Microsoft’s carbon emissions climb 25% as tech giants grapple with AI’s energy toll

Microsoft has just four more years to reach its ambitious goal of removing more planet-warming carbon that it produces. But the company’s annual sustainability report, released Thursday, shows it’s moving in the opposite direction, as its 2025 emissions spiked 25% over the previous year.

Despite the troubling increase, Microsoft leaders say they remain committed to the longer-term goal.

“We continue to really be focused around carbon negativity by 2030,” said Melanie Nakagawa, chief sustainability officer, in an interview with GeekWire.

The Redmond, Wash.-based company is the latest tech giant to fall further behind its climate targets as they invest billions of dollars in new, energy-hungry data centers to power the AI boom. Amazon’s carbon footprint jumped 16% last year, while Google’s greenhouse gas emissions swelled 18%.

The report also shows how much energy use drove that increase: Microsoft’s emissions from purchased electricity — known as Scope 2 emissions — grew by 25% last year.

In total, Microsoft produced 34 million metric tons of carbon dioxide equivalent in 2025. After subtracting the carbon it paid to remove from the atmosphere, that figure drops to a net 20 million tons. That puts the company’s footprint roughly on par with the total emissions of Panama or Lithuania.

In addition to data center expansion, Nakagawa said, the carbon increase was also driven by Microsoft’s decision to stop buying unbundled, short-term renewable energy certificates, or RECs — a mechanism companies can use to quickly lower their reported emissions for a given year. Microsoft is instead prioritizing longer-term initiatives with bigger impact, she said.

The challenge Microsoft wants to answer, she said, is how to take a “portfolio approach” that spans carbon dioxide removal, carbon-free electricity, sustainable materials, and fuels — addressing all of them together rather than in isolation.

Where Microsoft made gains

The annual report highlighted areas of success. That includes:

• Matching its electricity consumption worldwide with clean energy sources.
• For the first time, replenishing more fresh water globally than it withdrew, making important progress on its 2030 goal of being water positive across operations.
• Achieving 92% reuse and recycling of decommissioned cloud servers and components for the second consecutive year.
• Reaching a total of 40 gigawatts of clean power purchase agreements across 26 countries, with 19 gigawatts currently online. (Forty gigawatts is roughly enough power to serve 30-40 million typical U.S. homes at once.)

Scrutiny over recent moves

Microsoft’s sustainability disclosures come after a series of announcements and news reports that have raised concerns among climate advocates.

• Last month, Microsoft and Chevron announced an agreement to build a natural gas facility in Texas with a 2.67 gigawatt capacity, providing dedicated electricity to the tech company for 20 years.
• In May, Bloomberg reported that Microsoft was considering scaling down or scuttling a pledge to match its electricity use with carbon-free power around the clock by 2030.
• In April, the New York Times reported that Microsoft was pausing future purchases of carbon removal credits, after years as the market’s top buyer.

Nakagawa said the company has not canceled any canceled removal projects, though she did not provide specifics about new purchases going forward. “We’re just continuing to take a hard look at each of the deals that are coming through,” she said, and looking for “credible opportunities to scale.”

Asked about Microsoft’s commitment to purchasing clean energy 24/7 — an approach that would eliminate reliance on coal- or gas-powered energy when wind and solar aren’t available — Nakagawa declined to confirm it. “We still are looking towards opportunities around carbon-free electricity,” while focusing on the 2030 carbon negative goals, she said.

As to the natural gas deal, the chief sustainability officer said Microsoft has also contracted to purchase 4.7 gigawatts of renewable power in Texas alone and that the company evaluates its energy investments as part of a broader mix.

Looking for efficiencies elsewhere

Even as data centers remain the prime driver of Microsoft’s rising energy use and emissions, the company points to other steps aimed at reducing the environmental footprint of the facilities.

That includes increasing the use of lower-carbon steel and concrete and incorporating mass timber into data center buildings. And In the past year, Microsoft has added a seventh Circular Center — one of several facilities worldwide where the company recycles and reuses electronics from data center operations.

Microsoft is also working with developers to use AI models more efficiently and build right-sized products. AI agents can review, test and improve code so it uses less energy when it runs, Nakagawa said.

“I definitely think there’s an opportunity here,” she said.