Clean Energy May Decide Winners and Losers in the Global AI Economy

A new UNDP and Oxford TIDE Centre report says the future of AI will depend heavily on access to clean and reliable energy, making the global AI race increasingly an energy race. It warns that without strong policies, developing countries could be left behind, but argues that renewable-rich nations still have a major opportunity to build inclusive “Green AI” economies.

Artificial intelligence is often described as a software revolution driven by data and algorithms. But a new report by the United Nations Development Programme (UNDP) and the Technology and Industrialisation for Development (TIDE) Centre at the University of Oxford argues that the real driver of the AI race may be something far more basic: electricity.

The report says AI systems are becoming so energy-intensive that access to reliable, affordable and clean power is now shaping the future of global technology competition. Modern AI depends on huge data centres, semiconductor factories and cooling systems that consume massive amounts of electricity and water. As AI expands, countries with strong renewable-energy resources may gain a major advantage in the new digital economy.

According to the report, electricity demand from data centres is expected to nearly double by 2030 as AI systems become larger and more complex. This means the future of AI will increasingly depend on who can supply stable, low-carbon power at scale.

A New Global Race Is Emerging

The report argues that the global AI race is quickly turning into an energy race. Competition between the United States and China is no longer only about semiconductors and software but also about securing energy for AI infrastructure.

Countries such as India, Brazil, Malaysia, Saudi Arabia and South Africa are trying to position themselves as new hubs for AI and digital infrastructure. Many of these countries see renewable energy as a way to attract green data centres and technology investment.

However, the report warns that developing countries could also be left behind. Millions of people across Africa and other regions still lack reliable electricity while advanced economies continue building energy-hungry AI systems. Without major investments in energy systems, digital infrastructure and skills, poorer countries risk remaining suppliers of minerals and cheap resources while wealthier nations capture most of the economic benefits.

The study highlights that countries rich in solar, wind, hydro or geothermal energy could gain new opportunities if they combine clean-energy expansion with industrial policy and digital development.

AI Could Either Help or Harm the Planet

The environmental impact of AI is one of the report's biggest concerns. Data centres require enormous amounts of electricity and water, especially in hotter regions where cooling systems work harder. Demand for minerals such as lithium, cobalt, and rare earth elements is also rising sharply because they are essential for batteries, semiconductors and digital infrastructure.

The report points to countries like the Democratic Republic of the Congo, which supplies much of the world's cobalt but receives little of the economic value created by the global technology industry. The authors warn that AI could repeat older patterns of extraction and inequality if developing countries remain stuck at the bottom of global supply chains.

At the same time, AI also offers environmental opportunities. The report says AI can improve renewable-energy systems, reduce electricity losses, support climate forecasting and increase industrial efficiency. Smart AI systems can help electricity grids manage renewable power more effectively while also reducing emissions in transport, manufacturing and agriculture.

Whether AI becomes a climate problem or a climate solution, the report argues, will depend on how governments manage energy and infrastructure policies.

The Report Calls for "Green AI"

To address these challenges, the report introduces the idea of "Green AI." This approach focuses on building AI systems that support clean energy, environmental sustainability and human development at the same time.

The report says governments should treat AI and energy as connected policy areas rather than separate industries. It proposes a "people, planet and prosperity" framework that places social inclusion, environmental protection and economic growth at the centre of AI strategies.

This includes investing in digital skills, vocational training and public-interest infrastructure while making sure AI systems improve healthcare, education, climate resilience and public services. The report also highlights the need to reduce gender gaps and expand access to digital opportunities for rural and low-income communities.

The authors argue that countries must build domestic capabilities instead of relying entirely on foreign cloud services and imported technologies.

Developing Countries Still Have a Window of Opportunity

One of the report's most optimistic conclusions is that the AI economy is still being shaped, meaning developing countries still have time to secure a stronger position within it.

The study maps nearly 90 startups across countries, including Nigeria, India, Brazil, Chile and South Africa that are already working on AI solutions for energy, climate and infrastructure challenges. These firms are developing technologies such as smart grids, renewable-energy forecasting and AI-powered climate tools.

But many startups remain small and fragile due to limited financing, weak infrastructure and regulatory barriers. The report says governments will need stronger industrial policies, public investment and regional cooperation to help these ecosystems grow.

The report argues that the future of AI will not be decided by technology alone. The real question is whether countries can build the clean energy systems, institutions and human skills needed to turn AI into a tool for sustainable and inclusive development rather than another source of global inequality.