The influence of artificial intelligence readiness on energy consumption patterns: Panel evidence from high-income countries

Center of Innovation in Economics Finance and Investment, Faculty of Economics, Chiang Mai University, Chaing Mai, Thailand, 50202

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Abstract

This study examines the effect of AI readiness, proxied by the Government AI Readiness Index developed by Oxford Insights, on primary energy consumption in high-income countries. Using balanced panel dataset covering 30 high-income economies over the period 2019-2023, the analysis employs panel regression techniques to assess how government-led preparedness for artificial intelligence adoption influences aggregate energy demand while controlling for income levels and structural characteristics. The empirical results reveal a positive and statistically significant relationship between AI readiness and primary energy consumption, indicating that the expansion of AI-related infrastructure, data capacity, and computational intensity currently outweighs potential energy-efficiency gains associated with AI applications. In contrast, GDP per capita exhibits a negative association with energy consumption, consistent with efficiency improvements and structural transitions toward less energy-intensive activities in advanced economies, while industry share does not display a systematic effect. These findings suggest that, even in relatively energy-efficient high-income countries, advancing AI readiness may exert upward pressure on national energy demand. Consequently, policies promoting AI development should be closely aligned with energy efficiency strategies, low-carbon electricity deployment, and sustainable digital infrastructure planning to ensure that technological progress supports long-term environmental and climate objectives.