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The expansion of artificial intelligence (AI) is still in the balance as debates around resource scarcity, privacy and safety are likely to shape public sentiment and government policy in ways that can both create and destroy financial value, according to a report by JP Morgan.
The report said that concerns around limited resources, data privacy and safety will play a key role in determining how fast and how widely AI technologies are adopted. It stated "Debates about resource scarcity, privacy and safety will likely shape public sentiment and policy around AI in ways that can create and destroy financial value". One of the most pressing constraints on AI expansion is power availability. In the United States, companies are facing a backlog of around five years to add new power generation capacity to the existing grid. The report noted that nearly 70 per cent of regional power markets are already under strain. Power demand is expected to rise sharply, growing by 662 terawatt-hours through the end of the decade, driven largely by data centres and AI-related infrastructure. The situation is further complicated by ageing infrastructure. Around 70 per cent of power transmission lines are more than 25 years old, making it harder to meet rapidly rising electricity needs. As governments increasingly view AI as a matter of national security, investment in power generation and transmission is expected to become more critical. However, the report warned that the industry's continued reliance on fossil fuels to meet near-term power demand could push carbon emissions above earlier forecasts in developed markets. This raises the risk of higher global temperatures and more frequent extreme weather events, adding another layer of challenge for policymakers and investors. Water is also emerging as an important factor to watch. Large amounts of water are required to cool data centres, and this is becoming part of a broader resource constraint story. Limited water availability, combined with other AI-related pressures, may restrict the pace of data centre expansion in certain regions. At the same time, the report cautioned that AI adoption could cause significant disruption in labour markets and may also increase the risk of a market bubble. Overall, while AI offers powerful economic benefits, its growth path will be shaped by how effectively societies manage resource limits, environmental risks and safety concerns. (ANI)
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