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How Climate Taxes on Crypto and AI Could Raise Billions for the Planet

How Climate Taxes on Crypto and AI Could Raise Billions for the Planet

How climate taxes on cryptocurrencies and artificial intelligence (AI) could raise billions for climate action, based on recent proposals by Laurence Tubiana and the Global Solidarity Levies Task Force.

⚡The Rising Energy Footprint of Digital Technologies:

  • Crypto mining alone uses enormous amounts of electricity, so much so that one Bitcoin transaction is said to use as much power as a person’s three years in Ghana or Pakistan. Together with AI data centers, they currently account for about 2% of global electricity consumption and nearly 1% of global carbon emissions; by 2027, this percentage is expected to rise to 3.5%, or the amount of electricity used in Japan.
  • Because of their high processing demands, AI models like ChatGPT use about 10× more electricity than a Google search.

💡 IMF Proposals: Targeted Energy Use Taxes

In August 2024, the IMF recommended targeted electricity-use taxes to curb emissions and raise funds:

SectorProposed Tax RateEstimated Revenue (Annually)Estimated Emissions Reduction
Crypto/mining electricity~$0.047/kWh (or $0.089 with air pollution cost)$5.2 billion~100 million tons (≈ emissions of Belgium)
AI data center electricity~$0.032/kWh (or $0.052 including pollution)$18 billionEncourages efficiency, lower footprint

Crypto miners’ electricity costs would increase by about 85% as a result of such taxes, which would also encourage a shift in behavior toward cleaner or more effective systems.

🌐Global Solidarity Levies & Broader Coalition:

The Global Solidarity Levies Task Force, which is co-led by France, Kenya, and Barbados, is creating a portfolio of creative “solidarity levies” on high-emission and under-taxed sectors in parallel with the IMF’s fiscal strategy.

Key proposals include:

  • Crypto‐energy levy:~$0.045 per kWh levy, producing ~$5.2 billion annually.
  • AI/data center energy levy:as part of larger research on tech taxes (specific AI levies are still being studied).
  • Financial transactions tax:Up to $418 billion could be raised annually worldwide by 0.1% on stock and bond trades.
  • Plastics production and billionaire wealth taxes,yielding tens to hundreds of billions more.

According to the coalition, these levies could help close the climate finance gap by hundreds of billions of dollars a year.

🌍Why It Matters:

  • By 2030, governments are expected to require $6.7 trillion annually to support development and climate goals, with developing countries alone requiring roughly $2.3 trillion annually.
  • There are calls for creative, equitable, and scalable financing methods like solidarity levies because the current public contributions are so inadequate.

🔧Potential Benefits & Policy Considerations:

Large revenue pipelines: Without causing financial market instability, even modest energy-use taxes could raise billions of dollars and cut emissions.

Changes in behavior: Taxes increase the cost of energy-intensive operations, which promotes a shift to more environmentally friendly methods.

Equity and justice: Tech behemoths and affluent users, whose actions contribute disproportionately to climate change, start to support international efforts to mitigate and adapt.

Obstacles to overcome:

Relocating facilities to low-tax jurisdictions can help companies prevent carbon leaks.

Political opposition: Particularly from nations like the US that are linked to the development of AI and cryptocurrency.

Coordination challenges: To avoid market distortions and guarantee equity, global alignment is required.

🧭Looking Ahead:

Final proposals and international commitments are anticipated as COP30, which will take place in Belém, Brazil, in November 2025, draws near.In accordance with IMF-World Bank spring meetings,the Task Force intends to publish comprehensive impact assessments and draft levy designs by April 2025.Proponents like Laurence Tubiana contend that these taxes are necessary to fairly meet climate finance goals and have the potential to completely change the way energy-intensive technologies are taxed and regulated around the world.

Read More Article>https://www.climatechallange.com/ai-offers-a-new-era-in-agricultural-innovation/


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