According to a new report by the International Monetary Fund (IMF), artificial intelligence (AI) has the potential to produce significant economic development that surpasses its environmental impact.

Despite growing worries about the energy demands of large-scale AI adoption, the paper forecasts that global GDP may grow by 0.5% a year between 2025 and 2030 due to AI integration, outweighing the potential environmental costs associated with higher emissions and energy consumption.

Economic Growth Outpaces Environmental Costs

At its annual spring conference in Washington, the International Monetary Fund (IMF) emphasized the revolutionary potential of artificial intelligence (AI) for the global economy. According to the IMF’s most recent report, AI is anticipated to boost global economic production by about 0.5% each year between 2025 and 2030.

While the expected advantages are significant, the research emphasizes that the benefits will not be fairly spread among countries and regions. It encourages both government and corporate sector leaders to implement solutions that reduce the greater socioeconomic consequences of this technological transformation.

The results follow increasing alarm over the climate footprint of AI technology, especially large language models and generative tools, which require vast amounts of processing power and energy consumption. But the IMF adds that if utilized prudently, AI can increase production, efficiency, and long-term sustainability.

The summary of the report notes:

“Our analysis of national accounts reveals AI-producing sectors in the U.S. have grown nearly triple the rate of the private non-farm business sector, with firm-level evidence showing electricity costs for vertically integrated AI companies nearly doubled between 2019-2023. Simulating AI scenarios in the IMF-ENV model based on projected data center power consumption up to 2030, we find the AI boom will cause manageable but varying increases in energy prices and emissions depending on policies and infrastructure constraints… Our findings highlight the importance of aligning energy policies with AI development to support this technological revolution, while mitigating environmental impacts.”

According to Reuters, Though AI’s energy consumption will probably grow, doubling electricity consumption to 1,500 terawatt-hours by 2030, the equivalent of India’s present yearly consumption, the related greenhouse gas emissions will expand by just 1.2% during the same timeframe, based on the IMF estimates. The economic contribution, on the other hand, could be much higher, with worldwide GDP gains potentially reaching more than $280 billion yearly.

Moreover, the social emissions cost, ranging from $50.7 billion to $66.3 billion, is insignificant compared to the estimated gains, rendering AI not only economically feasible but also environmentally sustainable.

AI Deployment Needs Sustainable Strategy

The research also emphasizes the urgent need for ecologically responsible AI adoption. With large-scale models putting additional burden on power networks, governments and private companies must emphasize energy-efficient structures and invest in renewable energy sources. Furthermore, infrastructure expansion, particularly in data centers, is changing energy demands.

The IMF estimates that if cleaner energy steps are not taken, AI uptake will add to the world’s greenhouse gas emissions by 1.2% from 2025 to 2035. With cleaner solutions, growth can be maintained at 1.3 gigatonnes. Though the switch will cost anywhere from $50.7 billion to $66.3 billion, it is offset by a predicted 0.5% boost in world GDP annually, thanks to AI growth.

As per experts, the actual effect of AI is contingent on its application, specifically whether it promotes energy efficiency and green habits. As per the Grantham Research Institute, AI can lower overall emissions by promoting low-carbon innovation in power, transport, and agriculture.