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Microsoft reported a 25 percent jump in carbon emissions in 2025 as it sets out to grow its use of artificial intelligence (AI) data centers.
The emissions increase was “driven primarily by the expansion of our datacenter infrastructure and pausing our use of non-additional, unbundled renewable energy certificates as we prioritize investments that bring net new power to grids,” Microsoft Vice Chair and President Brad Smith and Chief Sustainability Officer Melanie Nakagawa said in the new sustainability report released on Thursday.
“While the decision increases our reported emissions in the near term, it enables us to increase the development of new CFE [carbon-free electricity] rather than relying on certificates alone,” the report overview reads. “We believe this change will create more long-term sustainability benefits. Growth-related emissions pressure was expected.”
The significant portion of this increase was tied to emissions from energy the company purchases or acquires to run operations, which Microsoft calls “Scope 2” emissions. This accounted for 13 percent of the total emissions, whereas last year it accounted for 2 percent of total emissions.
“This development highlights how important the energy systems across our supply chain are in shaping environmental outcomes,” Smith and Nakagawa’s report overview reads.
The report covers fiscal 2025, which ended last June, and does not cover deals that Microsoft reached since then, including ones that involve gas-powered data centers and the 20-year “power agreement” with Chevron last month. This deal will build a power plant for the company in West Texas.
But the sustainability report insists that Microsoft will become “carbon negative by 2030 by reducing emissions across our operations and value chain, and removing more carbon than we emit.”
The report’s release comes after Google and Amazon released their own sustainability reports, with Google’s emissions increasing 18 percent due to “increases in supply chain activities that supported the rapid expansion of our business.” Amazon’s overall emissions increased by 16 percent, while its supply chain emissions, which include data center building and construction, amounted to 20 percent.
Data centers are facing political backlash from people worried about increased energy prices and land use meant for constructing data centers. State lawmakers are looking at moratoria or stricter regulations meant to address the environmental and economic impact data centers leave behind.
This backlash has governors and gubernatorial candidates in the hot seat about how they will address the impact felt by data centers in their states. The data center industry has pushed back against complaints linking AI to data centers, arguing that data centers serve other uses.
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