The International Monetary Fund raised alarms on Tuesday about the escalating electricity demands of artificial intelligence data centers, warning that the surge could challenge global energy infrastructure, drive up prices, and increase carbon emissions.

In a statement, the IMF highlighted AI’s transformative potential to boost global economic growth by reshaping productivity, employment, and investment.

However, this upside comes with a significant catch: a sharp rise in energy consumption, particularly from data centers powering AI models and cloud computing.

Citing estimates from the Organization of the Petroleum Exporting Countries, the IMF noted that data centers consumed approximately 500 terawatt-hours (TWh) of electricity in 2023—more than double the annual average between 2015 and 2019.

By 2030, this figure could triple to 1,500 TWh, matching the current electricity use of India, the world’s third-largest power consumer.

For context, data centers already rival the electricity consumption of major economies like France or Germany and could outpace electric vehicles’ power demand by 1.5 times in the next five years.

The United States, home to the world’s largest cluster of data centers, is projected to lead this energy surge.

McKinsey & Co. forecasts that U.S. server farms’ electricity use could soar to over 600 TWh by 2030, more than tripling current levels, fueled by the boom in AI applications and cloud infrastructure.

The IMF cautioned that inadequate investment in energy infrastructure could undermine AI’s economic promise, urging policymakers to act swiftly to bolster national grids.

If electricity demand increases without a timely response, it could lead to higher energy prices, negatively impacting consumers, businesses, and stalling AI development.

Unreliable or expensive energy could also discourage investment in AI, particularly from tech infrastructure providers, delaying progress in the sector.

“Increasing electricity demand from the technology sector will stimulate overall supply, which, if responsive enough, will lead to only a small increase in power prices.

“More sluggish supply responses, however, will spur much steeper cost increases that hurt consumers and businesses and possibly curb growth of the AI industry itself,” the IMF stated.

The environmental impact of AI’s growing electricity demand is concerning. The IMF predicts that AI-related energy use could add 1.7 gigatons of global greenhouse gas emissions from 2025 to 2030, roughly equivalent to Italy’s total energy-related emissions over five years.

With the full impact of AI on electricity demand still uncertain, the IMF calls for proactive policy measures.

“Implementing policies that incentivize multiple energy sources can enhance electricity supply, help mitigate price surges and contain emissions,” it stated.