The financial success of the world’s largest three hyperscale cloud companies, Amazon, Google, and Microsoft, can be attributed to the increasing customer demand for artificial intelligence (AI) services. This has resulted in a boost in their profits, revenues, and market share. However, this growth has also led to a setback in their efforts to reduce carbon emissions. Google and Microsoft have reported significant increases in their greenhouse gas emissions in their recent annual environmental reports, mainly due to the expansion of their datacentre footprint to support their AI services.
Microsoft’s 2024 Environmental sustainability report, released in May 2024, revealed a 29.1% rise in GHG emissions from 2020 to 2023. The company attributed this increase to the expansion of its global datacentre footprint to meet the growing demand for AI services. Similarly, Google reported a 13% increase in GHG emissions in 2023, largely due to the rising energy consumption in its datacentres driven by the demand for AI services.
Both companies have committed to remedial actions to ensure they stay on track to achieve their 2030 carbon reduction targets. Microsoft announced initiatives to reduce its Scope 3 emissions, including requiring high-volume suppliers to use 100% carbon-free electricity by 2030. Google is working with suppliers to develop decarbonisation roadmaps to lower its GHG emissions and plans to reach a 100% renewable energy match by 2029.
Despite efforts to mitigate their emissions, the rapid growth in AI services poses a challenge for both companies in reducing their environmental impact. As the demand for AI services continues to grow, so will the emissions associated with datacentre expansions. The hyperscale cloud giants are facing the dilemma of balancing customer demands for AI services with their sustainability commitments, highlighting the need for innovative solutions to reconcile these conflicting priorities.