Microsoft Spends Hundreds of Millions on Carbon Credits to Offset AI’s Environmental Impact

July 11, 2024 – In a significant move to support its overall carbon strategy, Microsoft has recently signed a contract with Occidental Petroleum, agreeing to purchase 500,000 tons of carbon dioxide removal (CDR) “credits” over the next six years.

The tech giant has been aggressively expanding its data centers to fuel the growth of the artificial intelligence (AI) sector, which has led to a sharp increase in its carbon dioxide emissions. According to the latest news, this agreement was signed with 1PointFive, Occidental Petroleum’s carbon capture and storage business unit, and is valued at “hundreds of millions of dollars.” However, the specific value of the transaction has not been publicly disclosed.

Carbon credits, a method by which companies purchase verified emission reductions from third parties to “offset” their own emissions, have been a subject of debate. Despite the controversies, this mechanism is increasingly being adopted by businesses as a means to achieve net-zero emission targets.

In a public announcement, 1PointFive stated that this agreement with Microsoft represents its largest single CDR credit transaction. The company also believes that its direct air carbon capture (DAC) technology is being embraced by more enterprises, aiding them in their journey towards net-zero emissions.

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