Digital Transformation » AI » Microsoft has, now it’s time you offset your AI carbon impact

Microsoft has, now it's time you offset your AI carbon impact

Occidental will sell Microsoft 500,000 carbon credits for an undisclosed amount over six years as it attempts to meet its carbon negative goal by 2030.

Microsoft has joined forces with energy company Occidental to launch a  carbon credit programme aimed at addressing the environmental impact of artificial intelligence (AI). This strategic partnership signals a significant step forward in the tech industry’s efforts to mitigate the growing carbon footprint associated with AI-powered technologies.

As AI continues to revolutionise various sectors, from healthcare to finance, its energy-intensive nature has led to a surge in electricity consumption and greenhouse gas emissions. The Microsoft-Occidental collaboration aims to create a comprehensive carbon credit programme that will enable tech companies to offset the environmental impact of their AI operations.

By tapping into Occidental’s carbon capture and sequestration (CCS) capabilities, Microsoft will be able to acquire and retire carbon credits, effectively compensating for the environmental footprint of its AI operations. This model is designed to be scalable and accessible to other companies in the tech sector, potentially setting a new industry standard for environmental responsibility.

Occidental expects to sell its credits generated by a process of sucking carbon dioxide from the air, known as direct air capture, more cheaply than the roughly $1,000 market rate.

Occidental is America’s fourth-largest producer by volume of oil and gas. But it has rapidly expanded its carbon dioxide management business in recent years in a bet that trapping and storing the greenhouse gas will become increasingly necessary in the race to keep global temperatures in check.

Benefits abound

Microsoft’s credits will come from Occidental’s first DAC project, Stratos, in West Texas, which is set to be the world’s biggest such facility when it goes online next year. The project is being developed in partnership with BlackRock, which invested $550mn in November.

The Financial Times notes recent estimates from S&P Global put the cost of DAC credits at about $800-$1,200 per tonne of carbon emitted, a high cost that meant there were at present few bulk contracts being signed. 1PointFive said it expected to operate at a cost of $400-$630 per tonne.

The  partnership offers several key benefits for companies looking to offset their AI carbon emissions:

  1. Streamlined process: The collaboration simplifies the carbon offset process, making it more accessible and transparent for other tech companies.
  2. Quantifiable impact: Rigorous measurement and reporting protocols ensure accountability and allow companies to accurately track their environmental impact.
  3. Regulatory alignment: The programme aligns with evolving regulatory frameworks, helping companies stay compliant with shifting environmental policies.
  4. Industry leadership: By participating in such initiatives, companies can position themselves as leaders in sustainable technology, potentially attracting environmentally conscious customers and investors.
  5. Innovation catalyst: Cross-industry collaborations like this can spur further research and development in sustainable AI technologies.

As the AI industry continues to grow, the need for sustainable practices becomes increasingly critical. The Microsoft-Occidental partnership serves as a blueprint for how companies can take proactive steps to address their environmental impact while continuing to innovate.

Thinking ahead

The long-term vision of this partnership is to scale the carbon credit programme, making it accessible to a wider range of companies and industries. By leveraging their expertise and resources, the two organisations aim to establish a model that can be replicated and adopted by other players in the technology and energy sectors, amplifying the positive impact on the environment.

This carbon credit programme aligns seamlessly with Microsoft’s broader sustainability commitments, which include the goal of becoming carbon negative by 2030 and removing more carbon from the atmosphere than the company emits by 2050.

With the potential to shape the future of sustainable AI, this partnership between Microsoft and Occidental may well mark a turning point in the tech industry’s approach to environmental responsibility. As more companies recognise the importance of offsetting their AI carbon emissions, we may see a wave of similar initiatives emerging across the sector, paving the way for a greener, more sustainable digital future.

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