Welcome to Zero I am Akshatrati. This week AI's climate impact. We've been wanting to do episodes exploring artificial intelligence, energy and the climate for some time now, and we have some exciting things in the works for you in the weeks ahead. There are basically two big questions here, what can artificial intelligence do to help fight climate change? And on the flip side, how might AI's resource consumption exacerbate emissions?
Today we are talking about the second question because we've just found the first concrete example of how the pursuit of AI is colliding with the efforts to cut emissions. Last week, my Bloomber colleague Dina Bass and I wrote a story about the impact of Microsoft's AI expansion, and we interviewed Microsoft president Bradsmith to get his Reactionshi. Hello audio test here, Hi les. In twenty twenty, Microsoft pledge to remove more carbon than it emits by the end
of this decade. If the company was on track, then its emissions should have been roughly thirty percent lower in twenty twenty three, but as the company's AI ambitions have expanded, its emissions have instead increased by thirty percent. Some of
the numbers are startling. Last year, the tech giant's power consumption rivaled that of a small European country, Slovenia consumed less electricity in twenty twenty three than Microsoft did, and its development that's likely to be repeated by other competitors that are also chasing their own AI goals. After all, Microsoft's AI push has made it the world's most valuable company,
worth more than three trillion dollars. Companies want what Microsoft has, but Microsoft is also the company that's been leading on climate plans. It's set one of the most ambitious goals for any large company, not just going carbon negative by twenty thirty, but also promising to erase its legacy emissions, and it came up with a comprehensive plan which is throwing money and other resources at almost every possible climate solution it could deploy. So when it comes to cutting emissions,
if Microsoft can't do it, can any other company. On today's episode, zero's producer Mightily Rao asks me the questions.
Hi, that's right, We're going to discuss Microsoft's climate challenge. What Brad Smith had to say about the company's rising emissions and how to think about climate in the AI age Actually let's start with some background in terms of reducing emissions. What did Microsoft pledge to do and how realistic did that promise seem at the time.
Let me take one more step back, actually and start in twenty eighteen, because before that we didn't even have ned zero. It was a report from the Intergovernmental Panel on Climate Change that said that if the world wants to keep warming below one point five degrees celsius, then the entire world needs to reach net zero carbon dioxide emissions by twenty fifty. Soon we saw a wave of
companies coming up with climate targets. Tech companies, which of course have a lot of money and mostly have their emissions tied to consuming electricity, were ahead in the game. We got a goal in twenty twenty from Microsoft saying we're going to be carbon negative by the end of this decade. Very ambitious, yes, and it wasn't clear then
how it would reach that. But because it was a tech company whose emissions were down to electricity, and electricity was getting cleaner, and of course solar and wind were getting cheaper, it felt like it is something a tech company could do.
So Microsoft set this climate goal in twenty twenty, but around the same time, AI started to become a bigger priority for the company. Let's talk about that parallel timeline.
So a little known story now, but in twenty nineteen, just a year before it put out its climate plan, Microsoft invested in open Ai, which was then an up and coming startup that was starting to build products around this thing called generative AI. Of course we know that company today as the maker of chad GPT, and everybody has their own feelings about it. But what it meant was AI is going to start to consume a lot
of computing resources, a lot of data processing. And Microsoft, as a provider of cloud services of computing services, both could be a customer to an AI produce, sir, but also could be a seller of those AI products. And we've seen Microsoft's bet on OpenAI is starting to pay off. There is clearly demand for these products. Maybe it's hype right now, but what is clear is that other competitors want what Microsoft has. So Google is investing in AI, Meta,
the company behind Facebook, is investing in AI. Amazon is doing it. There a bunch of Chinese companies doing it. Everybody is in this race now.
So in the meantime, Microsoft has fallen short on the emissions goals that it's set. You asked Microsoft president Brad Smith about that, and we can play a little bit of his answer.
You know, in twenty twenty, we unveiled what we called our carbon Moonshot, our goal of being carbon negative by twenty thirty. That was before the explosion and artificial intelligence. So in many ways, as I say across Microsoft, the moon has moved. It's it's more than five times as far away as it was in twenty twenty. If you just think about our own forecast for the expansion of AI and its electrical.
Needs, and again let's go back to the story you wrote, because the figures are pretty astonishing. Microsoft's total planet warming impact is about thirty percent higher today than it was in twenty twenty. So is that all down to AI.
Well, that seems to be the case. Now. AI has two aspects to it. One is that it consumes more and more compute, as they say, which requires electricity, And of course more compute means it requires more computing power, which comes from building data centers that are built out
of steel, cement and microchips. So because Microsoft says it's one hundred percent powered by renewables, it's not really the electricity consumption that is contributing towards this emissions increase, which means most of those emissions increase is coming from the construction of data centers because there is no green cement or steel or microchips which are zero carbon that you can deploy right away, and that's a big problem for Microsoft right now.
On what basis is Microsoft saying that they're entirely powered by renewables.
It's a good question, and more people should ask this question because a lot of companies say they are one hundred percent powered by renewables, which is not technically true, because what is happening is that Microsoft and other tech companies sign something called corporate power purchase agreements PPAs, and these are where they actually go out pay a developer to deploy a solar plant and consume all the electricity
that solar plant is producing. So that is renewable energy, but there's a lot of electricity there is also consumed at night when the sun is not shining that might
come from a fossil fuel grid, coal or gas. Many companies then something called a renewable energy credit, which simply turns a coal electron into a solar electron and that was fine in the initial days when there wasn't enough renewables on the grid, because those extra credits made renewables a little more profitable because at the time they were expensive,
and that meant it incentivized the deployment of renewables. Today, those credits do not really incentivize building out more renewables, and so work that my colleague Ben Elgin has done has found that in fact, using these renewable energy credits can mask a company's emissions. Microsoft told us that in the long term they want to stop buying these renewable energy credits and move to just buying it through power purchase agreements, but that still weighs away.
Right, But because of the data centers needed for AI, Microsoft's emissions are still rising. Brad Smith seemed to suggest that we shouldn't lose sight of a good AI can do.
So I think the right way to think about it in the first instance is the call it benefits and costs, or the good that we think AI will do for the world versus the impact on the environment. And I think we would clearly say it's going to do far more good for the world, especially in terms of the need and ability to bring it to everyone in the world rather than have a group of AI haves and AI have nots in different parts of the world.
So Microsoft is developing AI and using it for a lot of different things. Can you talk me through what we might think of as Microsoft's good AI, because from what I've seen of chat GPT, I'd be happy to be AI have not.
Yeah, this is the part of AI which is currently sort of confusing because chat GPT is only one type of AI, it's generative AI. There are other forms of AI which can be used for doing climate goods, so we know, for example, there are companies that are deploying AI models to try and improve weather prediction.
Yeah, I would say AI is saving lives every day. It's helping respond to natural disasters that are occurring more frequently, so we shouldn't lose.
Sight of it that can really help. There are other examples of using AI to find new materials that could help us make better batteries, for example, or try and find new materials to capture carbon. Those are examples where AI has been put to use and will be increasingly put to use, and it's something we want to explore on
the podcast. More so, we didn't get into all the applications that AI can have for trying to solve some of the climate problems we have, etc. But I think he was telling us that just like computers and mobile phones have done good in the world helping people connect and make use of their own abilities to a better extent to be more productive, that AI can do that too, and that we should try and get this to as many people in the world as possible, as quickly as possible.
But of course he would say that because he has AI as a product and he would like to sell that.
And as we know, AI is also used to help oil and gas companies find where to drill kind of to expand fossil fuel production, and some people at Microsoft aren't happy about the company's commitment to AI.
Yes, there is a group of ten thousand employees within Microsoft who want to push Microsoft to deal with its own emissions, but also to ensure that its AI is not used to increase emissions. In fact, two former employees wrote that they were deeply saddened to be so let down by a company we love so much because they didn't want Microsoft's AI to be used by oil and gas companies for increasing extraction. So we asked Brad about that,
and he did have an answer. He basically said, we have laid out our principle that we will only work with energy companies that do have an net zero goal and are on the climate pod, and that our AIUS is towards the energy transition.
I want to ask you about something else Brad said about Microsoft's long term impact. This goes back to the point about the company's need for green cement and green steel and green microchips. And what Brad basically said to you and Dina was that when a gigantic tech company like Microsoft throws its weight around, it can completely change market realities and it can maybe even entirely jumpstart green industries. Here's what Brad said on the question of green concrete.
I'm probably especially excited about concrete and steel in a way that I never thought I would be working at a tech company, mostly because I think we have an opportunity to punch way above our weight in starting to build new markets for greener steel and greener concrete. One of our goals for this next year is to do for concrete what we've done, or at least help to do for electricity. By that, I mean there are certain places where we sense the potential for a market to
come together to buy green concrete. It may not be next door to our data center. But what we're trying to do is use our resources to then go buy green concrete I'll just say in Finland, and then be able to credit that for carbon accounting purposes against a data center that might be in southern Europe. And if we can do that, we will stimulate demand for green concrete. It will help it grow to scale. As it grows to scale, the price of green concrete starts to come down.
And if you then think about the role of the tech sector as a whole, because the tech sector as a whole has and so committed to meeting these goals, and we have the resources to pursue this goal, we can make a difference.
What do you make at this point? Does this kind of influence make up for the company's rising emissions?
So let's look at the numbers. Microsoft's emissions at sixteen or seventeen million tons per year are quite small relative to say the global emissions which are thirty eight billion tons last year, or even other large companies like Exomobil which was five hundred million tons. And yes, it's true that as Microsoft pursues green steel, green cement, and even carbon removals, it is making an expensive product slightly cheaper every time it buys it, and that will make it
easier for other companies to meet that goal. But that does not mean Microsoft should get any credit for it in its own carbon footprint.
So basically, the companies arguing for another kind of long term thinking, don't just look at our emissions, don't just look at our carbon footprint, look at this other intangible effect we are having on industries adjacent to ask.
Right, and you should look at that intangible benefit, But you cannot ignore the fact that the company's emissions right now are rising. Microsoft has to both reduce its own emissions while it may take some reputational benefit from making green solutions cheaper.
After the break, does Microsoft need to choose between its net zero commitments and its AI ambitions and has it already made that decision? Aksha and Dina put the question to Brad and we discuss his answer. And if you're enjoying this episode, please do rate and review zero on Apple or Spotify. Microsoft is clearly going to keep pushing on AI and that means more resources, more electricity, and thus probably more emissions. So what happens to its climate target?
You put that question to Brad Smith. He said, they're not abandoning those pledges.
I don't want to give up now. Can I promise that we'll get to this moon by twenty thirty? We keep making more progress. The truth is we made so much progress at the strategy level over the past year. That's the real story to me inside Microsoft.
Can he have it both ways?
It's really tough. This is why the story we wrote kind of en viral, because there is no good answer right now. It's clear, even if your electricity was really clean, fully clean one hundred percent renewables twenty four to seven, that are still building data centers with steel and cement and these chips. That is very common intensive and that's going to increase emissions in the short term. So we ask Bratsmith what exactly is the plan here? And the
answer is basically everything possible. Microsoft is investing in existing technologies like nuclear power and geothermal, but also frontier technologies like nuclear fusion, which we haven't even made work yet, but maybe we will in the next decade, and of course, if nothing else works, Microsoft is also investing in carbon removal. It is the largest purchaser of carbon removal credits in
the world. And if say, by twenty twenty nine, emissions are still high, Bratsmith said, carbon removal is always on the table, But of course it is a very expensive purchase to try and remove carbon dioxide from the air. It would be much cheaper to not emit that carbon dioxide in the first place.
You mentioned that last year Microsoft consume more energy than Slovenia, but the same could be said for Google or Meta. Probably right, This is not only a problem for Microsoft, but is it disproportionately a problem for Microsoft.
No, it's a problem for all of the tech companies trying to get after AI. And I'm sure as we see the sustainability reports from Google and metacome for this year and it's likely to show an increase in emissions not very different from what Microsoft has. So it is a problem that tech companies need to find an answer to. Because we also ask Google, Meta and Amazon to respond to our questions on their own emissions increase, and they all said, we are not backing away from our climate targets.
Which in most cases are either carbon neutrality by twenty thirty or in Amazon's case, by twenty forty.
Because I think most listeners know you've written a book called Climate Capitalism, which is about the idea that rather than trying to entirely remake our economic system overnight, it's more fruitful to focus on getting businesses and governments to respond to the reality of climate change within the capitalist
framework that we already live in. When you see a big company like Microsoft move in this direction on its own climate commitments, do you worry about capitalism's incentives just being too much at odds with green goals.
Well, it's exactly the thesis of the book, which is climate change has to modify how capitalism works. Microsoft isn't going to back off from AI if it's got profits in there. But as long as governments and people want climate targets to be hit, Microsoft will have to find a way to make those climate targets work. That may mean a lot more investment in greener technologies, or if it has to pay a really premium price and remove
all that carbon dioxide, so be it. But those targets need to be set by governments so that we don't rely on just voluntary commitments from companies like Microsoft doing the right thing on climate. It is possible to hit these goals with the technologies that we have and the technologies that we do need to invent, because that modeling has been done by very reputable organizations like the International Energy Agency, Bloomberg and EF the Intergovernmental Panel on Climate Change.
What is needed is to actually do the work, and Microsoft is showing that that work is not easy, but it is something you need to be committed to because climate is a problem everybody has to deal with. In fact, Bradsmith ended our interview by saying exactly that.
You've got to be willing to invest and pay for it. You've got to be willing to persist even when the challenge seems so hard. It's all about incredibly sophisticated execution. But we need to retain a vision as well, and that starts with the recognition that a problem that humanity created is also a problem that humanity can solve, and let's never lose sight of that. Yeah, it's not like this is running the Kentucky Derby, where you get up on Monday and the race is over and there's no
race to run. This is the race of the century, and it needs to be run every day throughout the century. That's our perspective on it. A THEAI race is more important.
I don't want to make some people. There are definitely people that think that climates should take precedence over rapid deployment of AI.
Yeah, but I think the question you should ask is what percentage of global steel consumption in twenty thirty is going to be devoted to the construction of data centers versus everything else that steel goes into. What percentage of the world's concrete consumption is going to go to data centers?
And then ask yourself this. Every time you go to a meeting, every time you see a new innovation, whether it's in the technology changes or the market innovation, I'm willing to bet you will find someone from Microsoft very likely to be there. The day we should worry is the day we stop showing up.
Okay, what do you make of Brad's answer? Do you really believe Microsoft's reasoning on this point?
My takeaway from following net zero from the start to company setting these goals, to Microsoft, which has been ahead in the game at least in setting goals, is that it is hard. Nobody has the perfect answer. But if anybody can try and answer that question, it's a company with money and a company that is committed to try and reach these goals. So I give Microsoft the credit that it is still trying to meet these goals, as hard as they might be. But Microsoft is the world's
most valuable company. And if Microsoft can't reach these goals or isn't taking them as seriously, then can we expect any other company to do so? As a climate reporter. That is the bigger question to me, and it remains unanswered. Lukshet, thank you, Thank you, This is fun.
Thank you for listening to Zero. If you liked this episode, please take a moment to rate or review the show on Apple Podcasts and Spotify, Share this episode with a friend or with a Microsoft Windows user. You can get in touch at zero pod at Bloomberg dot Net. Zero's producer is me Mightily Raw. Our theme music is composed by Wonderley Special thanks to Kiara Bindram, Dina Bass and Alicia Clanson. Back soon.