Microsoft’s push to become carbon negative by 2030 is drifting further from reach, with the tech giant’s total emissions surging 25 per cent in a single year to sit nearly 58 per cent above its 2020 baseline. The blowout, driven by the breakneck expansion of AI data centres, has the company leaning harder than ever on mass timber construction and forest-linked carbon removal to claw back its emissions.
Published on Thursday, Microsoft’s 2026 Environmental Sustainability Report puts the company’s emissions for the 12 months to June 2025 at 20.3 million tonnes of carbon dioxide equivalent across its operations and supply chain, up from 16.2 million tonnes a year earlier. Electricity consumption climbed 24 per cent over the same period as the company expanded the computing capacity behind Azure, Copilot and its OpenAI partnership.
Part of the increase is self-inflicted, with Microsoft choosing to stop buying unbundled renewable energy certificates, an accounting instrument that trimmed its reported emissions without adding new clean electricity to the grid. In their place, the company will back long-term agreements now covering up to 40 gigawatts across 26 countries, with 19 gigawatts already operational.
In the report’s foreword, Microsoft Vice Chair and President Brad Smith and Chief Sustainability Officer Melanie Nakagawa conceded that the collision between AI growth and the company’s 2020-era climate pledges is forcing hard choices: “This tension is real,” the pair wrote, adding that it is pushing the company to ask where it needs to move faster, invest differently or rethink its approach altogether.
Mass timber is Microsoft’s carbon answer…
Crucially for the forest products sector, the report’s answer is not to retreat from AI but to bundle carbon-free electricity, carbon removal, sustainable fuels and lower-carbon construction materials, including mass timber, into a single decarbonisation portfolio.
No tech giant is further down that road than Microsoft, which in November 2024 opened the world’s first data centres built from cross-laminated timber in Northern Virginia, a Gensler-designed hybrid system the company estimates cuts embodied carbon by 35 per cent compared with steel and 65 per cent compared with precast concrete. “A lot of our suppliers are on the same journey as we are,” Jim Hanna, sustainability lead for Microsoft’s data centre engineering team, said at the time.
That model has since been adopted by Amazon and Meta, with big tech now accounting for up to 10 per cent of all mass timber sold in the United States. “Mass timber is the smartest structural choice available right now for data centre construction,” Washington-based building materials expert David Stallcop said ahead of this year’s International Mass Timber Conference in Portland, Oregon.
Redmond is also one of the world’s biggest buyers of wood-linked carbon removal, signing a deal in April last year to purchase more than 3.685 million tonnes of carbon dioxide removal credits over 12 years from CO280, a start-up capturing biogenic emissions from US pulp and paper mills for permanent geological storage. “The trees do the heavy lifting; they absorb the CO2,” CO280 chief executive Jonathan Rhone said of the agreement.
The new report shows why those bets matter, with Scope 3 emissions, covering construction, purchased hardware and suppliers, remaining the largest slice of Microsoft’s total. Electricity-linked Scope 2 emissions, meanwhile, ballooned from nearly 2 per cent to 13 per cent in the space of a single year.
Chief executive Satya Nadella claims the buildings themselves are changing too, with a new closed-loop cooling design allowing AI data centres to use as much water annually as a restaurant. Elsewhere, the company replenished 14.2 million cubic metres of water, exceeding its global withdrawals for the first time, and recycled or reused 92 per cent of its retired cloud hardware.
Further wins came in waste and land, with 90.5 per cent of construction and demolition material diverted from disposal and 16,266 acres legally protected, 36 per cent more than the company’s operations occupy.
Progress on paper has not quieted critics on the ground, with residents protesting a planned facility near Granger, Indiana, and neighbours of the US$7.3 billion Fairwater AI complex in Wisconsin suing over noise, dust and light pollution. It comes as Microsoft’s global estate passes 300 data centres across 34 countries, twelve months after the company’s previous report showed data centre growth threatening its net-zero goals. Smith and Nakagawa insist the 2030 target remains feasible, with every environmental lever, from timber to carbon capture, run as one portfolio, but on numbers published, Microsoft has 4 years to eliminate 20.3 million tonnes of emissions, then go beyond zero.
