Microsoft is forking out for even more carbon credits to offset spiralling AI-fuelled carbon dioxide emissions from its datacenters.
The latest agreement signed with Re.green is for 3.5 million tons of carbon removal credits over 25 years. The Brazilian company says it works with landowners to restore degraded land such as farmland back to natural ecosystems by replanting native species.
According to the Financial Times, the arrangement could be worth around $200 million.
Microsoft and Re.green first struck an agreement in May 2024 for approximately 3 million tons of carbon removal credits over a 15-year period. Microsoft confirmed to The Register that this is effectively the same deal, although the numbers have clearly changed.
The contract, as disclosed in 2024, involved Re.green planting at least 10.7 million seedlings over 16,000 hectares across Brazil, and at the time was hailed by Re.green CEO Thiago Picolo as validation of its efforts to restore forests via the use of carbon credits.
“This collaboration serves as tangible evidence that this market not only exists but has significant potential for growth in Brazil. We are committed to forging additional partnerships of this calibre,” he said.
Microsoft is just one of many large corporations struggling to meet commitments regarding reduction of greenhouse gas (GHG) emissions. In its most recent Environmental Sustainability Report, Microsoft admitted its overall emissions had swelled by nearly 30 percent since 2020, despite setting the amibtion to be carbon-negative by 2030.
That reversal was blamed on an increase in indirect (Scope 3) emissions from the construction and outfitting of more datacenters – a carbon-intensive process – to meet customer demand for cloud services, especially AI development.
This trend looks likely to continue in the near future, with Microsoft confirming earlier this month it has budgeted to invest $80 billion this year on building more infrastructure to train and deploy AI models.
Microsoft has sought to address its emissions problem through a number of approaches, including renewable energy and nuclear power generation, as well as other carbon credit schemes, such as one announced last year with Occidental Petroleum.
Nevertheless, carbon credits have been criticized by some as “elaborate greenwashing mechanisms” and “a licence to pollute” as the buyer simply carries on emitting GHGs while securing credits from others to offset their activities.
A study published by financial services biz Morgan Stanley last year estimated that global GHG emissions caused by datacenters will be three times higher – between now and the end of the decade – than if generative AI had not been developed.
Microsoft was accused of greenwashing last year, when it was revealed the company had identified fossil fuel industries as a key growth target for its AI and cloud services so these could be used to aid exploration and production of new resources. ®
