AI & sustainability will be growth story of this century, says Nicholas Stern

New Delhi: The intersection of artificial intelligence (AI) and the driving force of sustainable development will be the "growth story of this century", said Nicholas Stern, IG Patel professor of economics and government at the London School of Economics.

In an interview to ET, Stern underscored the importance of AI in building the sustainable cities of tomorrow. "We're talking about changing cities, changing land systems, changing energy systems, changing transport systems. How do you manage that change? How do you manage those systems? AI is absolutely crucial," Stern said.

Stern argued that there is "no trade-off" between energy transition and other climate initiatives and economic growth.


Climate finance is an integral part of development finance, Stern said, highlighting the perils of viewing them separately. It's about investing in all sorts of development projects-from clean energy to clean transportation-that are going to be sustainable. "Why would you build your infrastructure to fit with a climate that's not going to remain (unchanged) in future?" he asked.

Obligations on rich nations
Stern acknowledged the greater obligations of rich countries, which have been responsible for a big part of the carbon emissions over the past couple of hundred years, in climate financing.

"Well, if you damage development prospects for other people, you have some responsibility to help them in the investments of the future," he said.

"And that's why it's so important to push the rich countries, to help expand the firepower of the multilateral development banks (MDBs), because they will help bring that low-cost finance," he said. These banks will partner with the private sector to reduce the financing risks of sustainable projects.

Way forward for India & others

At the same time, it would be in the interest of developing countries to not shy away from pursuing green goals seriously on any ground, he said. Climate change is real, and efforts to address it can't wait, he indicated.

India must chart its own way in this direction, and it's doing so, he emphasized. India has taken on an ambitious pledge of net zero emission by 2070.

As many as 5-10 million people globally die of causes linked to air pollution. So, investment in cities where people can breathe well is, in fact, investment in health, he said, explaining why sustainability measures can't be halted on any pretext, including funding constraints.

Stern said American President Donald Trump is "completely wrong" in his rhetoric (Trump has called climate change "the greatest con job", and has announced the US' withdrawal from Paris Agreement) but others are not making that mistake.

There are multilateral development banks and others that could make climate finances available. Even the World Bank, in which the US has a controlling stake, continues to fund sustainable projects, including in public transport.

According to the estimates firmed up by a 2023 G20 working group, jointly headed by NK Singh and Larry Summers and of which Stern was a part, developing economies outside China would require an additional $1 trillion a year in external finance by 2030 for climate initiatives and for meeting sustainable development goals. This is on top of about $2 trillion needed to be gathered through internal means. The panel had estimated that a half of the external finance could be garnered through the private sector, and another half through official development finance. About $260 billion of the official development finance could be provided by multilateral development banks.