Why many tech giants will miss their 2030 Net Zero commitments

As 2030 approaches, several tech giants face uncertainty regarding their Net Zero commitments. The sharp drop in CO2 emissions promised in their flowery worded ESGs has not materialised. Worryingly, for many global brands, the important numbers are going the wrong way.

Years of inaction have shifted the urgency from carbon reduction to carbon removal. This is leading to panicked boardroom strategies backing unproven technologies in a bid to appear green.

The result: companies’ long-made promises to minimise climate change are now secondary to dubious investments and unproven technologies in their quest to achieve Net Zero. After all, with just over five years on the clock, why struggle to achieve actual emission reductions which might risk profits and growth when you can buy compliance?

It’s time to have a serious conversation about 2030.

Why is 2030 important to Net Zero strategies?

2016’s Paris Agreement is a binding multi-national legal treaty to reduce the rising global average temperatures of the planet. The agreement focuses on limiting the rise to 1.5°C (above pre-industrial levels) by requiring that ‘our’ greenhouse gas emissions peak before 2025 and decline by 43% by 2030.

The agreed strategy to de-carbonise the world is Net Zero. The term is a theoretical measurement based on a difference calculation between Carbon Reduction (stopping carbon entering the atmosphere) and Carbon Removal (taking carbon from the atmosphere).

Here’s an over-simplified example. If my factory emits 1 tonne of carbon into the atmosphere, then providing I recapture 1 tonne of carbon from the atmosphere – or pay someone else to do it on my behalf – then the theoretical emissions of my factory will be a (net) zero.

Net Zero is an olive branch to give carbon-heavy industries (aviation, construction and technology) the opportunity to leverage Carbon Removal technologies to mathematically improve their hard-to-deliver Carbon Reductions. Long term, the expectation is that as businesses prioritise ways reduce their emissions, the need for Carbon Removal decreases. Net Zero will eventually become just Zero.

For Net Zero to work, the decarbonising process needs to happen quickly. The chart above shows several models of how dramatic the required drop in CO2 emissions (from 2021) needs to be for Net Zero to work. Net Zero requires actual, real, genuine, bona fide emissions reduction.

Microsoft, Google, HP, Apple and, frankly, any other tech firm you can think of has pledged (many times) to be Net Zero by 2030. The reality is that many are reporting year-on-year rises in emissions.

Why are Scope 1 emissions rising?

Let’s begin with some numbers for Scope 1 and Scope 2 emissions for five of the biggest tech brands: Adobe, Apple, Google, HP and Microsoft:

Scope 1: Emissions from sources owned or controlled by a company.

• On-site fuel combustion from boilers or furnaces.
• Company-owned vehicles for transporting goods and employees.
  

Scope 2: Emissions from indirect sources of electricity, heat or steam:

• Power for lighting, computers and office equipment.
• Refrigeration, heating and air conditioning.
• Servers, cooling systems and backup power systems.

For FY23, Adobe and Microsoft saw rises in their Scope 1 figures. Although it’s encouraging to see reductions from Google and HP, we shouldn’t overlook that their latest numbers remain higher than Y20s.

The anomaly is Apple, which has reported the same Scope 1 figure for the last three years. Hmmmm….

These Scope 1 numbers illustrate fluctuations in the direct emissions of these companies, rather than a continual and rapid reduction.

Before we can draw any conclusions, we need to look at Scope 2’s numbers.

Why are Scope 2 emissions rising?

Just to add to the fun, Scope 2 emissions are reported in two categories:

Location Based: Average emissions intensity of the local power grid.

• This provides a standardised measure based on regional energy production.
  

Market Based: Emissions associated with purchasing decisions and contracts.

• Energy from Power Purchase Agreements, Supplier Specific Contacts or Energy Attribute Certificates.
• Contracts designed to underpin the claim that renewable energy is being used.

Analysing the numbers shows Scope 2 Location Based emissions for Adobe, Google and Microsoft are rising. Of particular concern is that the reported FY23 numbers for Google and Microsoft are almost double of those from FY20. This is a clear demonstration that the power requirements of these firms are rising, putting an increasing strain on local power grids.

Their Market Based Contracts for renewables are also pointing the wrong way. Apple, Google and Microsoft emissions are increasing whereas Adobe’s have flatlined for the second successive year. The rapid drop in emissions required by all these firms to hit Net Zero by 2030 has not only failed to materialise, but the multi-year curve is going the wrong way.

Will any tech company hit Net Zero by 2030?

HP is doing a better than the competition. Scope 2 emissions are trending downwards, but TechFinitive has already highlighted the spikes in Scope 1 at all HP sites around the world. Although HP should be congratulated for reducing Scope 2, it’s a gradual decline. Like its peers, HP hasn’t got a whelk’s chance in a supernova of fulfilling 2030s pledges.

Another key point is that you may notice some data gaps in Apple’s chart. It states:

“We do not currently account for these emissions in our carbon footprint, due to the poor quality of this data.”

Opinion is divided on this type of reporting. In that, Apple says it doesn’t matter and everyone else says that it does.

The TLDR is that these firms are using more non-renewable energy than their press office would like you to know. Interestingly, the United Nations is pointing the finger at data centres.

The UN takes aim at the digital economy

The UN Trade Agency (UNCTAD) 2024 Digital Economy Report presents stark statistics about the environmental impact of high-energy computational industries such as AI and cryptocurrency.

The report highlights that, in 2022, the data centres to run these technologies consumed around 460 terawatt hours of power. That’s enough to power around 42 million homes in the US for a year. If that doesn’t shock you, try this one: the figure will double by 2026.

UNCTAD warns that there is a desperate requirement for a new policy mindset and that ‘business as usual’ is not an option. Its belief is that the continual growth of digitisation is impossible to sustain with the rapidly dwindling finite resources of the planet.

An increasingly large proportion of Microsoft’s and Google’s services come out of data centres and it’s not a coincidence that the rise of AI technology is showing up on their energy bills as increased emissions.

I’ve just started a rumour that every time the Windows Copilot button is pressed a tree is starved of oxygen and a panda dies. Nearer to the truth is that their failure to cap emissions is contributing to climatic change. Need I remind you that this affects all of us.

Microsoft sucks in Texas

One strategy to achieve Net Zero involves retrieving CO2 from the biosphere and then storing it in the geosphere.

Microsoft has signed a partnership agreement with 1PointFive, a company constructing a Carbon Capture and Storage (CCS) solution in Texas called Stratos. The Stratos Direct Air Capture and Storage (DAC) system uses oversized high-powered fans to draw carbon from the air and store it underground. The theory is that this will reduce the amount of carbon in the atmosphere.

1PointFive has sold Microsoft 500,000 metric tonnes of CO2 removal credits (CDR) over six years. Stratos will securely store the carbon it pulls from the sky in underground saline repositories.

1PointFive seem keen to point out that the Carbon sequestration will not be used to produce oil and gas. Now, about that…

Has Microsoft thought this through?

Occidental Petroleum, a multi-billion dollar oil company, owns 1PointFive. One of the side effects of pushing Captured CO2 into the ground is that it can pump out hard-to-reach oil reserves – a process called Enhanced Oil Recovery. What a stroke of luck!

Earlier this year, Occidental’s CEO Vicki Hollub appeared on a panel alongside Microsoft’s President of Cloud & AI, Scott Guthrie. Hollub explained that Occidental originally posited Carbon Capture as an oil acquisition solution for reserves to be “developed for our shareholders”. The seed for Stratos was sown when Occidental realised the potential in capturing carbon in the air. I wonder how it got there?

Interestingly, Hollub states that Stratos isn’t scheduled to operate until mid-2025 but there are still plans to open another 100 DAC facilities by 2035. This would give Occidental an estimated 100 million tonnes of CO2 pulling capacity.

This all sounds impressive but this technology is eye-wateringly expensive to build (Stratos is being partially funded by BlackRock). Running giant fans in ‘The Middle of Nowhere, Texas’, is, with predicable irony, going to burn through some fuel.

Hollub talked about using AI to improve energy efficiency – I wonder if she meant profitability? – whilst Guthrie simply restated that Microsoft is “on track to be carbon negative by 2030”. I wonder if he’ll change his mind after reading this.

The problem of trapped gas

Many scientists agree that capturing carbon from the atmosphere with facilities like Stratos could help to decarbonise the atmosphere. The thornier debate revolves around the topic of storage. Once you have 100 million tonnes of CO2, where do you stick it? Occidental’s plan is to pump it underground (the Storage part of CCS) yet anyone who has glugged a can of Pepsi too quickly will testify that trapped gas has a habit of leaking out again.

The jury is still out on whether long-term secure carbon storage is even possible. Currently, a vast CCS facility in Australia is only running at 33% capacity. A leak from an ExxonMobil facility in Louisiana in April 2024 raises additional questions about the safety records of the oil corporations and the long-term stewardship of storage sites once contracts have expired.

CCS remains a controversial subject. Many voices echo those of the University of Cambridge stating that the UK needs to scale up Carbon Storage with rapidity to deliver Net Zero. Other environmental activists warn of carbon leaks from earthquakes and the increased risk of injection-induced earthquake. Think of fracking except with CO2 and not water.

The path forward is unclear, and as the clock ticks, the planet gets warmer. The figures show that tech firms seem unable, or unwilling, to compromise on their business-as-usual mindset. Perhaps many are clinging to the hope that they can pay for CCS solutions to deliver environmental offsetting.

Why Net Zero isn’t working

Net Zero wasn’t meant to work this way. Organisations that are serious about Net Zero must show that carbon credits used for offsetting are genuinely additional to reductions and removals that would have occurred anyway.

Adobe, Apple, Google, HP, Microsoft and countless others will miss 2030 targets. To prove me wrong, they need to urgently reduce emissions and close the carbon removal gap to hit Net Zero.

Otherwise, Net Zero is going to hit everyone. Hard.