AI's Dark Side: Tech Giants' Environmental Damage Exposed

The tech industry's relentless push into artificial intelligence is coming at an undisclosed cost to the planet. Amazon, Microsoft, and Meta are using outdated carbon accounting rules to conceal their actual carbon footprints, buying credits tied to electricity use that inaccurately erase millions of tons of planet-warming emissions from their carbon accounts.

  The current carbon accounting rules allow for the use of these credits for calculating a company's carbon footprint. However, many academics have shown that the accounting rules need to be updated to accurately reflect greenhouse-gas emissions.

  Companies are buying credits — called unbundled renewable energy certificates (RECs) — that can make it seem that power consumed from a coal plant came from a solar farm instead. Amazon, Microsoft, and Meta rely on millions of unbundled RECs each year to claim emission reductions when making voluntary disclosures to CDP, a nonprofit that runs a global environmental reporting system.

  The use of unbundled RECs is not only misleading but also creates a cascading impact of misreported emissions and growing demand for energy-intensive AI products. If consumers do not understand the climate impact of AI, because tech companies do not transparently report on it, then there's no incentive for consumers to change their behavior and change to a different AI model.

  Tech companies are the largest buyers of unbundled RECs in the world. Whether or not they continue buying these credits to make climate claims matters a great deal as more corporations look to cut their carbon footprint and green their credentials.

  To understand how the companies' use of RECs works, consider the origins of the power generated on a grid. Usually, it comes from a mix of sources  from coal and gas to wind and solar. Climate-conscious companies are increasingly looking to secure power exclusively from sources that generate the least planet-warming emissions.

  One way to do this is to sign a contract for clean power directly with the supplier through a power-purchase agreement, where a tech company is signing a long-term contract and thus taking on some of the risk for a period of 10 or 15 years. That, in turn, makes it easier for the developer to acquire the financing to build the solar or wind farm.

  Renewable-energy producers also issue energy attribute certificates, or RECs, which are a type of tracking instrument. However, RECs can also be bought on their own, separate from an electricity purchase. The idea behind these so-called 'unbundled' RECs is that there's value in renewable energy generation beyond simply the electrons produced and sold — its lack of emissions also has a value.

  Studies as far back as 2010 showed that unbundled RECs weren't delivering on the theory of stimulating the production of renewables. But that inconvenient fact was mostly ignored, and the enthusiasm for RECs led to a quirk in emissions reporting rules that allows companies to buy unbundled RECs and then deduct the emissions from their CO2 accounts.

  Solar and wind power have now become cheaper than the fossil-fuel alternative, and a growing body of evidence shows that most unbundled RECs aren't what those who count emissions call 'additional.' That is, they don't spur new wind or solar farms and thus there is no second value producers should be paid for, and certainly no emissions reductions for the buyer.

  The widespread use of RECs allows companies to report on emissions reductions that are not real. Last month, Amazon claimed that it had reached 100% renewable energy use in 2023 using its own accounting methodology and thus will have no emissions from electricity use.

  Like Amazon, Google claims to be 100% renewable powered on an annual global basis. In lieu of using unbundled RECs, Google purchases more clean energy than it consumes in some places, like Europe, and less in others, like Asia-Pacific, depending on the availability in those locations.

  Amazon, Microsoft, Meta, and Google are following the accounting rules set out under the Greenhouse Gas Protocol that was first developed in 2001. Those disclosures underpin the analyses that investors rely on to make decisions about what counts as a green company. While the protocol has received small updates over the years, it's due for a big update and experts are working to propose changes. All the big tech companies are now involved in lobbying on those changes.

  Standards need to evolve, because measuring carbon emissions isn't an exact science. It's continuing to improve and we're committed to helping improve it.

  In conclusion, the tech industry's reliance on outdated carbon accounting rules and the use of unbundled RECs is misleading and creates a false narrative about the climate impact of AI. It's time for the industry to adopt more transparent and accurate accounting methods to reflect the true cost of their operations on the planet.