AI’s $15.7 trillion global prize comes at a growing environmental cost
A new report from KPMG warns that while the economic benefits of artificial intelligence (AI) could reach dazzling heights, the opportunity comes with a rising environmental cost. Addressing that impact has become a strategic necessity – one that governments and businesses must begin tackling today.
The report, titled ‘The AI and Sustainability Paradox’, highlights the broad range of benefits AI can deliver. From accelerating medical research and improving access to education, to strengthening logistics networks and helping cities become smarter, AI is emerging as a powerful tool capable of unlocking productivity, driving innovation, automating repetitive tasks, and improving quality of life across industries.
$15.7 trillion on the table
According to the report, AI has the potential to contribute $15.7 trillion to the global economy by 2030. For comparison, that figure is roughly 28 times larger than the entire economy of the United Arab Emirates, and 15 times the size of the Saudi economy.
“Artificial intelligence is rapidly reshaping economies, industries, and everyday life at a pace few technologies have achieved before. Governments and businesses are investing heavily to capture these benefits, seeing AI as a catalyst for competitiveness, efficiency, and long-term growth,” said Tareq Dreiza, Partner and Head of AI and Technology Enablement at KPMG.
That massive opportunity, however, will not be captured evenly across countries and sectors. Economies with strong institutions, advanced digital infrastructure, skilled talent pools, and effective governance frameworks are expected to secure the greatest share of value. Those lacking readiness risk being left behind – remaining consumers of AI technologies rather than benefiting from them at a strategic and sovereign level.
“The $15.7 trillion figure is not a gift to be claimed; it is a reward for readiness,” Dreiza noted. “The economies and organizations that will capture the largest share of AI’s value are those investing today in skills, infrastructure, and governance. The challenge lies in building institutional capacity quickly enough to convert AI’s potential into lasting advantage.”
The environmental cost
Alongside AI’s rapid growth come several challenges, including scaling infrastructure, ensuring trust and transparency, and managing the environmental impact. KPMG’s report focuses on the latter, highlighting the enormous investments in physical infrastructure and computing power required to support AI systems, as well as the significant electricity and water consumption needed to operate the data centres powering AI.
“The infrastructure required to sustain that growth is placing unprecedented pressure on electricity grids, water resources, and environmental systems,” said Fadi Al-Shihabi, Partner and Head of Sustainability Solutions at KPMG.
The numbers are striking. Data centres currently consume approximately 1.5% of global electricity demand, equivalent to around 415 terawatt-hours in 2024. By 2030, that figure is projected to nearly double to 945 terawatt-hours. Water consumption is expected to follow a similar trajectory, rising from around 560 billion litres annually today to approximately 1.2 trillion litres by the end of the decade.
Such levels of electricity and water consumption are creating increasing pressure on local grids and natural resources, particularly in regions already facing environmental constraints.
The impact extends beyond energy and water use. Large-scale data centres can span hundreds of acres, at times replacing farmland or encroaching on ecologically sensitive land. As a result, the report argues that data centre planning must be integrated into broader urban and regional development strategies to balance digital growth with environmental and social priorities.
The way forward
To address the strategic and environmental implications of data centre expansion, KPMG outlines several recommendations.
The first is establishing transparent measurement standards that distinguish AI workloads from broader data centre activity. This is particularly important because KPMG’s review of 11 major data centre operators found that none clearly disclosed how much of their electricity and water consumption was directly linked to AI workloads.
In other words, the data centre industry still faces a significant transparency gap around its environmental footprint.
“This means that policymakers, investors, and businesses are trying to manage one of the fastest-growing industrial transformations in history without fully understanding its environmental footprint,” said Al-Shihabi. “Greater transparency is a strategic necessity for governments, investors, regulators, and other stakeholders.”
The report also calls for building institutional capacity to ensure AI adoption creates durable economic value, while strengthening international cooperation around ethics and safety to maintain public trust in the technology.
Finally, KPMG advocates accelerating investment in renewable energy sources capable of supporting the growing demands of data centres and digital infrastructure.
“The decisions we make today about where and how to site data centres will shape our sustainability trajectory for decades,” Al-Shihabi said. “This is not an argument against AI. It is an argument for deploying it with eyes open – powered by renewables, sited responsibly, and held to transparent standards.”
