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IATP sent the following letter to the Commodity Futures Trading Commission (CFTC) on April 24, 2024.

The Institute for Agriculture and Trade Policy (“IATP”) appreciates the opportunity to respond to this Request for Information (RFI). IATP is an Associate Member of the Commission’s Technology Advisory Council and a member of the TAC subcommittee on Emerging and Evolving Technologies that is close to finalizing a paper on Artificial Intelligence (AI). Part of the following comments summarize IATP contributions that were not included in that paper or that were included in a scaled down version. The questions posed by the Commission staff, though very pertinent to regulated entities, are too numerous for IATP to answer. Some of our responses to the questions will be thematized and will often refer to the questions by their number in parentheses.

An issue that will affect the use of AI in CFTC regulated markets but that is not under CFTC jurisdiction

The following section responds to the last sentence of the RFI: “Staff welcomes any relevant comments, including on related topics that may not be specifically mentioned but that a commenter believes should be considered.” (p. 12) 

When Commission staff meet with registered entities about how they use AI models in research, data analytics trading, risk management, clearing, self-regulation and for other purposes, they should also ask registrants to comment on their priorities for current and prospective uses of AI. One reason to ask about these priorities is that AI is not an infinitely reproducible technology that cannot be applied to an infinite number of use cases. 

The “elephant in the room of AI” that few among AI product developers wish to discuss publicly is, according to a Microsoft AI engineer, the unsustainable natural resource — both energy and water — use of AI. The rate of unsustainability is suggested by water use in Microsoft and Google data centers in West Des Moines, Iowa. For example, a local citizen’s lawsuit revealed, “As Google and Microsoft prepared their Bard and Bing large language models, both had major spikes in water use — increases of 20% and 34%, respectively, in one year, according to the companies’ environmental reports.” The Microsoft engineer also reports on a recently introduced Senate bill to remediate AI’s unsustainability, but that bill is very far from being enacted and appropriated. There is, of course, mainstream press coverage of the contribution of AI to data center energy crises.

Whether proposed technological solutions for generative AI’s environmental unsustainability are economically feasible and technologically effective, the CFTC should be part of an interagency task force to establish priorities for AI use and to develop an agreement on how to triage that use before unlimited use contributes to widespread water and energy crises. The New York Times series, “Uncharted Waters,” illustrated in granular and extensive detail the depletion of U.S. aquifers under Business-As-Usual water use that is expected to increase with the acceleration of climate change. The Times series identified industrial agriculture, mining and “enhanced oil recovery” (i.e., fracking) as opponents of the regulation of water use. To that list may be added in the near future financial service firms whose business plans become increasingly dependent on AI use. The Commission should use information gathered by this RFI to work with other financial regulators to ensure that AI can be used sustainably, as well responsibly, in the near future.

To read the full letter, download a PDF. 

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