14/4/26
The AI Boom Has A Carbon Problem. Big Tech Wants to Buy Its Way Out Of It.
The AI Boom Has A Carbon Problem. Big Tech Wants to Buy Its Way Out Of It.
Since ChatGPT launched in 2022, the world's biggest technology companies have committed to pouring hundreds of billions of dollars into AI infrastructure.
Data centres, specialised chips, cooling systems, and the enormous amounts of energy needed to run them around the clock.
At the same time, Amazon, Google, Meta, and Microsoft all have net-zero or carbon-negative climate pledges. But keeping both of those things true at once is proving complicated.
Their answer, increasingly, is carbon credits, and the scale of their buying has exploded.
Here's what's actually happening, and what it means if you invest in any of these companies.
What Carbon Credits Actually Are
Before getting into the numbers, let’s make sure we’re on the same page about what a carbon credit is.
Each credit represents one metric tonne of carbon dioxide either reduced or removed from the atmosphere.
Credits can come from projects that avoid emissions, like renewable energy schemes, or from technologies that actively pull carbon out of the air.
The removal side is where things get more interesting, and more contested.
Some removal methods are nature-based, like planting forests or restoring soils. Others are engineered, like machines that literally suck CO₂ from the air.
One key distinction is durability: some approaches store carbon for decades, others aim to lock it away for hundreds or thousands of years. How permanent the storage is matters enormously for whether a credit genuinely offsets an emission. ‘Permanent’ here usually means hundreds to thousands of years of storage, not literally forever.
The IPCC, the UN's climate science body, has been clear in its modelling: every credible pathway to limiting global warming to 1.5°C involves not just cutting emissions rapidly, but also removing carbon from the atmosphere, particularly later this century.
How Big Tech's Buying Exploded
The numbers are striking.
According to data compiled by carbon credit management platform Ceezer, Amazon, Alphabet, Meta, and Microsoft together purchased around 14,200 permanent carbon removal credits in 2022. By 2023 that figure had risen to nearly 12 million. By 2024 it reached 24.4 million, and by 2025 it had climbed to 68.4 million.
Microsoft stands out even within that group. The company saw a 247% increase in credit purchases between its fiscal years 2022 and 2023, reaching around 5 million credits. The following year its reported total rose to 21.9 million, with roughly another 100% increase in the year after that.
One climate finance CEO told the source article that the carbon removal market is "basically Microsoft," reflecting just how dominant the company's demand has become.
It's also worth noting that these figures have limitations. There's no legal obligation to report carbon credit purchases, some deals go unreported for reputational reasons, and credits are often bought in batches delivered over multiple years, which can affect how the numbers look in any given year.
Why This Is Happening Now
Two things converged to drive this surge.
The first is the AI build-out itself. Data centres running AI workloads are energy-intensive in a way that ordinary computing is not. They run continuously, generate enormous heat that requires cooling, and are often located in places where the electricity grid still relies partly on fossil fuels. At the same time, the biggest cloud providers are rapidly adding renewable energy, which has helped keep reported emissions increases relatively modest so far.
The second is a shift in how companies think about their climate commitments. Net-zero targets were set before the AI boom. Now, with emissions ticking upward and clean energy supply tight, carbon removal has become what one expert called "a quick and flexible instrument to deal with emission increases." It allows companies to pursue ambitious AI investment while technically staying on track with their climate pledges.
There are also structural market reasons. Early buyers like Microsoft are trying to secure future supply in a market that is still small and expensive, sending demand signals to developers of removal technology in the hope of scaling it up.
Necessary Climate Tool Or Paying To Pollute?
The debate around this is complicated.
The supportive case is straightforward. The IPCC says carbon removal is essential for meeting climate targets, full stop. Without large early buyers willing to pay above-market prices for high-durability removal, the technology would stay small, expensive, and inaccessible. Someone has to fund the scale-up, and Big Tech's balance sheets are one of the few places capable of doing so.
The critical case is also real. If companies can buy their way to net-zero on paper while their actual emissions continue rising, that undermines the whole point of having a climate target.
There are legitimate questions about whether this dynamic encourages companies to invest less in making AI itself more energy-efficient, or in powering data centres with genuinely clean around-the-clock energy.
One expert said Big Tech's buying spree conflicts with their stated desire to "build better," suggesting credits are being used to paper over a gap rather than close it.
It's also worth noting that not all carbon credits are equal. Early markets were plagued by credits that didn't represent genuine or permanent reductions. The shift toward high-durability removal is partly a response to those quality concerns, but scrutiny remains important.
What This Means If You Invest In Big Tech
If you hold shares in any of these companies, directly or through a fund or index, their climate strategies are part of your investment.
If you hold shares in any of these companies, directly or through a fund or index, it's worth knowing what you're actually invested in.
That means looking beyond the net-zero headline to understand how much of the climate plan involves real decarbonisation, things like renewables, efficiency improvements, and cleaner building materials, and how much relies on purchasing credits to offset ongoing emissions.
It also matters whether the removal credits they're buying are genuinely permanent or shorter-term storage.
The purchases themselves don't tell you whether a company is genuinely on track, but how they fit into the broader climate strategy does. The more useful question is whether a company is using them as a bridge while genuinely decarbonising, or as a substitute for doing so.
Source: