengthen risk management, compliance and resilience. FNZ will also deploy GitHub Copilot across its engineering teams to boost developer productivity and innovation. • Resilience and scalability: By combining FNZ's market-leading platform and delivery capabilities with Microsoft's technologies and tooling, the partnership will help create more resilient, scalable and industrial-strength solutions for financial institutions. • Enhancing operational efficiency: FNZ will also deploy Microsoft 365 Copilot and intelligent agents to support middle- and back-office processes. • Global joint go-to-market: FNZ will collaborate with Microsoft on joint go-to-market activities, including the development and deployment of modular wealth solutions through multiple channels, including the Microsoft Marketplace, alongside coordinated global marketing initiatives and joint participation in industry events. Roman Regelman, Group President, FNZ, said: "FNZ has always been at the forefront of innovation in wealth-management technology. Partnering with Microsoft allows us to accelerate our AI-led roadmap and enhances our ability to deliver personalized, intelligent and resilient solutions to our clients, strengthening our position of leadership." "Together, we are not just upgrading technology. We are setting a new standard for how wealth management is delivered. Partnering with Microsoft further advances our mission to open up wealth, by making investing more accessible to more people worldwide." Bill Borden, Corporate Vice President, Worldwide Financial Services, Microsoft, said: 'Our partnership brings together Microsoft's AI and cloud technologies with FNZ's global platform and expertise in wealth management to deliver insights that will lead to more impactful and personalized experiences for advisors and their clients. Together, we're helping financial institutions lead as Frontier Firms by reimagining their operations through agentic AI, accelerating innovation, and unlocking new value across the wealth management ecosystem.' FNZ is backed by some of the world's largest institutional shareholders, including Caisse de dépôt et placement du Québec (La Caisse), Canada Pension Plan Investment Board (CPP Investments), Generation Investment Management and Motive Partners.

Finextra
15 minutes ago
- Finextra
No AI? No exit, says investment bank Artis Partners
Fintechs that fail to embed AI into their operating model will find it increasingly difficult to orchestrate an exit, according to investment bank and tech advisory firm Artis Partners. 0 Embedded AI has become a fundamental trigger for enterprise software acquisitions, reshaping how strategic buyers select targets, according to Victor Basta, managing partner at Artis Partners. 'Without a deeply embedded AI story, soon it will probably become impossible for any digital-first business to succeed in terms of getting an exit,' he says. Most strategic buyers — particularly mid-market public companies and larger private equity-backed platforms — are acquiring businesses which have successfully embedded AI into their product functionality and operational delivery, says Basta. 'These companies don't manifest as AI businesses. They're not on a Gartner AI list,' he adds. 'But that capability 'under the hood' is exactly what buyers are chasing. It's about acquiring businesses with customers, product, and domain strength, but with AI capability already built in.' This marks a clear shift from 12 months ago, when AI-native model-builders and enterprise software companies operated in separate market segments. Today, strategic buyers no longer separate these categories, as adoption quickly becomes more use case driven rather than infrastructure led. Additionally, buyers are assigning higher valuations based on perceived differences in how deeply companies have embraced AI credibly. Recent deals Artis advised on highlight this dynamic. Ravelin Technology, acquired by Worldpay, leverages embedded AI for merchant fraud detection. Likewise, businesses as diverse as digital mental health platforms and HR enabling software are in the process of being acquired based on their ability to support customers with AI capability tuned to their specific use case. Neither of these examples would position themselves as AI-native, yet embedded AI significantly underpins their strategic value. 'In a year or two, there will be no software that isn't AI, so the current distinctions driving exit values will no longer apply, but for the moment it is making the difference between prices of 100 and 200 for similar businesses,' says Basta. 'Buyers understand this and are acting now to build capability from within.'


Reuters
an hour ago
- Reuters
Climate, gender in focus for World Bank in aid-reliant Pacific Islands
SYDNEY, July 28 (Reuters) - The World Bank has maintained its focus on climate change and gender in the Pacific, managing director of operations Anna Bjerde said on a visit to Australia, even as its largest shareholder the United States reduces aid in those areas. After meeting Pacific Islands economic ministers in Fiji, Bjerde said countries in the region continued to worry about being exposed to the accelerating effects of climate change, and had grave concerns about food security and rising debt levels. Six Pacific Island countries are at high risk of debt distress, the bank says. The World Bank is moving a regional vice president from Washington to Singapore, and will move directors from Australia to Fiji and Papua New Guinea to be closer to a $3.4 billion Pacific aid programme that has grown seven-fold in 10 years, she said in an interview on Monday. "We are committed to designing projects that really take into account the vulnerabilities of countries we work in. In this part of the world, countries are vulnerable to the impact of climate change," she said. "We haven't really changed our language around that," she added. Pacific road projects designed to be flood resilient provide better infrastructure that can withstand the changing climate and also be counted in climate finance programmes, Bjerde said. The World Bank was focussed on boosting women's workforce participation to help lift the region's economic growth, she said, after meeting women leaders in Fiji who highlighted the need for childcare so women can work. On Monday, Bjerde also met officials from the Australian government, the largest bilateral donor to the region. Under reforms introduced last year by its president Ajay Banga, the World Bank has started to roll out region-wide programmes to have a bigger impact among Pacific countries with small populations. Eight countries have joined an arrangement that stops small island states being cut off from the international financial system, while a health programme targeting non-communicable disease will potentially reach 2 million people across the Pacific Ocean and train 16,000 health workers. A trade programme is also being designed to give access to goods faster and more cheaply, she said.