Microsoft has signed a landmark carbon credit agreement with Occidental Petroleum worth hundreds of millions of dollars. This deal aims to counteract the tech giant’s growing emissions, exacerbated by its expanding artificial intelligence (AI) operations.
View of the sky from the perspective of the earth. AI generated picture.
Under the agreement, Occidental, a leading US oil producer, will provide 500,000 carbon credits to Microsoft over six years. This transaction, touted as the largest of its kind, will help Microsoft offset emissions by paying Occidental to capture and store carbon dioxide underground.
Read more: Historic carbon offset sale: Microsoft acquires 8 million credits
This collaboration highlights the tech industry's struggle to curb the steep rise in emissions driven by AI advancements. Microsoft reported a nearly 30% increase in emissions since 2020 due to data centre construction, while Google's emissions surged by almost 50% since 2019. Microsoft aims to achieve carbon negativity by 2030, with Google targeting net zero by the same year.
Read more: Greening the blueprint: Microsoft's 2030 carbon negativity roadmap
Occidental's credits will be generated through direct air capture (DAC) technology, which extracts carbon dioxide from the atmosphere. Although innovative, DAC is criticised for its high costs and energy consumption. Nevertheless, Occidental anticipates producing these credits more cheaply than the current market rate of approximately $1,000 per tonne.
Occidental has swiftly expanded its carbon management sector, recently striking a similar deal with Amazon. This move positions the company as a key player in the burgeoning carbon capture industry, critical for global temperature control efforts.
The Stratos project, Occidental's DAC facility in West Texas, will commence operations next year and is set to be the largest of its kind. This initiative underscores the increasing necessity of diverse solutions, including carbon credits, to manage AI-related emissions effectively.
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