Virtual humans are expected to be applied in a wide range of industries like retail, finance, real estate, entertainment and education, fueled by artificial intelligence-based technology advancement, experts said on Thursday ahead of an important industry event.

They predicted both digital human production costs and period will fall dramatically in the years to come.

But they also stressed that the interactive experience with digital avatars will need to be further improved to give users a greater sense of reality when interacting with virtual humans.

"With the breakthrough made in the artificial intelligence-powered algorithms, the production cost of digital humans will be reduced by 10 times or 100 times, and the production period will be shortened from several months to just few hours as well," said Yuan Foyu, vice-president of Chinese tech giant Baidu Inc.

These expected developments will likely result in large-scale application of digital humans in a variety of industries, Yuan said.

To make the most of the anticipated advances, Baidu will launch its digital avatar livestreaming platform during the annual Baidu World Conference, which will be held online on July 21.

According to a report from research firm International Data Corp, the digital avatar sector has become the hottest among AI industry segments this year.

The scale of the AI digital avatar market in China will reach 10.24 billion yuan ($1.5 billion) in 2026, IDC predicted.

The IDC report noted that digital avatars have been already applied in areas such as customer service, finance, entertainment, tourism and livestreaming.

Baidu has released its digital avatar platform, Xiling, which integrates the generation of digital humans and content production, as the company looks to leverage its AI capabilities in the fast-growing metaverse.

The platform provides a complete set of services for the creation and operation of virtual hosts, virtual celebrities and virtual brand spokespersons for clients in the fields of broadcasting, television, internet, finance and retail, enabling more industries to use virtual humans.

For instance, Baidu's virtual assistant Du Xiaoxiao integrates a string of cutting-edge technologies, including the multimodal interaction technology, 3D digital human modeling, machine translation, speech recognition and natural language processing. It has three key features: real-time interactivity, companionship and open AI-generated content capability.

In addition, Baidu has worked with Shanghai Pudong Development Bank, China Everbright Bank and China Unicom to launch one-to-one service-oriented digital humans to enhance operational efficiency and reduce labor costs.

Digital humans have been used for customer services, document review, internal training and sales in Shanghai Pudong Development Bank.

China Media Group and Baidu AI Cloud launched the first AI sign language anchor, which has been used during the Beijing 2022 Olympic and Paralympic Winter Games.

"Currently, digital humans have already shown clear commercial value in a number of fields," said Lu Yanxia, an associate research director of IDC China.

Lu estimated there will be large-scale teams of digital humans coexisting with humans in life and at workplaces in the future.

Chinese AI pioneer Xiaoice, SenseTime and tech giant Huawei Technologies Co have also jumped on the digital human bandwagon.

Xiaoice developed Cui Xiaopan, the first virtual employee of Chinese real estate developer Vanke. The digital human is in charge of reminding employees to pay the company's bills on time and collect bills due. Huawei Cloud has also created and hired its first virtual human employee named Yunsheng.

"Although the digital avatar segment is still nascent, the appearance, gestures and actions of digital humans will be more refined and closer to that of real humans this year," said Yu Jianing, executive director of the metaverse industry committee at the China Mobile Communications Association, a Beijing-based industry association.

Yu said the accelerated application of 5G and the research and development of 6G, the next-generation wireless technology, will fuel the digital human industry.

Governments which enact climate legislation risk being sued for trillions of dollars by fossil fuel companies seeking compensation for lost revenue and stranded assets, according to data that campaigners warn threaten pledges made at COP26.

Energy experts predict that more ambitious climate action from world leaders will significantly increase companies' use of a tribunal mechanism that has already awarded billions to the heavy industry.

Trade agreements such as the Energy Charter Treaty and NAFTA contain investor arbitration clauses, known as investor-state dispute settlement (ISDS), that allow foreign companies to sue governments over actions they say hit profits or investments.

Campaigners say that energy companies are increasingly turning to this type of arbitration to recoup investments as governments accelerate the shift away from fossil fuels.

Jean Blaylock, trade campaigner at Global Justice Now, tells AFP these corporate courts - "the global trade system's dirty little secret" - could "make a mockery" of commitments generated at the COP26 summit.

"We're seeing the fossil fuel sector use investor-state dispute settlement to hold climate action to ransom," she says.

"These companies have made unfathomable profits from fueling the climate crisis, we cannot let them demand even bigger pay-outs."

AFP has obtained excerpts from a presentation given at a September trade event by consultancy firm Berkeley Research Group (BRG), which predicted that climate legislation would lead to a rise in private lawsuits.

"Increased climate policy ambition [eg CAT Ratings] will drive the policies behind climate-related disputes," said an excerpt. 

CAT refers to Climate Action Tracker, which ranks national emissions plans on their compatibility with the Paris climate deal.

The presentation suggested that the "scale of energy transition policy" could "unleash a wave of international investment and/or commercial arbitration to adjudicate claims."

Responding to a request to comment, Christopher Goncalves, chair of BRG's Energy and Climate practice, told AFP that dispute resolution was "likely to remain a critical component of the energy transition process."

"It is not possible to make any generic conclusion as to whether such legal disputes accelerate or impede the energy transition," he added.

**History of awards

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The BRG presentation said if governments legislate to limit heating to 2 C by 2050, $3.3-6.5 trillion in upstream fossil fuel assets would be at risk, as well as $650-700 billion in coal power assets and $900 billion in oil reserve write-offs in a 1.5 C scenario.

Blaylock said $9 trillion in upstream fossil fuel and oil reserve write-offs are at risk of litigation - a little over a tenth of the global economy.

Energy and mining firms have a long history in winning large settlements. In 2006, Occidental Energy sued the government of Ecuador for terminating an oil contract. It was awarded $1.77 billion, which was later reduced to $1 billion.

In 2012 Tethyan Copper sued the government of Pakistan over a gold mine, and in 2019 was awarded $5.9 billion - roughly 2 percent of the country's GDP.

ISDS decisions are internationally binding and courts have in the past ordered the seizure of state assets when countries have refused to pay.

Five current cases, brought by energy firms identified by Global Justice Now, are seeking $18 billion from governments.

These include a dispute involving the cancellation of the Keystone Pipeline in North America, where the complainant, TC Energy, is seeking a reported $15 billion in lost revenue. 

A TC Energy spokeswoman told AFP that it would "not comment on speculative claims." 

German energy firm Uniper is one of two companies reportedly seeking more than $1 billion from the Netherlands after it decided to phase out coal.

A Uniper spokesperson did not comment on the amount in question but said government policy had cut 15 years off the lifespan of its MPP3 power plant near Rotterdam, "however understandable that change in itself may be."

'Ordinary people will pay'

British company Rockhopper is suing Italy for a reported $324 million over a ban on offshore oil drilling close to the country's coast. Italy signed the Energy Charter Treaty (ECT) but then withdrew in 2016.

Companies can resort to ISDS for 20 years after a country leaves the ECT.

A spokeswoman for Rockhopper rejected the idea that the suit was linked to climate change. 

"The Italian government issued licenses and encouraged significant investment in oil and gas exploration, based on this platform. Clearly it is not equitable to change the rules halfway through," she told AFP.

Most of the governments wrapping up COP26 plan to slash their emissions to net-zero by 2050.

That will cost the global economy as much as $100 trillion, according to International Energy Agency estimates.

Nations are also pledging billions to help countries adapt to climate-driven extreme weather and crop failures.

Campaigners say that litigation represents a looming, hidden cost of climate action. 

"The science is clear. The vast majority of fossil fuels must stay in the ground to avoid catastrophic global heating," Leah Sullivan, trade campaigner at the War on Want pressure group, told AFP.

Since ISDS awards are taken from public money, "It's ordinary people who will have to pay for this," she said.