Microsoft emissions rise 27% as AI data centers expand

Microsoft's greenhouse gas emissions rose sharply in its latest fiscal year, driven by the rapid construction of new data centers to support artificial intelligence services, according to the company's annual sustainability report. The disclosure, released this week, underscores the growing environmental challenge facing major technology firms as they race to build AI infrastructure.

The company reported total emissions of 21.1 million metric tons of carbon dioxide equivalent for the fiscal year ending June 30, 2025, a 27 percent increase from the 16.7 million metric tons reported the previous year. A significant portion of the rise was attributed to a nearly tenfold surge in Scope 2 market-based emissions, which are tied to purchased electricity, jumping from approximately 259,000 metric tons to 2.7 million metric tons.

Microsoft stated the increase was driven primarily by the expansion of its data center infrastructure and a change in its carbon accounting policy. In February 2025, the company stopped purchasing certain types of renewable energy certificates and carbon removal credits, instruments it had previously used to offset emissions. Executives described this shift as a...