Microsoft's carbon emissions rose 25% in 2025 to 34 million metric tons, according to the company's 2026 sustainability report published this week. Microsoft attributed the increase to the buildout of AI data center capacity and to its decision last February to stop purchasing unbundled renewable energy certificates. The numbers put Microsoft further behind on the carbon negative target it set several years ago for 2030.
The report is blunt about the cause. Microsoft said the emissions growth was "driven primarily by the expansion of our datacenter infrastructure," the physical footprint required to train and serve frontier AI models. The 34 million metric ton figure is calculated "without select interventions," meaning it excludes offsets and other accounting adjustments Microsoft applies elsewhere in the report.
“driven primarily by the expansion of our datacenter infrastructure”— Microsoft, 2026 sustainability report
This is not a one-year anomaly. Microsoft's 2024 sustainability report showed a similar year-over-year rise in emissions tied to data center growth, meaning the company has now widened the gap to its 2030 goal for two consecutive reporting cycles. The 2030 target requires Microsoft to remove more carbon than it produces — a bar that gets harder every quarter compute demand keeps climbing.
Key facts
- 01Microsoft's carbon emissions rose 25% in 2025 to 34 million metric tons, per its 2026 sustainability report.
- 02The company blamed the increase primarily on expanding data center infrastructure to support AI workloads.
- 03Google reported a 25% jump in supply chain emissions in its own 2026 report; Amazon reported a 16% rise.
- 04Amazon's data centers used 2.5 billion gallons of water in 2025, which it claims is less than Microsoft.
- 05Microsoft set a 2030 carbon negative goal several years ago and has now missed its trajectory two years running.
The pattern extends across the hyperscalers. Google reported a 25% spike in supply chain emissions in its own 2026 sustainability report. Amazon reported a smaller 16% increase, and disclosed in June that its data centers consumed 2.5 billion gallons of water in 2025, a figure Amazon claims is lower than Microsoft's water use. All three companies are building at a pace their published climate commitments were never designed to accommodate.
Microsoft's report does not sugarcoat the mismatch. The company wrote that "While AI infrastructure is driving demand for energy, water, land, and materials, sustainability solutions are not scaling fast enough to meet demand." That is an unusually direct admission from a company whose 2030 pledge was, at the time it was made, one of the most aggressive in the sector.
“While AI infrastructure is driving demand for energy, water, land, and materials, sustainability solutions are not scaling fast enough to meet demand.”— Microsoft, 2026 sustainability report
The February decision to stop buying non-additional, unbundled renewable energy certificates is worth flagging on its own. Those certificates have long been criticized as a paper accounting tool that lets companies claim clean energy consumption without actually adding new renewable capacity to the grid. Dropping them raises Microsoft's reported emissions on paper but produces a more honest baseline. The 25% number reflects, in part, that methodological tightening rather than a pure operational spike.
Data center siting decisions are increasingly the constraint. Grid interconnection queues in the US now stretch multi-year, and utilities in Virginia, Arizona, and Texas have started raising alarms about the pace of hyperscaler load additions. Microsoft has signed nuclear-adjacent power deals over the past 18 months, including the restart of a Three Mile Island reactor via Constellation Energy, but those megawatts do not come online for years.
The counterweight in Microsoft's report is that per-workload efficiency continues to improve — newer chips do more inference per watt, and liquid cooling designs cut energy overhead. The absolute numbers are still going up because total AI demand is outrunning those efficiency gains. Microsoft has not published a revised 2030 target and continues to treat carbon negative as the stated goal, even as the trajectory tells a different story.
The market read here is that the sustainability commitments made by hyperscalers between 2019 and 2021 were priced for a pre-generative-AI compute curve. Every major AI operator is now running the same math: build the capacity your customers are paying for, disclose the emissions honestly, and hope that grid decarbonization, small modular reactors, and next-generation cooling close the gap before 2030 becomes a reporting problem. Microsoft's 34 million metric tons is the number that number-crunchers will benchmark Google and Amazon against for the rest of the year, and the direction of travel is not toward the pledge.
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