‘160% data center carbon footprint increase,’ research finds: Microsoft, Big Oil forge $7B partnership as several AI infrastructure projects push hyperscaler off ‘credible path’ toward decarbonization

Three methane gas projects announced in just the last month powering Microsoft’s planned AI data centers means the company’s data center carbon footprint is anticipated to more than double with a 160% increase, reaching approximately 25.25 million metric tons of CO₂e by 2028, according to analyses developed by Stand.earth Research Group (SRG), representing a massive expansion in the company’s direct fossil fuel burning capacity. With a combined capacity of 4.75 gigawatts (GW), these projects are capable of generating enough electricity to power nearly 4 million U.S. homes, while potentially emitting 15.52 million metric tons of million metric tons of CO₂e annually.

Microsoft will be the sole client of a major new methane gas-powered plant project near Pecos, Texas announced last week as an exclusive partnership with oil giant Chevron and investment group Engine No. 1 that is projected to deliver 2.5GW – with the potential to grow up to 5GW – to the company’s planned data center. Meanwhile, another major off-grid data center facility leased by Microsoft was also announced last week in Abilene, Texas, adding 900 megawatts (MW) of capacity. A review of air permit applications for the facility revealed plans for methane-gas powered turbines for the site. These are in addition to the company’s share of a new Mason County, W.V.-based facility announced in mid-March that will draw 1.35GW of methane-derived power, which alone would increase Microsoft’s data center pollution by 44%.

“Microsoft makes great claims about its climate credentials, and has shown real leadership in the past, which makes it even more disappointing to see the company so wholeheartedly turn toward fossil fuels – proposing nearly 5GW of new fossil fuel power in just the first few months of 2026 – while still promising to be on track for its climate goals. The gap between what Microsoft says, and what Microsoft does, seems to grow wider by the day.” said Rachel Kitchin, Senior Corporate Climate Campaigner at Stand.earth.

Project profiles* are below:

• Chevron/Engine No. 1 power plant
  • Location: Pecos, Texas
  • Project capacity (Phase 1): 2.5GW
  • Generation type: Behind-the-meter methane gas-powered plant development
  • Annual emissions: 8.31 million metric tons CO₂e

• Monarch Compute Campus – Nscale co-location AI data center
  • Location: Mason County, W.V.
  • Microsoft share of project capacity (phase 1): 1.35GW
  • Generation type: behind-the-meter on-site gas turbine generation
  • Annual emissions: 4.31 million metric tons CO₂e

• Crusoe facility – co-location AI data center
  • Location: Abilene, Texas
  • Microsoft share of project capacity: 900MW
  • Generation type: On-site gas power plant, adding to existing energy infrastructure/grid connectivity
  • Annual emissions: 2.90 million metric tons CO₂e

CDP source

Microsoft is one of a number of hyperscale data center developers that have publicly committed to reducing their carbon emissions, setting the goal in 2020 to become “carbon negative” and to power its data centers with around-the-clock, carbon-free energy by 2030. Company President Brad Smith told the Associated Press just last month that he is “confident in our ability” to meet the company’s 2030 goal to remove more carbon from the atmosphere than it is responsible for via nuclear, solar, and hydropower investments.

Microsoft has made significant investments in new renewable electricity projects globally – however, the company’s recent claims of matching 100% of its electricity demand with renewables is based on energy markets that do not require the electricity to be directly delivered to, or even nearby, its sites. This means that demand from data centers can be, and are often, met with new or existing fossil fuels, while the company still claims to be 100% renewable. And while Microsoft is also a major investor in experimental carbon capture and removals credits, this is still a largely unproven area of technology, and can’t be used to justify increasing emissions in the short term.

Microsoft’s decarbonization efforts are marred by its demonstrated ambition in constructing and powering hyperscale infrastructure that directly increase its carbon emissions. Three years after its 2020 climate pledge, the company’s emissions had already increased at least 30%.

These recent announcements are part of a growing trend of hyperscalers increasingly turning to on-site power generation to get data centers online more quickly. On-site generation is overwhelmingly coming from methane gas power, drastically increasing fossil fuel lock-in: At the end of 2024, on-site data centers made up 5% of all demand for methane gas power being developed in the U.S. One year later, this has ballooned to 39%, with on-site data center demand for methane gas capacity in 2025 outstripping all demand for methane gas capacity in the prior year.

Developers claim that the behind-the-meter approach will “eliminat[e] the burden on existing utility customers and protect[-] ratepayers’ bills.” However, the rapid growth in demand from the data center build out has already drastically increased consumers’ electric bills and is likely to continue to do so moving forward by spiking methane gas prices, according to industry analysts.

“Proponents of these fossil fuel-powered hyperscaler projects may, for example, point to the opportunity to leverage methane that would otherwise be burned off as part of the conventional extraction process, which is a convenient perspective to hold if you’re an oil-and-gas giant seeking to entrench new dependents. However, if you’re one of the world’s leading technology companies that has for years proudly touted its decarbonization goals, the visions don’t line up. Renewables are the cheapest form of energy to build, aren’t subject to the massive price volatility compared to fossil fuels, and don’t drive up people’s utility bills. Microsoft has shown that it knows how to build renewables quickly and at scale, so to get back on track, it needs to cancel these pollution-producing contracts and recommit to around-the-clock clean energy,” said Kitchin. 

The behind-the-meter methane gas build out also comes with its own set of negative externalities including serious consequences for people living nearby. A Virginia Commonwealth University study published last month found that on-site power derived from methane gas and diesel generators for a single data center in Virginia could lead to $53-99 million in health-related costs.

Communities living near fossil fuel power, off-grid or otherwise, face increased risk of cancers, heart disease, stroke, respiratory illnesses, and other adverse health outcomes. A 2021 Harvard University study found that 1 in 5 deaths globally can be linked to air pollution caused by the burning of fossil fuels, reinforcing the industry’s responsibility for rapid climate action.

* NOTE TO EDITORS: SRG’s methodology calculates total annual emissions by determining the data center’s net electrical demand – adjusted for capacity factor and operating hours – and dividing it by the generator’s efficiency to establish total fuel consumption. This fuel energy is then multiplied by the carbon emission factor of natural gas to convert energy consumption into the physical mass of CO₂ released.

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Media contact: Shane Reese, Corporate Campaigns Media Director, Stand.earth, shane.reese@stand.earth, +1 919 339 3785 (U.S. Eastern Time)