Abstract 1

1. Introduction 2

2. Opportunities: AI as a tool for climate action 3

  2.1 Mitigation: energy efficiency and emissions reduction 5

  2.2 Adaptation: climate risk prediction and resilience 5

  2.3 Economic benefits and innovation opportunities 6

3. Challenges: environmental costs, rebound effects and broader risks 8

  3.1 Energy consumption and carbon emissions of AI 9

  3.2 Jevons paradox, rebound effects and unintended consequences 11

  3.3 Geopolitical and distributional implications for the climate transition 12

4. Effects of AI on climate change under two AI development scenarios 13

  4.1 AI as a copilot 13

  4.2 Artificial general intelligence (AGI) 14

5. Implications for central banks and policy responses 15

  5.1 Implications for central banks 15

  5.2 Policy and governance responses 16

    5.2.1 Measurement, reporting and transparency 17

    5.2.2 Initiatives for sustainable AI innovation 18

    5.2.3 Global governance and the role of international cooperation 20

6. Conclusions 20