The 2030 emissions targets set a number of Big Tech companies are at risk due to the growing power demands of artificial intelligence (AI), according to a new report.
The second edition of GlobalData’s ESG Executive Briefing states that carbon offset purchases are ramping up and that 2030 net-zero targets “are just about still achievable.” However, it adds that, while AI-fuelled emissions growth has begun to slow, Big Tech’s announced capital expenditure plans suggest this will be temporary, with data centre construction to accelerate.
As such, the report says: “The key question for climate targets will be whether enough carbon offsets can be bought to match emissions in 2030 and beyond. In its 2024 reporting year, Microsoft massively increased its offset purchases, contracting an amount above its full-year Scope 1, 2 and 3 emissions.”
Microsoft is alongside Google, Meta and Apple in having committed to achieving carbon neutrality across their value chains by 2030. Its example demonstrates that purchasing carbon offsets at high volumes is feasible – but contracted offsets must still be delivered, and maintaining a pipeline of offsets to the high standards for purchasing set by Microsoft and Google poses a challenge.
Power purchase agreements (PPAs) are another tool being employed by Big Tech in pursuing emissions targets. These allow firms to fund renewable projects in exchange for securing clean energy to help meet their sustainability goals.
“PPAs will continue, and there will be more for small modular reactors,” the report states. “Their ability to provide consistent power makes them a good match for data centres, which run 24 hours a day. Big Tech has already signed PPAs for small modular reactors, but most will not be up and running until 2030 or later.”
GlobalData adds that other barriers to PPAs are tariffs on equipment made in China and delays in connecting new plants to power grids.
The report states that the long-term challenge for Big Tech will be reducing Scope 3 emissions.
“Expanding net-zero strategies to companies across the value chain will be needed to reduce Scope 3 emissions,” it explains. “Big Tech must help smaller suppliers sign their own PPAs for low-carbon energy. Suppliers to Big Tech can expect procurement standards on emissions to tighten over time, requiring suppliers to achieve emissions reduction at or below a certain emissions intensity.”