The Bank for International Settlements published a paper assessing how artificial intelligence could both support and hinder the climate transition. AI can improve energy efficiency, resource allocation, climate forecasting and risk management, but its computational demands increase electricity use, emissions and pressure on power grids. The net effect will depend on whether efficiency gains outpace expanding AI use, the carbon intensity of additional electricity and the extent to which productivity gains drive greater economic activity and resource consumption. Under a scenario in which AI mainly supports human decision making, the benefits and environmental costs are likely to emerge gradually. Artificial general intelligence could amplify both, making climate outcomes more uncertain. For central banks, these developments could affect potential output, energy prices, inflation and assessments of economic slack, while financing for data centers and energy infrastructure could create financial stability risks if expected returns do not materialize or carbon intensive investment raises transition exposure. The paper highlights priorities including better measurement and disclosure of AI's environmental footprint, more energy efficient systems and infrastructure, and greater international cooperation.
Bank for International Settlements paper finds AI's net climate impact uncertain and outlines central bank implications
A Bank for International Settlements paper finds that AI could aid climate mitigation and adaptation while increasing electricity demand, emissions and resource use. Its net climate effect remains uncertain and could influence central bank assessments of potential output, inflation and financial stability. The paper highlights the need for better environmental measurement, more efficient AI systems and sustainable energy infrastructure.