A Growing Climate Concern around Microsoft’s Expanding Data Center Operations

As artificial intelligence (AI) rapidly reshapes industries, the environmental toll of this technological revolution is escalating. Tech giants like Microsoft are leading the charge, but their AI expansion comes at steep climate costs. From energy-intensive data centers to the resource-heavy production of AI chips, every stage of this boom accelerates the climate crisis.

Read all parts of the blog series on Microsoft AI’s climate impacts:

Part 1: Unveiling the Hidden Emissions in AI Chip Manufacturing
Part 2: A Growing Climate Concern around Microsoft’s Expanding Data Center Operations
Part 3: Microsoft’s Application of AI to Accelerate Fossil Fuel Expansion

Fossil Free Microsoft Roadmap – Progress Tracker

A Growing Climate Concern around Microsoft’s Expanding Data Center Operations

Data centers are the backbone of the rapidly expanding AI industry, but their immense energy demands come with a substantial climate cost. Training, deploying, and running AI models require significant computational power, leading to continuous, large-scale electricity consumption. According to Goldman Sachs Research, data center power demand is projected to grow by 160% by 2030 due to the AI boom, accounting for 3-4% of global power consumption. This trend is particularly concerning because many data centers are located in regions where electricity grids are heavily reliant on fossil fuels, exacerbating their carbon emissions. Without a transition to renewable energy sources, the expansion of data centers risks deepening the AI industry’s reliance on carbon-intensive power, undermining global climate mitigation efforts.

Microsoft’s rapid growth in the AI sector is raising questions about the company’s true commitment to carbon neutrality. This concern is reflected in the significant increase in its operation emissions (Scope 2) in recent years (see Figure 2). Data centers account for up 95.6% of Microsoft’s location-based emissions. As a primary driver of its Scope 2 emissions, Microsoft’s data center operations are expected to continue contributing heavily to its overall carbon footprint.

The energy-intensive nature of AI, particularly for training models, inference, and deployment, further amplifies the climate impact. These processes require vast amounts of electricity and potentially prolonging reliance on fossil fuels. For example, Microsoft’s planned $3.3 billion data complex in Wisconsin has already led to requests for 1,300 megawatts of new gas-powered generation from the Public Service Commission, highlighting the persistent dependence on fossil fuels.

Looking ahead, Microsoft continues to invest heavily in expanding its cloud infrastructure. As of 2024, the company operates in over 60 cloud regions worldwide and has recently announced major infrastructure investments in Brazil, Italy, Mexico, and Sweden. As demand for Azure AI services continues to surge, Microsoft’s investment in data centers and cloud infrastructure is expected to grow substantially in the long term. With demand for Azure AI services expected to surge, Microsoft’s investment in data centers and cloud infrastructure is set to grow quickly, raising further concerns about its climate footprint.

Emissions related to Microsoft’s data centers may also be significantly underreported. According to reports, Microsoft’s data center-related emissions totaled 280,782 metric tons of CO2 equivalent in 2022. However, under a location-based accounting method, this figure jumps dramatically to 6.1 million metric tons of CO2 equivalent, which is nearly 22 times higher. In addition, while Microsoft operates its own data centers, it also rents third-party facilities, enabling the company to shift responsibility for emissions tied to those operations. This approach, coupled with the rapidly increasing energy demand, means Microsoft’s true climate impact is likely understated.

Despite its public commitment to achieving carbon neutrality across all data center locations, Microsoft’s growing environmental footprint and reliance on questionable accounting methods raise serious doubts about the alignment of its climate promises with its expansion in the AI sector.

Roadmap to Fossil Free Microsoft

Microsoft must deploy a comprehensive approach that addresses both operational and supply chain emissions, and the usage of the products. These steps are critical for driving a complete transition to renewable energy, ensuring accountability, and aligning with global climate goals. By implementing these measures, Microsoft can lead the way in fostering a sustainable and resilient future.

Goal: Transition Operations to 24/7 Renewable Electricity by 2030
Publicly commit to achieving 24/7 renewable electricity across all operations and data centers by 2030
Ensure no new data centers are built without meeting energy demand through local and additional 24/7 renewable electricity, in order to prevent reliance on new fossil fuel generation
Publicly commit to phasing out unbundled RECs across operations
Transition to 100% high-impact renewables across all operations and phase out unbundled RECs
Publish detailed environmental impact reports, including energy and resource use in company operations
Provide detailed energy reporting for all data centers and AI resource use