Technology giant Microsoft says surging demand for artificial intelligence (AI) is driving a sharp increase in its greenhouse gas emissions, while reinforcing its long-term commitment to carbon dioxide removal (CDR) as a key pillar of its climate strategy.
In its 2026 Environmental Sustainability Report, the company revealed that its greenhouse gas footprint increased by 25% year-on-year, citing the rapid expansion of AI-driven data centre infrastructure alongside a shift in its clean energy strategy.
The company said emissions growth reflected “the expansion of our datacentre infrastructure and pausing our use of non-additional, unbundled renewable energy certificates as we prioritise investments that bring net new power to grids.”
Microsoft’s Scope 2 emissions – those associated with purchased electricity – increased almost tenfold during the reporting period after the company discontinued its use of spot Energy Attribute Certificates, opting instead to invest in new carbon-free electricity generation.
While the move has increased reported emissions in the near term, Microsoft said it believes the strategy will deliver more durable emissions reductions over the long term.
Despite the increase, the company reaffirmed its ambition to become carbon negative by 2030 and continues to expand one of the world’s largest corporate CO2 removal portfolios.
During 2025, Microsoft added 29 CDR projects spanning 10 different removal pathways, with the portfolio expected to deliver more than 45 million tonnes of carbon removals over the next three decades.
The company said it continues to assess around 200 carbon removal projects globally and is using long-term procurement agreements to help scale the sector.
Its approach includes signing 10 to 15-year offtake agreements for engineered CDR technologies such as direct air capture (DAC), alongside longer-term contracts for nature-based solutions.
Microsoft said the strategy is intended to help developers secure financing while supporting the commercialisation of emerging removal technologies.
The latest sustainability report follows a series of major carbon removal agreements signed by Microsoft over the past year, underscoring growing demand for permanent CO2 removals as AI-related emissions continue to climb.
In May, the company signed a seven-year agreement with Danish to purchase 650,000 tonnes of permanent CO2 removals generated through bioenergy with carbon capture and storage (BECCS).
The project will capture CO2 from five of BioCirc’s biogas plants, with deliveries of 100,000 tonnes annually through to 2032.
The deal followed a 15-year agreement with North Star to purchase 626,000 tonnes of CO2 removal credits from a in Saskatchewan, while Microsoft has also committed to projects including Stockholm Exergi’s BECCS facility in Sweden, Lithos Carbon’s enhanced rock weathering programme in the US and Exomad Green’s biochar operations in Bolivia.
Last year, Microsoft also signed agreements covering 45 million metric tonnes of CO2 removals with 21 companies, including a 15-year contract with AtmosClear involving the capture of 6.75 million tonnes of CO2 annually from a BECCS facility in Louisiana.
The company said it has adapted its procurement strategy according to the maturity and scalability of different CDR pathways, using smaller purchases to help de-risk emerging technologies while supporting the development of measurement, monitoring, reporting and verification protocols.
Anette Poulsen, Sales Development Manager at Adding Engineering, commenting on Microsoft’s agreement with BioCirc earlier this year, said, “This is a strong signal, both for the development of a permanent CO2 displacement and for the role Danish companies can play in the green transition on a large scale.”
“It also shows how much is starting to happen in the intersection between energy, technology, process plants and documentation in recent years.”
