To meet its targets, Vole must quickly adopt green technologies and improve efficiency in its data centres, which are critical for AI but heavily reliant on carbon-intensive resources.
Voleland President Brad Smith said that for Microsoft to meet its goals, It will have to make serious progress quickly in gaining access to green steel, concrete, and less carbon-intensive chips.
"In 2020, we unveiled what we called our carbon moonshot. That was before the explosion in artificial intelligence. So, in many ways, the moon is five times as far away as it was in 2020 if you think of our forecast for the expansion of AI and its electrical needs,” Smith said.
Despite AI's ravenous energy consumption, this contributes little to Microsoft's hike in emissions -- at least on paper. That's because the company says in its sustainability report that it's 100% powered by renewables.
Companies use various mechanisms to make such claims, which vary widely in terms of credibility. Some firms enter into long-term power purchase agreements (PPAs) with renewable developers, where they shoulder some of a new energy plant's risk and help bring new solar and wind farms online. Companies also buy renewable energy credits (RECs) to claim they're using green power. Still, researchers have consistently found that these inexpensive credits do little to spur new demand for green energy.
Vole mixes both approaches. It's one of the biggest corporate participants in power purchase agreements, but it's also a huge purchaser of RECs, using these instruments to claim that about half of its energy use is clean, according to its environmental filings in 2022.
By using a large quantity of RECs, Microsoft is masking an even larger growth in emissions. "Microsoft plans to phase out the use of unbundled RECs in future years," a company spokesVole said. "We are focused on PPAs as a primary strategy."
So what else can be done? Smith and Microsoft's Chief Sustainability Officer Melanie Nakagawa have laid out clear steps in the sustainability report. High among them is to increase efficiency, which means using the same amount of energy or computing to do more work. That could help reduce the need for data centres, which will reduce emissions and electricity use.
“Our climate goals require that we spend money," said Smith. But efficiency gains will enable us to save money." Microsoft has been at the forefront of buying sustainable aviation fuels, which have helped reduce some of its emissions from business travel.
The company also wants to partner with those who will "accelerate breakthroughs" to make greener steel, concrete, and fuels. Those technologies are starting to work at a small scale but remain far from being available in commercial quantities, even if they are expensive.
Cheap renewable power has helped make Microsoft's climate journey easier. But the tech giant's electricity consumption last year rivalled that of a small European country -- beating Slovenia easily. Smith said that one of the biggest bottlenecks for it to keep getting access to green power is the lack of transmission lines from where the power is generated to the data centres.
Microsoft says it will increase lobbying efforts to get governments to speed up grid building.
If Microsoft's emissions remain high going into 2030, Smith said the company may consider bulk purchases of carbon removal credits, even though it's not "the desired course."
"You've got to be willing to invest and pay for it… Climate change is a problem humanity created and can solve."
