Artificial Intelligence (AI) has dominated headlines recently. From OpenAI supposedly creating a “PhD-level” model with ChatGPT-5 to the debut of AI actors, it seems like this technology is everywhere. 

Companies are increasingly investing in AI to improve their products and services — firms invested $33.9 billion on generative AI alone in 2024, which was 18.7 per cent more than in 2023. It has become a necessity for a business to invest in AI to remain competitive in this new market.

However, there is a negative side to this technology. From increased energy usage to large amounts of toxic waste, its negative impact on the environment is very evident. Whether through failure or success, businesses need to learn how AI affects not just them, but the world. 

AI’s energy impacts

The development of AI requires large amounts of memory storage and energy due to its data-intensive nature. “AI data centers need constant power, 24/7, 365 days a year,” Rahul Mewawalla, the CEO of Mawson Infrastructure Group, mentions in an article published on the MIT Technology Review website. 

Electricity usage is increasing significantly — in 2020, computers consumed an estimated four to six per cent of the global electricity supply, and this number is expected to increase to between eight and 21 per cent by 2030 due to AI.

Not only does high electricity usage affect companies’ energy costs, but it also impacts the environment. Renewable sources won’t be able to support 24-hour AI data centers because solar and wind power are often intermittent. This results in a larger reliance on non-renewable sources, leaving a larger carbon footprint. 

Between 2017–2020, the energy and carbon emissions related to data centers doubled. Top tech companies have been reporting increasing emissions in their sustainability reports due to their AI data centers — in fact, Google, a company that used to maintain carbon-neutral operations, is no longer able to offset its emissions with activities like tree-planing because of the surge in pollution arising from AI investments.  

Additionally, businesses such as Amazon and Meta are building more facilities to develop AI models. As the number of facilities increases, so do carbon emissions. 

AI’s material impact

AI data centers not only require electricity to function, but they also require water. To absorb the heat from equipment, chilled water is used to cool data centers. For each kilowatt hour that a data center consumes, it would need two litres of water for cooling. This water is taken from rivers, lakes, and groundwater to produce cooling systems for AI. 

Due to limited water recycling, water supplies can be polluted by use in data centres. Google’s 2025 Environmental Report shows that its overall water consumption increased by 28 per cent between 2023–2024. If companies do not address the extreme use of water, there is a chance of social conflicts related to freshwater resources emerging, as water stores for humans are already scarce. 

AI is also a large source of toxic waste. Mining procedures that pollute and the use of toxic chemicals are often associated with GPUs, which power AI models. Moreover, old chips and equipment are being discarded, increasing the toxic waste produced. 

Researchers from the Chinese Academy of Sciences and Israel’s Reichman University have estimated that globally, AI will increase the amount of electronic waste produced by 3–12 per cent by 2030. 

Strategies for sustainability

Companies need to focus on ethical frameworks that could be implemented in their strategies and sustainable goals to account for the negative environmental impact of AI. They should also create policies to ensure that AI will be used responsibly. 

Though Canada and the US have not created any laws, policies, or legislation to limit the environmental impacts of AI, Europe recently introduced the European Union’s Act, which contains regulations for companies to follow when developing or using AI technologies. In fact, this plan states that EU countries must develop AI codes of conduct that mandate environmentally responsible use of this technology.

AI is leaving behind a carbon footprint that will continue to increase in size as it becomes more common. Companies wanting to invest in AI must weigh out both the financial return and the environmental impact of this technology before committing to long-term changes.