As multiple large-scale data centres are developed around the globe, Big Tech is investing heavily in a range of energy projects to power its new facilities, from renewable energy to nuclear power. In addition, several tech companies have announced major investments in climate credits, in a bid to offset their carbon emissions. However, many existing carbon credit schemes have been widely criticised for being ineffective, leading many to question whether this is just another case of greenwashing.
Both the electricity use and carbon emissions associated with the running of data centres are expected to grow significantly in the coming years, as tech companies develop larger facilities to power complex technologies, such as artificial intelligence (AI). The global electricity consumption of expanding data centres has increased by approximately 12 percent a year since 2017, according to an International Energy Agency (IEA) AI report. In fact, the power demand for data centres is growing four times faster than all other sectors.
The increased use of electricity is expected to drive up tech sector carbon emissions in the coming years, as much of the world’s electricity is still produced using fossil fuels. Some major tech companies, such as Google, Meta, and Microsoft, have already seen their carbon emissions rise in recent years, owing to data-centre expansion, which is at odds with their net-zero pledges. Data centres are thought to contribute at least 0.5 percent of global greenhouse gas (GHG) emissions at present, and the IEA expects that figure to increase to around 1.4 percent of global emissions in just five years, equivalent to the GHG of Japan.
To mitigate the effects of the increase in emissions, several tech companies are investing heavily in carbon credits in a bid to offset emissions. Amazon, Google, Meta, and Microsoft have all increased their purchases of permanent carbon credits since rolling out more widespread AI use in 2022, according to data from the carbon credit management platform Ceezer. The firms are investing in carbon credits to support their net-zero emissions pledges, rather than seeking to reduce their GHG emissions through operational changes.
Carbon credit schemes allow the user to offset emissions by financing projects that reduce emissions, such as carbon capture and storage (CCS) technologies and reforestation. Each carbon credit represents one metric tonne of carbon dioxide reduced or removed from the atmosphere.
Amazon, Google’s parent company Alphabet, Microsoft, and Meta are, together, expected to invest a total of almost $700 billion in AI technology in 2026, which will require huge amounts of computing power to run. The companies, together, purchased 11.92 million credits for permanent carbon removal in 2023, compared to just 14,200 in 2022. Microsoft is the only one of the four companies to have consistently reported annual purchases of carbon credits before 2022. Currently, there is no requirement to report the purchase of carbon credits.
Ben Rubin, the executive director of industry coalition Carbon Business Council, explained, “The demand surge for removal in 2023 was not a short-term reaction but the beginning of a structural shift, matched by increasing private sector action and public policy support.” Rubin added, “These buyers are looking to secure future supply, send demand signals to the market, and address residual emissions in their long-term climate strategies.”
Microsoft appears to be leading the purchase of carbon credits among major tech companies. The firm reported that it had experienced a 247 percent increase in credit purchasing between 2022 and 2023 – which is different from the figures provided by Ceezer – followed by a 337 percent rise between 2023 and 2024, to 21.9 million. Microsoft’s chief sustainability officer, Melanie Nakagawa, said that the firm was focused on reducing emissions and removing what it cannot, in a bid to become carbon negative by 2030.
Despite Big Tech’s best efforts to offset its emissions, many researchers are critical about whether carbon credits will actually help companies to achieve this. A 2025 review paper, analysing 25 years of evidence, showed that failure of carbon offsets to cut planet-heating pollution was “not due to a few bad apples” but rather was owing to deep-seated systemic problems that gradual change to the system will not fix.
Despite several widespread efforts to improve carbon credit systems to make them more effective, the report shows that several underlying problems have resulted in most big credit programmes being of poor quality. In addition, the long-awaited rules resulting from the 2024 UN climate summit “did not substantially address the quality problem”, according to the report. “We must stop expecting carbon offsetting to work at scale… We have assessed 25 years of evidence, and almost everything up until this point has failed,” said Stephen Lezak, the study’s co-author.
Most scientists agree that to effectively achieve net-zero, and help curb the effects of climate change, companies must cut emissions at the source, rather than simply “offset” emissions while making no real change to operations. This has been repeatedly stated by the IEA, to little avail. Unless new studies can prove that there are effective carbon credit programmes now in operation, Big Tech’s massive investment to achieve “net-zero” is likely to be just another case of greenwashing.
By Felicity Bradstock for Oilprice.com