Microsoft Emissions Rise 25 Percent Due to AI Expansion

Microsoft Corporation reported a 25 percent increase in carbon emissions for the fiscal year ending June 30, 2025, according to its 2026 Environmental Sustainability Report. Total emissions reached approximately 20 million metric tons of carbon dioxide equivalent, a surge driven by the rapid expansion of power-hungry data center infrastructure required for artificial intelligence. The company also noted a 22 percent increase in water consumption, totaling 8,170 megaliters.

Company leadership attributed the emissions spike to the buildout of AI infrastructure and a February 2025 strategic decision to pause the purchase of unbundled renewable energy certificates and certain carbon removal credits. This shift aims to prioritize investments that bring net new power to grids. To support its energy needs, Microsoft signed a June agreement with Chevron Corp. to utilize power from a planned natural-gas-fired plant in West Texas.

These developments challenge the company's 2020 pledge to become carbon negative by 2030. While executives acknowledge that sustainability solutions are not scaling fast enough to meet AI demand, they maintain that they are not lowering their overall climate ambitions. Separately, UN Secretary-General Antonio Guterres launched the AI Environmental Transparency Initiative on June 23, calling on AI firms to power all data centers with renewable energy by 2030.