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According to the International Energy Agency, carbon emissions caused by the energy used by data centers are rising sharply as artificial intelligence begins. However, tech giants like Microsoft have argued that emissions from energy use are a small share of their overall carbon footprint, moving downwards.
what happened?
Is Big Tech’s emissions better than true?
The phrase “marathon, not sprint” is one of the most exhausting cliches in corporate English. But Microsoft gets the point to use it in a curious new sense. It’s going in the wrong direction.
“It has become clear that our journey to carbon negativity is a marathon, not a sprint,” Tech Giant vice-chairman Brad Smith and top sustainability director Melanie Nakagawa were released on Thursday.
If you thought it meant slow but steadily progressing, their next sentence would have straightened you. Since 2020, when Microsoft pledged to be “carbon negative” within 10 years, its total emissions have increased by 23.4%.
And even those numbers are actually too flattering, according to critics of the practice of big high-tech carbon accounting.
Choose your adventure
There are two main ways to calculate carbon footprint from a company’s energy usage (known as “scope 2” emissions).
The first is called “location-based” accounting, which examines the amount of electricity used by a company from each power grid and determines the share of emissions from the grid’s power plant over the period in question.
Calculated using this method, two Microsoft scope emissions increased two emissions, from 9.96 million to 9.96 million, from 4.3 mn tonnes in 2020 last year. That means that its overall emissions (including other areas such as supply chain and business trips) have increased by 55% since 2020, rather than 23.4%.
Microsoft’s main report discloses location-based emissions (required by the widely used greenhouse gas protocols), in a separate data sheet, while Microsoft’s main report only mentions favorable indicators of “market-based” emissions. This accounting method focuses on corporate electricity purchase agreements with renewable energy producers, and even controversially, individual purchases of renewable energy certificates or RECs.
Under the regulations of the GHG protocol for market-based emissions reporting, RECS allows companies to trust the “environmental attributes” of renewable electricity, even if they are not among users of the generated electricity. The logic is that the revenue from selling these credits will allow developers to build clean power projects that would otherwise not be economically viable.
So, for example, factory owners in Illinois can purchase RECs from solar factory developers in Texas. The solar developer gets an additional revenue stream above the money he earns by powering the local grid. Factory owners can use RECS to reduce the amount of emissions they report from their factory’s electricity usage.
The large-scale purchase of RECS is how Microsoft reports two emissions of 259,000 tons of carbon dioxide in the range last year, down just 1.7% of total emissions, down from 456,000 tons in 2020.
According to Microsoft, its carbon footprint growth came not from the energy consumption of new data centers, but mainly from emissions related to the materials used to build them.
Rec Reckoning
REC supporters call it a key source of funding to support new renewable energy development. However, academic critics argue that it should not be used to “offset” carbon emissions, as it is often unknown whether they have a “addition,” that is, whether they will increase the amount of renewable energy actually being built. (See this FT Deep Dive since last year.)
These questions have been strengthened as the costs of renewable energy are steadily falling, making projects more competitive without extra revenue from REC. Renewables accounted for more than 90% of the new generation capacity added in both the US and worldwide last year.
Scepticism about RECS is prominent even in the largest user base, the large technology sector. Google no longer purchases them, except for some of its power purchase agreements. Even Microsoft has expressed its intention in its latest report to “break away from procuring non-presenting environmental attribute certificates.”
If you take a new Microsoft report at face value, you might think that a significant increase in energy consumption by data centers is coming without an increase in carbon emissions. Reports from other high-tech Titans, such as Amazon and Meta, highlight market-based emissions rather than much higher location-based numbers, but talk about similar stories.
However, a growing number of research has found that the study, led in particular by Harvard researchers, has tripled between 2018 and 2023, resulting in more than 2% of the national total.
In a report last month, the International Energy Agency estimates that global carbon emissions due to data centre energy usage will rise under the base case forecast from 323 mn tonnes in 2024 to 567 million tonnes in 2030.
This tension becomes increasingly difficult as Microsoft surfs the favorable wave of growing demand for AI as it moves to its 2030 carbon-negative deadline.
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