Microsoft's GHG emissions have risen by 25% year-on-year and are now increasing at a faster pace than ever before and as AI infrastructure expands, so too do environmental concerns. The numbers, which are included in the company's 2026 Environmental Sustainability Report, stem from the company's increase in data centre construction, and the shift in Microsoft's clean energy procurement policy, while the company reiterated its promise to become carbon negative by 2030.

The report notes that the boost in emissions is driven by the growth in energy needs associated with the development of AI, as well as the company's decision to stop purchasing certain renewable energy certificates in order to invest in new carbon-free energy generation. The shift has resulted in higher emissions in the short-term, but will help provide more lasting long-term emissions reductions and make better progress toward its climate goals, Microsoft said.

The expansion of AI infrastructure is causing emissions to increase.Expansion of AI infrastructure is leading to emissions growth.

The explosion in the use of AI services has created a much greater need for electricity, water, land and materials for new data centres, Microsoft stated. As the company continues to build its global AI infrastructure, emissions from these growth activities have increased too.

While presenting AI's impact on natural resources, Chief Sustainability Officer Melanie Nakagawa stressed that Microsoft continues to have ambitions for sustainability in the long term. Despite the current increase in emissions, the company is still striving to become carbon negative, water positive and zero waste by 2030.

The reported Scope 2 emissions are also higher when a shift in the clean energy strategy is made.

This year Microsoft has announced it will no longer buy non-additional, unbundled Energy Attribute Certificates (EACs) to offset electricity use in its reporting, one of the biggest changes in the year.

This led to an increase in Scope 2 emissions (indirect emissions from purchased electricity, heating and cooling) to almost 10 times the previous year. Microsoft's GHG footprint in scope 2 is some 13% of its total GHG footprint, whereas it was less than 2% a year ago.

While this has led to higher emissions reported as a result of ending the certificate programme, Microsoft has said it expects to get more long-term environmental value from directly investing in projects that will add new carbon free electricity to the power grid than from purchasing certificates.

Renewable Energy Portfolio Continues to Expand

In spite of the emissions increase, Microsoft continued to expand renewable energy commitments. The company's portfolio now has agreements for up to 40 gigawatts (GW) of renewable energy capacity, from 34 GW last year, it said.

The report also reflects a more general strategy on clean electricity procurement. In addition to renewable energy like wind and solar, Microsoft plans on enabling the integration of several types of carbon-free power on the grids in which it operates. The company said global electricity demand is increasing, and a diversified decarbonisation strategy is needed to provide the support for both economic growth and climate targets.

Scope 3 Emissions Still Make Up the Majority of Emissions.

Microsoft's GHG emissions remain the highest in indirect value-chain emissions, which are classified as Scope 3 emissions. Representing about 85.8% of the total emissions for the reporting period, these emissions rose about 12% from the previous year.

Capital goods connected to big data hosting projects and equipment needed for AI infrastructure have contributed most to the growth. The overall increase was offset by some decreases in other areas such as emissions associated with sold products.

Microsoft is increasing sustainability requirements throughout its supply chain to tackled Scope 3 emissions. The company has set new expectations for its suppliers that they begin buying sustainable aviation fuel (SAF) for Microsoft travel where they can by 2030. It is also actively seeking to increase the availability of suppliers to purchase carbon-free energy and offers assistance in measuring and reporting greenhouse gas emissions.

Carbon Removal Strategy Moves Forward in Absence of Market Reports.

Microsoft has recently reported halting some carbon removal purchases, however the sustainability report shows that the company's overall carbon dioxide removal (CDR) programme is still on the go.

Microsoft is still exploring around 200 CDR projects, and is relying on procurement contracts to support market demand for carbon removal technologies, Microsoft said. The company has taken various contracting strategies, depending on the maturity and scalability of the technology.

Microsoft normally enters into contracts of 10 to 15 years for solutions that are engineered for carbon removal, giving developers a way to identify financing by committing to long-term purchases. Typically, nature-based carbon removal projects have agreements that span beyond 20 years. The company is also exploring new technologies like enhanced rock weathering (ERW) and direct air capture (DAC) in smaller quantities to assess feasibility, scale and environmental effects, and to facilitate progress toward monitoring, verification and reporting protocols.

In 2025, Microsoft has brought 29 carbon removal projects with 10 types of carbon removal methodologies to its portfolio. Together, these projects will provide over 45 million metric tonnes of carbon dioxide removals in the coming 30 years to help the company meet its longer-term climate goals.

Microsoft's newest sustainability report captures the environmental impact of the growth of the AI industry, but the company is confident that its investments in new carbon-free electricity generation, supplier decarbonisation and extended carbon removal will enable it to make more substantive emissions reductions over time, despite the temporary rise in its GHG footprint.