Microsoft stopped buying paper renewable energy credits (RECs) that don't fund new generation to power its AI data centers. The 25% jump is the cost. Amazon and Google face the same trade.
Microsoft's total carbon emissions rose roughly 25% in the past year, according to the company's 2026 Environmental Sustainability Report, released July 9 alongside a companion post on Microsoft's On the Issues blog. The number covers Scopes 1, 2, and 3 combined: fuel the company burns directly, electricity it buys, and everything in its supply chain, including the power plants feeding its data centers. Scope 3 is the line where the AI footprint lives.
The cause Microsoft cites is the buildout of data center capacity to support AI workloads. Chief Sustainability Officer Melanie Nakagawa framed the 25% jump as the near-term cost of a deliberate strategy shift. The company has paused its use of non-additional, unbundled renewable energy certificates, the paper credits sold separately from the actual electrons they nominally represent, and is redirecting that capital into carbon-free electricity projects designed to bring net new clean power onto grids. Those projects take years to come online. Until they do, the report's headline number will look worse, by the company's own admission.
An unbundled REC is a financial instrument: a buyer pays for a certificate tied to renewable generation somewhere on the grid, and uses it to claim a renewable match for their own consumption, without changing the physical mix of electrons in their data center. Critics call that accounting greenwashing. Defenders call it the only liquid instrument available at scale. Microsoft's argument is that the alternative, paying for new solar, wind, or nuclear capacity that would not otherwise exist, is a bigger lever on actual emissions, even if it shows up as a higher number on the way through. The company's 2030 goal of becoming carbon negative, set in 2020, is the bet riding on that choice.
Four years out from that deadline, the carbon line is moving in the wrong direction, and the public reporting that would tell readers whether the pivot is on track is the same reporting Microsoft controls. The 25% jump is reported in aggregate. The Scope 3 share of the rise isn't broken out in the available summary, and no third-party audit of the new CFE contracts appears in the public reporting.
Microsoft isn't the only company in this position. Coverage from The Verge and Forbes on the Microsoft report cites a roughly 16% rise at Amazon and an 18% rise at Google tied to the same AI datacenter buildout. All three companies set their own climate targets, publish their own numbers, and miss them on the same trajectory line. The pattern isn't a Microsoft problem. It is a feature of voluntary corporate climate accounting when the underlying business is growing fast and the new clean power the strategy depends on takes longer to build than the load it is meant to serve.
Forbes covered the report on the same day it was released. HTXT.co.za and India Today ran the story the following morning, both leading with the AI capital expenditure cycle as the proximate driver. None of the coverage independently verifies the CFE claims behind the 25% number. That is the gap the 2026 report leaves open, and it is the same gap every Big Tech sustainability report leaves open.
The next data point arrives in 2027, when Microsoft publishes its fiscal 2026 numbers. If the CFE investments arrive in time, the 2026 spike becomes a footnote in a story about how the company built cleaner power by spending more on it sooner. If they do not, the spike becomes the line on a chart that says a self-set deadline was missed by a company with no obligation to meet it. The 2030 milestone is four years away. The 2027 report is the first real test of whether the pivot is working.