Microsoft buys 500,000 tons of carbon credits to offset its emissions

(Washington) Microsoft on Tuesday committed to a record purchase of carbon offsets from Occidental Petroleum subsidiary 1PointFive, as tech giants struggle to reconcile their massive investments in artificial intelligence (AI) with their environmental goals.

The agreement covers 500,000 tonnes of carbon dioxide removal credits (CDRs) over a six-year period, according to a statement from 1PointFive.

According to the two companies, this is the largest purchase of CDR credits made using direct air carbon capture (DAC) technology.

Direct capture, which allows CO to be extracted₂ directly from the atmosphere, has recently gained popularity among tech companies that have set ambitious goals to combat climate change.

Microsoft and Google, among others, have each committed to achieving net-zero emissions across their operations by 2030.

“Demand for energy in the technology industry is increasing and we believe direct air capture is ideally suited to eliminate residual emissions and help achieve climate goals,” said Michael Avery, CEO of 1PointFive.

DAC is one of the solutions recommended by the UN, but some experts fear that it will replace the sacrifices needed to reduce emissions at source.

Amazon and 1PointFive struck a similar deal last year to purchase 250,000 tons of carbon offsets over ten years.

Microsoft and Amazon’s CDR credits will be generated by Stratos, 1PointFive’s first DAC factory, currently under construction in Texas.

They allow the two world leaders in “cloud” (remote computing) to offset their emissions by paying the subsidiary to have the carbon removed from the atmosphere and stored underground.

By 2023, Google saw its greenhouse gas emissions reach 14.3 million tons of CO₂an increase of 48% in four years. Microsoft’s jumped by 29% in three years.

The reason: the increased energy requirements of data centers to train and operate generative AI models (like ChatGPT), a booming sector.

Experts note that large companies (Amazon, Airbus, Lego, etc.) are willing to pay more than $1,000 per ton of CO₂ captured and stored as carbon credits.

Last September, Microsoft had already signed a contract with a Californian start-up, Heirloom Carbon, for the purchase of CDRs (up to 315,000 tonnes of CO₂).

The International Energy Agency estimates the annual need for direct air capture at 80 million tonnes of CO₂ in 2030.