Microsoft Cut Carbon Removal Buying by 80 Percent While Guiding to $175bn in AI Spend

Microsoft has bought roughly 80 percent fewer carbon removal credits so far this year than in the same period last year, according to a BloombergNEF report published Thursday, its first retreat in three years in a market it dominates ^[1]. In the same stretch the company told investors it expects to spend about $175 billion on AI infrastructure this year ^[2], and the two figures are best read together.

The spending side is concrete. Microsoft said it spent $41 billion in the three months from April to June, with a majority going to AI initiatives and datacenter construction ^[3]. A $175 billion annual figure averages about $44 billion a quarter ^[4], so the guided pace sits above what the company has already demonstrated it can deploy in a quarter. On the emissions side, Bloomberg reports that Microsoft's AI bet produced a 25 percent increase in emissions last year, before this year's acceleration ^[5].

Microsoft told Bloomberg that carbon removal is not the only strategy it is using toward its decarbonization goals and that the change does not imply a shift in ambition ^[6]. That may be true, and ambition is still not a unit of account. What is countable is that the disclosed emissions line moved up 25 percent ^[5] while the most visible mitigation line fell to roughly a fifth of its prior-year pace ^[7]. Procurement and sustainability teams that treated a hyperscaler's removal purchases as a durable input to their own reported footprint were leaning on a voluntary line item, and voluntary line items are the first thing to flex when capital expenditure guidance goes up.

The efficiency defence is also weaker than it was a week ago. A study published in Nature last week found that the climate benefits available from AI optimising renewables and the grid are dwarfed by the benefits the same technology delivers to the fossil fuel industry ^[8]. The researchers wrote that absent policy steering, AI's modelled effects "increase the carbon intensity of the global economy and reinforce fossil fuel incumbency" ^[9], and oil and gas executives say they are eager to adopt the technology for cheaper extraction ^[10].

The local cost is arriving faster than the global one. Datacenters increasingly lean on gas turbines, which emit smog-forming pollution, fine particulate matter, carbon monoxide and formaldehyde ^[11], and the Environmental Data and Governance Initiative found that communities within a mile of a datacenter breathe above-average levels of air pollution ^[12]. Studies have also tied datacenter construction to local heat islands ^[13]. The International Energy Agency has scenarios in which datacenters show the largest emissions growth of any sector ^[14]. That attention is now producing siting risk: New York state recently announced a moratorium on major new datacenters, and other jurisdictions have taken similar steps ^[15].

Worth watching: whether BloombergNEF's next tally shows a rebound or a plateau in Microsoft's removal purchases ^[1], whether the next sustainability report reconciles the $175 billion figure with the 80 percent cut ^[2][1], and how many more jurisdictions follow New York in constraining where the buildout can physically land ^[15].