PATH TO NET ZERO: AI build-out tests tech sector's emissions trajectory

The world's largest technology companies continue to reach milestones in renewable energy, even as the rapid expansion of AI infrastructure drives absolute emissions higher.

The race to build out AI infrastructure is in full swing, with the five major hyperscalers — Amazon.com Inc., Alphabet Inc., Microsoft Corp., Meta Platforms Inc. and Oracle Corp. — having spent $1.1 trillion in capital expenditure over the past five years, according to Visible Alpha. This capex has fueled the rapid expansion of energy-intensive AI data centers, prompting hyperscalers to invest heavily in clean energy capacity — securing everything from solar and wind to geothermal, hydro and nuclear capacity — to power these facilities.

However, overall electricity consumption has continued to climb, resulting in some hyperscalers reporting significant increases in their greenhouse gas emissions this year.

"The key question for investors and policymakers is whether a clean energy purchase changes emissions in the real world, not simply whether it changes how emissions are allocated on a company's carbon inventory," Mark Dyson, managing director at RMI, said in an email.

Big Tech emissions

Among the hyperscalers that published sustainability reports in 2026, both Microsoft and Amazon reported increases in total emissions.

In particular, Microsoft's total Scope 1, 2 and 3 greenhouse gas emissions increased by 25% year over year in fiscal 2025 as the company expanded its infrastructure. At the same time, the company said it reached a milestone by matching 100% of its annual global electricity consumption with renewable electricity.

That calculation includes renewable electricity already present in local power grids. Separately matched renewable electricity totaled about 34.5 million megawatt-hours, representing roughly 93% of Microsoft's 37 million MWh of electricity consumption.

Microsoft has maintained its goal of becoming carbon negative by 2030. A company spokesperson reaffirmed Microsoft's climate commitments but declined to provide additional comment, directing S&P Global Market Intelligence to the methodology in its environmental data disclosures.

Amazon reported a similar trend. Its carbon footprint increased by 16% in 2025 to 80.85 million metric tons of carbon dioxide equivalent, while carbon intensity rose 3% year over year but remained 38% below its 2019 level, according to the company's sustainability report.

Amazon matched 100% of its electricity consumption with renewable energy for a third consecutive year. The company has also continued investing in carbon-free generation, including nuclear power and small modular reactor technology, as it pursues a 2040 net-zero target.

Amazon has more than doubled its portfolio of utility-scale clean energy capacity over the past three years, according to a report from 451 Research by S&P Global, with agreements for more than 40 gigawatts of existing and planned capacity.

Alphabet subsidiary Google LLC stands out as a hyperscaler that reported a 2% annual decline in operational emissions in 2025, including a 3% year-over-year reduction in Scope 2 emissions, or the indirect greenhouse gas emissions from purchased electricity. The reduction came despite the company reporting a 37% annual increase in electricity demand, its largest load growth in history.

"Maintaining this decoupling of electricity-related emissions from our rapid growth will require even more clean energy investments and closer partnerships with local stakeholders in the years ahead," according to the 2026 Google Environmental Report.

Google has nearly 35 GW of contracted clean energy capacity and has signed agreements for over 12 GW of net-new clean energy in 2025 alone.

Investors question real-world impact

For investors and policymakers, these results illustrate why clean energy purchases alone may not be reducing emissions overall, said RMI's Dyson.

Traditional Scope 2 accounting is largely attributional, Dyson said. It can show whether a company has matched electricity consumption with clean energy attributes, but it does not necessarily demonstrate whether the procurement made the power system cleaner.

At Google, for instance, as the company's overall electricity consumption climbed, the average share of carbon-free electricity powering Google's global data centers fell slightly in 2025 to 65%, down from 66% a year earlier.

"Two renewable energy purchases that look identical on a corporate inventory can have very different climate impacts depending on where and when the projects operate, what generation they displace, and whether they change investment, retirement, or operating decisions on the grid," Dyson said.

Investors and policymakers, Dyson added, should also consider what he described as consequential impacts: whether a project would have happened without the corporate buyer, what generation it displaces, and whether it accelerates new clean capacity, fossil fuel retirements, or other structural changes to the grid.

Evolving standards

The distinction between attributional accounting and consequential emissions impacts is beginning to shape the standards companies use to set climate targets.

The Science Based Targets initiative (SBTi) Corporate Net-Zero Standard Version 2.0 requires companies with rapidly growing electricity demand — above 20% over a target cycle — to set Scope 2 emissions reduction targets, an SBTi spokesperson said in a statement. The provision is intended to prevent companies with fast-growing assets, such as data centers, from increasing the share of low-carbon electricity they use, contract or match while their physical emissions continue to rise.

SBTi's implementation hierarchy also calls for companies to prioritize direct decarbonization within their operations and value chains before turning to market instruments once other available levers have been exhausted.

"It's absolutely critical that companies act upon their climate goals," the spokesperson said.

SBTi's validation arm does not currently review how companies execute their individual sustainability strategies or assess their ongoing progress. Companies with validated science-based targets are required to publicly report progress annually and review and, if necessary, update their targets every five years.

Testing commitments

Bruce Kahn, lead portfolio manager of the Shelton Sustainable Equity Fund, is skeptical that voluntary corporate climate commitments will constrain technology companies when they conflict with the commercial race to build AI infrastructure.

"None of this is binding," Kahn said in an interview. "Their net-zero commitments are not binding. They're voluntary."

The AI investment cycle has made Kahn less confident in the durability of those pledges as technology companies compete to bring new computing capacity online. Their immediate energy strategy is likely to be shaped more by cost and speed than by a preference for any particular generation technology, according to Kahn.

"Their strategy is, how do we get power fastest and cheapest?" Kahn said.

That dynamic can favor wind and solar because those resources can generally be deployed faster than new nuclear generation, Kahn said. He views nuclear as an important long-term energy source but sees more immediate investment opportunities in areas such as nuclear fuel and equipment supporting new power infrastructure.

Emissions hurdles

The uneven climate picture extends to the semiconductor industry, which supplies much of the AI build-out.

NVIDIA Corp. continued to match 100% of electricity consumption at sites under its operational control with clean electricity in fiscal 2026, according to its sustainability report for the fiscal year. Its Scope 3 emissions, however, increased to 10.7 million metric tons of CO2 equivalent from 6.9 million a year earlier.

Analog Devices Inc. reported a 42% reduction in combined Scope 1 and 2 emissions from its 2019 baseline and achieved its goal of 100% renewable energy use across its manufacturing operations by the end of 2025. The company also established its first interim upstream Scope 3 target, seeking a 30% to 35% reduction in emissions intensity by 2030 from a 2022 baseline.

Mary Ferris, ADI's head of ESG, said the company considered both absolute and intensity-based approaches before deciding how to structure the Scope 3 target.

"We know that our investors want to see us grow," Ferris said in an interview. "That intensity target gave us the comfort that we were going to be able to grow at the pace that we needed to, while still showing the substantive reduction that we're targeting."

ADI is expanding fabrication capacity in the US and Europe by adopting more energy-efficient manufacturing equipment and investing in clean energy procurement. Specifically, ADI invested in two US solar developers through arrangements that include renewable energy credits over 10 years, expected to more than cover the company's US electricity requirements, including those for nonmanufacturing operations.

"That additionality was really important to us," Ferris said.

ADI faces a different set of constraints in its supply chain, where external foundries and other suppliers operate in regions with widely varying access to renewable electricity and use various emissions-intensive processes.

"It isn't one size fits all," Ferris said. "It's an engaged, collaborative conversation that allows us to get to scale."

Varied progress

Other technology companies are further ahead on some near-term operational targets.

Marvell Technology Inc. reported an 86% reduction in Scope 1 and 2 emissions in fiscal 2025 compared to its fiscal 2022 baseline, surpassing its 50% fiscal 2030 target years ahead of schedule. Cisco Systems Inc. reduced Scope 1 and 2 emissions by approximately 90% from its fiscal 2019 baseline, meeting its fiscal 2025 goal and exceeding its fiscal 2030 reduction target for selected Scope 3 emissions.

Apple Inc. illustrates why the next phase of corporate decarbonization increasingly lies beyond companies' directly controlled operations.

Apple has powered its corporate operations with renewable electricity since 2018, but manufacturing accounts for more than half of its gross carbon footprint, according to its Environmental Progress Report covering fiscal 2024. Its supplier code requires direct manufacturing suppliers to transition to 100% renewable electricity for Apple production by 2030.

The company's directly controlled operations represent a comparatively small share of its environmental footprint, making manufacturing and the supply chain the larger challenge as Apple pursues carbon neutrality across its entire footprint by 2030.

For investors, Kahn of Shelton Sustainable Equity Fund said opportunities lie within the "picks and shovels" supporting the build-out — cooling systems, water-efficiency equipment, electrical components and power infrastructure that could retain value regardless of which AI business models ultimately prevail.

Kahn also noted that the strength of a company's climate strategy is unlikely to determine which technology companies ultimately lead the AI market.

"Let's just say one company has a much better climate strategy and is executing really great on that, and they're net-zero, and all the other ones are not," Kahn said. "Are they going to be the leader in the AI tech world? It won't have a bearing on it at all."

Susan Dlin contributed to this article.