The net zero problem with big tech: reporting reform needed to address real world emissions

TL;DR

• Big Tech impacts every aspect of our lives. Google, Amazon, Meta, Microsoft, and Apple have the power to impact global politics, economics, societal trends, innovation, and more.

• Despite making strong sustainability commitments and reporting positive results, including achieving net zero, these corporations remain some of the planet’s most prolific polluters. The rise of AI has also led to vastly increased energy consumption.

• That’s not to say they are greenwashing; these firms have invested substantial sums in renewable energy, several buy clean energy direct from suppliers, and many are vocal supporters of clean tech initiatives like electric vehicles.

• Renewable Energy Certificates (RECs) are one way that corporations can buy their way to zero emissions. This practice is widely accepted in the industry but leads to discrepancies between the emissions recorded and the emissions produced and reduces the impact of zero carbon targets on the environment.

• The way greenhouse gas emissions are measured is governed by a protocol established over 30 years ago, and Big Tech is pushing for reforms. Any changes to this measurement process could have a lasting impact on the fight against climate change.

The detail

The power of the tech industry can’t be underestimated. Decisions made in Silicon Valley can have a global impact, filtering down to affect politics, economics, media, and societal trends. Where they lead, the world follows.

The term “Big Tech” first entered the lexicon in 2013, and since then, five companies have grown to become major global powers in their own right: Google, Amazon, Meta, Microsoft, and Apple.

Each of these companies has radically altered the way we work, shop, communicate, consume information, and engage with culture. They also have aggressive innovation and strategic acquisition strategies to secure their industry dominance.

Google is synonymous with search and is one of only a handful of brands to have its name become a verb. In terms of reach, its Android operating system drives more than 70% of mobile phones worldwide, Google.com attracts 84.2 billion visitors each month, and 6.3 million searches are conducted through Google search engines every minute. The company continues to innovate, pioneering developments in smart cities and self-driving cities.

Apple has also earned a reputation for relentless innovation, setting the benchmark in mobile and personal technologies with its suite of iPhones, iPads, and iMacs while Meta controls the social media landscape with over a billion members on each of its platforms: Facebook, Instagram, WhatsApp, and Messenger. Amazon is best known for its retail and entertainment arms, but it is arguably just as influential in the technology space thanks to its cloud computing service Amazon Web Services (AWS).

With their diverse service portfolios, all these tech giants impact our lives daily while also shaping our futures. The Internet of Things, cloud computing, artificial intelligence (AI), and how information is shared and moderated will affect the way the world evolves in the years ahead. That’s why it’s vital that Big Tech prioritises people and the planet, not just profit.

Unfortunately, this balance between profit and philanthropy isn’t always achieved.

Leading the way to a greener way of working?

When looking at their sustainability efforts on a surface level, Big Tech corporations seemingly exhibit model behaviour. Amazon, for example, says it matched 100% of its electricity consumption with renewable energy sources in 2023 (seven years ahead of schedule) as well as investing $2 billion to support the development of sustainable technologies via The Climate Pledge Fund.

However, recent analysis by the Financial Times has revealed that creative emissions calculations and use of carbon offset schemes may be more responsible for these sustainable success stories than the corporations themselves would like to admit.

That’s not to say that these companies are guilty of greenwashing – the practice of making an activity appear to be more environmentally friendly or less environmentally damaging than it really is. In fact, the big five have all made meaningful climate change commitments and backed them up with substantial investments.

Amazon is investing heavily in wind and solar projects in countries such as India, while also aiming to have at least 100,000 electric delivery vans on the road by 2030 and expanding its use of cargo e-bikes and on-foot deliveries. Meta has made similar pledges; by championing renewable energy and restoring water resources, it is looking to make a just and equitable transition to a zero-carbon economy. It is also hoping to have a positive impact on hearts and minds by amplifying content from scientists and climate action leaders and providing access to new ideas, accurate information, and ways to act on its platforms.

In 2020, Microsoft made several climate change commitments, asserting that it would become carbon negative, water positive, zero waste, and protect more land than it uses by 2030. Long-term investment in carbon-free electricity has increased Microsoft’s renewable energy portfolio to more than 19.8 GW, it has achieved its water access target by providing more than 1.5 million people with access to clean water, and has directed more than 18,000 metric tonnes of waste from landfills or incinerators.

Face value figures or stats that go beneath the surface?

Even so, these achievements should not detract from the fact that Big Tech is a major polluter and consumes a vast amount of energy. In 2023, Microsoft and Google used 24 TWh of electricity, more than both Jordan (20 TWh) and Ghana (19 TWh), while Meta used 12 TWh. The growth of artificial intelligence has put pressure on data centres and increased cooling requirements, a market shift that has increased Google’s emissions by 13% and doubled Microsoft’s electricity use from 11 TWh to 24 TWh in less than four years.

What is perhaps more alarming is that the figures reported by these corporations in their annual sustainability reports do not seem to highlight their real-world impacts in a transparent way. Meta, for example, says that it has already hit net-zero emissions, but the Financial Times’ analysis of its 2023 sustainability report found that its real-world emissions were 3.9 million tonnes, compared to the 273 net tonnes cited in the report.

The reason for this shocking discrepancy? A legacy of reporting loopholes and reliance on carbon offset schemes.

A protocol ready for reform

The current emissions reporting system, known as the Greenhouse Gas Protocol, originated in 1998. But 34 years later, is it still fit for purpose?

One of the biggest drawbacks of the Greenhouse Gas Protocol is that it allows for the purchase of credits rather than physical electricity. In practice, this means that instead of buying their wind, solar, or hydro power from the renewable energy producers themselves, corporations can buy standalone credits known as renewable energy certificates (RECs). A REC can be issued each time one MWh of electricity is generated and delivered to the grid from a renewable energy source.

By buying RECs at a cost-effective rate, companies can claim to have hit a clean energy goal without the real-world impact. The trading of RECs doesn’t necessarily help to displace fossil fuels or decarbonise the grid. In effect, it allows companies to reduce their Scope 2 emissions by writing a cheque, while continuing to emit just as many greenhouse gases.

The limitations of RECs have contributed to the growing consensus that how a company achieves net-zero is more important than how quickly it reaches that goal. Emissions are also just one factor in the fight against climate change and a broader picture should be considered rather than fixating on offsetting every tonne of carbon emitted.

While reform of the REC system won’t be a silver bullet, it could make a difference to the carbon emissions of Big Tech firms and other corporations around the world.

A divided landscape

Silicon Valley is currently split into two camps when it comes to REC reform: Amazon and Meta have formed a group called the Emissions First Partnership and are advocating for a more finely calibrated approach to monitoring the impact of low-carbon energy investments. This would allow companies to use RECs in a more flexible way, with no restrictions on their geographical origin – perhaps an unsurprising desire for two of the world’s biggest corporate buyers of RECs. However, they argue that it would encourage investment in renewable power in countries with high-carbon grids, such as South Africa, India and Australia.

On the other hand, Google is proposing an approach that requires companies to offset their emissions using power generated by more closely comparable means. Currently, RECs must come from the same defined geographic region as the emissions they offset, but the clean energy they refer to could be generated in a completely different country, at a completely different time of day. The Google reform would mean matching energy consumption only with RECs from the grids where power was consumed and at the same time of day it was consumed.

No matter which lobby is successful – and despite rumours of closed-door meetings with academics and donations to the accounting oversight body aiming to swap opinions – any reforms to the REC system are unlikely to be finalised until 2026.

If Big Tech is to be a force for good in the world it must find ways to offset its increasing energy demands. Training AI will require massive amounts of energy; the International Energy Agency (IEA) has estimated that the electricity consumed by data centres will more than double by 2026 – a volume roughly equivalent to Japan’s annual consumption. A reliable supply and robust infrastructure of renewable energy will be essential to satisfy this demand without further jeopardising net zero.

REC reform could have a serious and lasting impact on Big Tech and beyond. By closing the loopholes in the emissions reporting processes and encouraging these corporations to invest in buying renewable energy from the source rather than relying on carbon offset, the race to net-zero could receive a significant boost. It’s a sensitive topic and one that challenges the sustainability results Silicon Valley proudly publishes, but it needs to be addressed.

The actions Big Tech take today will impact tomorrow’s world, but the legacy these corporations leave behind is yet to be determined.

— Lew 👋

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