AI could unlock US$600b in climate, sustainability value by 2028

Industrial efficiency, climate risk modelling, and grid management offer the clearest near-term opportunities.

Artificial intelligence could unlock about US$600b in annual global value across climate and sustainability sectors by 2028, according to a report by Boston Consulting Group, Temasek, and GenZero.

The report said the opportunity comes from efficiency gains, cost reductions, new revenue, and improved asset use from deploying AI across more than 40 subsectors.

It said AI and sustainability are increasingly linked by resource efficiency, with AI helping businesses use less energy and fewer materials, reduce waste, and improve financial returns at the same time.

Five priority subsectors account for about US$423b of the estimated opportunity. These are industrial equipment and systems efficiency, climate risk modelling, grid, storage, and system flexibility management, inclusive education, and materials discovery.

Industrial equipment and systems efficiency represents the largest opportunity at about US$300b. AI applications in this area include predictive maintenance, process optimisation, energy management, quality control, scheduling, and workplace safety.

The report estimated that AI deployment across industrial systems could reduce Scope 1 and 2 emissions by about 0.6 gigatons annually.

Climate risk modelling could generate about US$75b in annual value by improving hazard intelligence, asset-level risk analytics, and portfolio climate stress testing. These tools could help businesses reduce disruption costs, improve insurance pricing, and support climate resilience planning.

Grid, storage, and system flexibility management could unlock about US$32b in annual value, as AI helps improve predictive maintenance, reduce renewable energy curtailment, and support grid reliability.

The report said the opportunity spans the full private capital spectrum, including venture capital for AI-native startups, growth equity for scaling platforms, buyouts for established companies integrating AI, and infrastructure capital for assets such as grids, storage systems, water networks, and data centres.

Businesses deploying AI are expected to capture most of the value through lower costs, better asset performance, and new revenue. AI solution providers are expected to capture a smaller share, estimated at 15% to 25%, through subscriptions, licensing, and outcome-based contracts.

However, the report said adoption could be slowed by the complexity of embedding AI into real-world systems, including the need for domain-specific data, integration with legacy infrastructure, operational expertise, and change management.