AI poses climate challenges but offers even greater environmental gains
Fascinating developments are unfolding in the climate sphere. Currency strategists at Bank of America (BofA) have drawn attention to the rising climate-related costs associated with artificial intelligence (AI). "However, fivefold sustainability gains promise relief," the experts add.
The growing energy demand from AI is raising concerns among specialists due to the potential doubling of carbon emissions by 2035. Nevertheless, BofA analysts argue that this technology can help optimize energy use. Moreover, it has the capacity to offset its significant carbon footprint. A surprising revelation indeed.
Preliminary estimates suggest that over the next decade, global electricity demand from data centers will triple. The reason is the explosive growth and application of artificial intelligence. This figure is expected to reach 1,300 terawatt-hours, which is equivalent to the entire electricity consumption of Japan. This means that by 2035, the planet could see 300 million metric tons of carbon dioxide emissions, which is almost twice the current level.
However, BofA analysts propose using this technology as a "remedy" to improve the climate. "AI may double its CO₂ emissions by 2035 but cut five times more by optimizing energy use and strengthening grid reliability," the analysts said. At the same time, the scaling of AI applications could help save up to 1,500 million tons of carbon dioxide globally. "Even as AI accelerates energy consumption, the potential for climate benefits is massive if the technology is harnessed to its full potential," the experts emphasize.
Results from pilot projects show that AI-powered models reduce building energy use by up to 30%, enhance the intelligence of HVAC systems, and significantly cut emissions from global shipping. Preliminary projections suggest that by 2026, AI could generate up to $150 billion in annual savings in the US healthcare sector, primarily by improving system efficiency.
However, AI is neither a cure-all for climate change nor a new industrial polluter, BofA notes. "It is a tool whose ultimate environmental footprint will depend on how quickly and broadly it’s deployed to tackle real-world inefficiencies," analysts state.
At the same time, climate transition-focused investors should keep in mind that electricity bills will rise with AI adoption. Nevertheless, this technology marks a new chapter in the global climate story.
"Whether we like it or not, artificial intelligence is one of the biggest tech revolutions ever... but could also be the solution to many of the challenges we face. It is a game-changer for sustainability as it reshapes industries and becomes a catalyst for climate action, social progress, and economic growth," BofA said.