BIS paper weighs AI's climate benefits against its own energy footprint

A BIS working paper by Leonardo Gambacorta and Salvatore Polizzi examines the two-way relationship between artificial intelligence and climate change. It covers AI's direct environmental footprint, its potential contribution to mitigation and adaptation, rebound effects, and two stylised scenarios for how capabilities might evolve. The authors set out why the AI-climate nexus bears on potential output, inflation and financial stability.

• BIS Paper 174 was published on 8 October 2026 and runs to 27 pages, authored by Leonardo Gambacorta and Salvatore Polizzi.
• The paper finds AI can improve energy efficiency and climate forecasting while its development raises electricity demand and, depending on carbon intensity and timing, associated emissions.
• The authors assess two stylised scenarios: an AI copilot path with gradual build-up and uncertain net effect, and a transformative AGI path with larger and more uncertain benefits and risks.
• The paper states the AI-climate nexus can influence potential output and inflation dynamics, while the scale and financing of AI and energy investment may have financial stability implications.
• The views expressed are those of the authors and do not necessarily reflect those of the BIS or its member central banks.

Executive summary

The Bank for International Settlements has published BIS Paper 174, "Artificial intelligence and climate change: balancing innovation and sustainability," a 27-page working paper dated 8 October 2026. It is authored by Leonardo Gambacorta, Head of Emerging Markets in the BIS…

Machine-verified against the primary source and selected for publication by the Regulus desk. Not individually read by an editor. Lead briefings and anything our checks flag always are — how we review.