{
  "title": "Carbon Emissions from AI and Crypto Are Surging and Tax Policy Can Help",
  "publication": "IMF Blog, August 15, 2024",
  "sourceUrl": "https://www.imf.org/en/blogs/articles/2024/08/15/carbon-emissions-from-ai-and-crypto-are-surging-and-tax-policy-can-help",
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  "summary": "Crypto mining and data centers now account for 2 percent of global electricity use and nearly 1 percent of global emissions, and their footprint is growing.",
  "sections": [
    {
      "heading": "Key findings: scale, trends, and emissions",
      "content": "- Crypto mining and data centers together accounted for 2 percent of world electricity demand in 2022.\n- That share is likely to climb to 3.5 percent in three years, based on estimates using International Energy Agency projections.\n- One Bitcoin transaction requires roughly the same amount of electricity as the average person in Ghana or Pakistan consumes in three years.\n- ChatGPT queries require 10 times more electricity than a Google search.\n- An IMF working paper found crypto mining could generate 0.7 percent of global carbon dioxide emissions by 2027.\n- Extending the analysis to data centers, their carbon emissions could reach 450 million tons by 2027, or 1.2 percent of the world total."
    },
    {
      "heading": "Policy analysis: taxation as a tool and current tax treatment",
      "content": "- Many data centers and crypto miners currently receive tax exemptions and incentives on income, consumption, and property.\n- Given environmental damage, limited employment effects, and pressures on electrical grids (which may raise household prices and reduce demand for other low-emissions goods such as electric vehicles), the net benefits of these special tax regimes are unclear."
    },
    {
      "heading": "Tax-based mitigation scenarios and estimated impacts",
      "content": "- Crypto mining:\n  - A direct tax of $0.047 per kilowatt hour would drive the crypto mining industry to curb its emissions in line with global goals.\n  - Including air pollution’s impact on local health raises the rate to $0.089 per kilowatt hour, translating into an 85 percent increase in average electricity price for miners.\n  - Such a levy would raise annual government revenue of $5.2 billion globally and reduce annual emissions by 100 million tons (around Belgium’s current emissions).\n- Data centers:\n  - A targeted tax on their electricity use would need to be set at $0.032 per kilowatt hour, or $0.052 including air pollution costs.\n  - Because data centers tend to be in locations with greener electricity, the required tax is slightly lower than for crypto.\n  - This tax could raise as much as $18 billion annually."
    },
    {
      "heading": "Broader policy recommendations and complementary measures",
      "content": "- A broad carbon price coordinated across countries is the preferred policy because it would encourage reduced fossil-fuel consumption, cleaner power sources, and improved energy efficiency.\n- To limit global warming to 2 degrees, countries would need to introduce additional measures equivalent to a carbon price rising to $85 per ton by 2030.\n- In the absence of a global carbon price, targeted measures can:\n  - Encourage more energy-efficient equipment for crypto miners and data centers.\n  - Motivate adoption of less energy-intensive crypto mining methods.\n  - Be complemented with credits for zero-emission bilateral power purchase agreements and potentially renewable energy certificates.\n- Cross-border coordination is important to prevent relocation to jurisdictions with lower standards.\n- Expanding renewable energy sources and adopting an appropriate carbon price are urgently needed; in the interim, targeted measures, including taxation, can help mitigate increasing emissions from crypto mining and data centers.\n\nSource: IMF Blog — \"Carbon Emissions from AI and Crypto Are Surging and Tax Policy Can Help\" (August 15, 2024).\n\n---\n\n Content in this bundle\n\n- Electricity 2024 - Analysis and forecast to 2026\n  - Electricity 2024 - Analysis and forecast to 2026 (Markdown version){rel=\"alternate\" type=\"text/markdown\"}\n  - Electricity 2024 - Analysis and forecast to 2026 (PDF){rel=\"external\" type=\"application/pdf\"}\n\n---\n\n References\n\n- paper\n- $85 per ton by 2030\n\nSource: https://www.imf.org/en/blogs/articles/2024/08/15/carbon-emissions-from-ai-and-crypto-are-surging-and-tax-policy-can-help"
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    "Authors: Shafik Hebous, Nate Vernon-Lin",
    "Published: August 15, 2024",
    "Crypto mining and data centers together accounted for 2 percent of world electricity demand in 2022.",
    "That share is likely to climb to 3.5 percent in three years, based on estimates using International Energy Agency projections.",
    "One Bitcoin transaction requires roughly the same amount of electricity as the average person in Ghana or Pakistan consumes in three years.",
    "ChatGPT queries require 10 times more electricity than a Google search.",
    "An IMF working paper found crypto mining could generate 0.7 percent of global carbon dioxide emissions by 2027.",
    "Extending the analysis to data centers, their carbon emissions could reach 450 million tons by 2027, or 1.2 percent of the world total.",
    "Many data centers and crypto miners currently receive tax exemptions and incentives on income, consumption, and property.",
    "Given environmental damage, limited employment effects, and pressures on electrical grids (which may raise household prices and reduce demand for other low-emissions goods such as electric vehicles), the net benefits of these special tax regimes are unclear.",
    "Crypto mining:",
    "Data centers:",
    "A broad carbon price coordinated across countries is the preferred policy because it would encourage reduced fossil-fuel consumption, cleaner power sources, and improved energy efficiency.",
    "To limit global warming to 2 degrees, countries would need to introduce additional measures equivalent to a carbon price rising to $85 per ton by 2030.",
    "In the absence of a global carbon price, targeted measures can:",
    "Cross-border coordination is important to prevent relocation to jurisdictions with lower standards.",
    "Expanding renewable energy sources and adopting an appropriate carbon price are urgently needed; in the interim, targeted measures, including taxation, can help mitigate increasing emissions from crypto mining and data centers.",
    "**Electricity 2024 - Analysis and forecast to 2026**",
    "[paper](https://www.imf.org/en/Publications/WP/Issues/2023/09/15/Cryptocarbon-How-Much-Is-the-Corrective-Tax-539214)",
    "[$85 per ton by 2030](https://www.imf.org/en/Publications/staff-climate-notes/Issues/2023/11/14/Is-the-Paris-Agreement-Working-A-Stocktake-of-Global-Climate-Mitigation-541083)"
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