Microsoft carbon emissions jump as AI and cloud demand rises

By EPN staff

Microsoft's carbon emissions surged in fiscal year 2024 due to growing energy demands for artificial intelligence and cloud computing, highlighting the challenges major corporations with ambitious climate goals face in a rapidly changing world.

The company’s overall emissions increased 23.4% compared to its 2020 baseline, Microsoft said in its annual sustainability report. 

However, company executives said they remained “pragmatically optimistic.”

“[W]e are encouraged by the fact that this increase has been modest compared to the 168% increase in energy use and 71% revenue growth that has taken place over the same period,” the company’s president and its chief sustainability officer said in a joint foreword to the report.

Microsoft “remains steadfast in our dedication” to environmental goals, including a 2020 promise to go carbon negative – meaning Microsoft would remove more carbon from the environment than it emits – by 2030.

Why it matters

Global energy consumption is rising after nearly two decades of flat demand, and data centers like the ones Microsoft relies on are one of the biggest drivers.

The International Energy Agency projects electricity demand from data centers alone will more than double worldwide by 2030, consuming “slightly more than the entire electricity consumption of Japan today.”

Microsoft reported it had actually cut the carbon emissions under its operational control – “scope 1” emissions produced by day-to-day business as well as “scope 2” emissions from energy that Microsoft purchases.

But “scope 3” emissions – indirect emissions from Microsoft’s supply chain – accounted for 97% of the company’s total emissions, enough to increase overall emissions more than 23%.

The company said it’s working with key suppliers to reduce those emissions by using new materials for data center construction and rapidly expanding carbon-free energy deals, contracting for 19 gigawatts of new renewable energy in 2024 alone.

The bigger picture

Greenhouse gas emissions are a challenge for all major tech companies.

Google said last year its emissions grew nearly 50% over the previous five years, driven by data center energy consumption and supply chain emissions. 

But some analysts believe tech sector emissions are far higher than any of the major companies acknowledge.

The popularity of artificial intelligence makes emission goals an even tougher target. A single ChatGPT query – and ChatGPT code forms the guts of Microsoft’s AI products – draws 10 times the energy of a Google search, according to a 2024 analysis from Goldman Sachs, though other estimates vary.

ChatGPT itself says a query uses the same energy as running a 60-watt light bulb for about 3 minutes, about “2–4 times the energy needed for a Google search.”

Goldman Sachs further estimates data center power demand will grow 160% by 2030, adding, “Along the way, the carbon dioxide emissions of data centers may more than double between 2022 and 2030.”

Yes but

While AI can put major strains on resources and the environment, Microsoft touted its projects utilizing AI innovations to support biodiversity and conservation efforts.

The company also said, “We are also on track to replenish more water than we consume across global operations and improve datacenter water use efficiency, including through a new innovative datacenter design that optimizes AI workloads and consumes zero water for cooling to avoid the use of an estimated 125,000 cubic meters annually per facility.”

Additional details

Microsoft’s sustainability report included several other benchmarks it says it has hit early or surpassed, including protecting more land than the company uses and exceeding targets on waste, reuse and recycling.

The company also relies on carbon credits and investing in carbon removal technology to offset emissions. Microsoft said it contracted for more carbon removal in 2024 “than all previous years combined.”