The artificial intelligence (AI) boom has entered a new phase. It is no longer just about innovation or market dominance. Instead, it is now deeply tied to energy demand, emissions, and capital discipline. As a result, the rapid expansion of AI infrastructure is pushing Big Tech into an uncomfortable position—balancing climate commitments with rising environmental costs.

Data compiled for CNBC by carbon management platform Ceezer shows a sharp rise in carbon credit purchases across the sector. Companies are scaling AI aggressively, yet at the same time, they are leaning more heavily on carbon markets to offset the emissions they cannot yet avoid.

This shift is not happening in isolation. It reflects a broader structural tension between growth, sustainability, and financial performance.

AI Expansion Is Driving Both Emissions and Offsets

Tech giants such as Alphabet, Microsoft, Meta, and Amazon are collectively expected to spend close to $700 billion this year to scale their AI capabilities. This includes building hyperscale data centers, deploying advanced chips, and expanding global cloud infrastructure.

However, these investments come with a high environmental cost. AI systems require vast computing power, which in turn demands continuous electricity and cooling. Water use is also rising, particularly in large data center clusters. Consequently, emissions are increasing even as companies reaffirm their net-zero ambitions.

This is where carbon credits play a growing role. Each credit represents one metric ton of carbon dioxide either reduced or removed from the atmosphere. By purchasing these credits, companies aim to offset emissions that remain difficult to eliminate in the short term.

Yet this approach raises a fundamental question. Are carbon credits acting as a bridge to decarbonization—or becoming a substitute for it?

A Market Surge Signals Structural Dependence

The scale of growth in carbon credit purchases suggests a structural shift rather than a temporary adjustment.

In 2022, permanent carbon removal purchases across these companies stood at just over 14,000 credits. Within a year, that figure jumped dramatically to 11.92 million. The momentum did not slow. Purchases increased to 24.4 million in 2024 and then surged to 68.4 million in 2025.

This exponential rise highlights how quickly AI-driven emissions are feeding into carbon markets. More importantly, it shows that demand for high-quality removal credits is accelerating faster than supply.

At the same time, companies are not relying on a single solution. Their portfolios include nature-based projects such as forestry and soil carbon, alongside engineered approaches like direct air capture. Long-term offtake agreements are also becoming more common, helping secure future credit supply while supporting project development.

However, the rapid increase in demand raises concerns about market depth. High-integrity carbon removal credits remain scarce, and scaling them is both capital-intensive and time-consuming.

Microsoft Sets the Pace—but Questions Remain

Among its peers, Microsoft has taken a clear lead in carbon removal efforts. The company reported a 247% increase in credit purchases between fiscal 2022 and 2023, followed by a further 337% jump in 2024. Growth continued into the next fiscal year, roughly doubling again.

More notably, Microsoft expanded its carbon removal agreements to 45 million metric tons of CO₂ in 2025, up from 22 million tons the previous year. These agreements span multiple geographies and technologies, reflecting a diversified approach to carbon removal.

The company is now a top climate leader, intending to become carbon-negative by 2030. Its strategy emphasizes reducing emissions first and then removing what cannot be avoided.

However, a key gap remains. It has not explicitly tied its carbon credit strategy to its AI expansion. While the correlation is clear, the lack of direct disclosure leaves room for interpretation.

This ambiguity is not unique to Microsoft. It reflects a broader issue across the sector, where sustainability narratives are evolving faster than reporting frameworks.

• MUST READ: Microsoft Q2 FY26 Earnings: $81B Revenue, AI Momentum, and a 150% Jump in Water Use by 2030

Free Cash Flow Pressures Are Becoming Harder to Ignore

While environmental concerns are rising, financial pressures are also building.

The CNBC report further highlighted that the scale of AI investment is unprecedented. As companies ramp up spending, free cash flow is beginning to decline. The four largest U.S. tech firms generated a combined $237 billion in free cash flow in 2024. That figure dropped to $200 billion in 2025, and further declines are expected.

This trend signals a shift in capital allocation. Companies are prioritizing long-term growth over short-term financial efficiency. However, this comes at a cost. Lower cash generation reduces flexibility and may increase reliance on external financing.

For instance, Alphabet raised $25 billion through a bond sale in late 2025, while its long-term debt rose sharply to $46.5 billion. This move underscores how even cash-rich companies are turning to debt markets to sustain their AI ambitions.

For investors, the implications are significant. The AI story remains compelling, but it now comes with margin pressure, delayed returns, and increased financial risk.

• ALSO READ: Google Bets Big on Next-Gen Nuclear and Carbon Credits from Superpollutants For a Greener AI

Renewables Help Stabilize Emissions—but Not Fully

Despite the rise in emissions, the increase has not been as steep as some feared. This is largely due to the rapid adoption of renewable energy.

Hyperscalers have expanded their clean energy portfolios, securing power purchase agreements and investing in renewable projects. As a result, they have been able to offset part of the additional demand created by AI workloads.

Ceezer’s data suggest that while emissions rose alongside AI growth, the increase was relatively moderate. This indicates that companies are responding quickly by integrating renewable energy into their operations.

However, this strategy has limits. Renewable energy can reduce operational emissions, but it cannot fully eliminate the impact of rapid infrastructure expansion. As AI demand continues to grow, the gap between emissions and reductions may widen.

Stricter Rules Are Reshaping Carbon Credit Use

At the same time, the regulatory landscape for carbon credits is becoming more stringent. New frameworks are redefining how companies can use offsets within their climate strategies.

Initiatives such as the VCMI Scope 3 Action Code now allow limited use of high-quality credits, but only under strict disclosure conditions. Meanwhile, the Science Based Targets initiative (SBTi) continues to refine its guidance, particularly as Scope 3 emissions remain difficult to reduce.

The challenge is substantial. The global Scope 3 emissions gap is estimated at 1.4 billion tonnes and could increase significantly by 2030. This creates pressure on companies to find credible solutions without over-relying on offsets.

In parallel, disclosure frameworks such as CSRD are pushing companies to provide detailed explanations of their carbon credit strategies. This includes justifying project selection, verifying credit quality, and demonstrating measurable impact.

The direction is clear. Carbon credits are no longer a simple compliance tool. They are becoming part of a broader accountability framework.

Carbon Removal Market Expands—but Supply Constraints Persist

The carbon removal market is growing rapidly, yet it remains constrained.

MSCI Projections suggest the global carbon credit market could exceed $30 billion by 2030. Corporate demand for carbon removal credits may surpass 150 million metric tons annually within the same timeframe.

However, supply is struggling to keep pace. High costs remain a major barrier, particularly for advanced technologies such as direct air capture, where prices often exceed $100 per ton.

In 2025, offtake agreements reached $13.7 billion, reflecting a strong corporate commitment. Yet these agreements will deliver only 78 million credits over the next decade. Actual durable carbon removal credits retired in the same year remained below 200,000.

This mismatch highlights a key issue. While demand is accelerating, real-world deployment is lagging. As a result, the market faces both growth potential and structural limitations.

The Bottom Line: A Delicate Balancing Act

Big Tech’s AI expansion is reshaping both the digital economy and the carbon market. On one side, companies are investing heavily in future growth. On the other hand, they are navigating rising emissions, tighter regulations, and increasing financial pressure.

Carbon credits are playing a critical role in bridging this gap. However, they are not a long-term solution on their own.

The path forward will require a more balanced approach—one that combines technological innovation with real emissions reductions and transparent reporting. Companies must prove that their climate commitments are more than offset strategies.

At the same time, investors will need to adjust expectations. The AI boom promises strong returns, but it also introduces new risks. Lower cash flow, higher capital intensity, and evolving climate obligations are all part of the equation.

Ultimately, the success of this transition will depend on execution. The companies leading the AI race must now show they can scale responsibly—without compromising either financial stability or climate credibility.

• ALSO READ: ChatGPT vs Claude AI: Carbon Footprints, Pentagon Deal, and Energy Impact

The post AI vs. Climate Reality: Why Big Tech Is Buying Millions of Carbon Credits appeared first on Carbon Credits.

Industrial heat production makes up a large share of global emissions. About 18% of all greenhouse gas emissions come from heat used in factories, plants, and manufacturing processes. This type of heat is hard to decarbonize because it often requires high temperatures that are still powered by fossil fuels like natural gas. 

To tackle this challenge, AstraZeneca, together with Secaro and ERM, launched the Clean Heat Program. The initiative helps companies measure, plan, and reduce industrial heat emissions across their supply chains.

Rob Williams, Senior Director of Sustainable Procurement at AstraZeneca, said:

“It’s clear that a programme like this is the fastest and most effective way to decarbonise heat in our supply chain. We are long-term partners with Secaro and ERM, and now we’re expanding relationships with peers, buyers from other industries and suppliers to plan, fund and launch the projects that will make heat decarbonisation a reality.”

Industrial Heat: The Hidden Carbon Giant

Fossil fuels still supply most industrial heat energy today. Cleaner alternatives like electrification, hydrogen, or biofuels often cost more. They also require new technology and infrastructure.

Despite its importance, industrial heat has received less focus than clean electricity or transport. In many industries, heat drives fundamental operations, from making chemicals to processing food. Because of this, experts say improving how heat is produced is key to cutting industrial emissions.

Clean Heat Program: Turning Plans into Action

In March 2026, AstraZeneca teamed up with ERM and Secaro to launch the Clean Heat Program. This initiative aims to help companies reduce emissions tied to industrial heat across their supply chains.

By combining data tools, technical support, and financing options, the program aims to make it easier for industrial facilities to adopt low-carbon heat solutions and accelerate decarbonization.

AstraZeneca is joining as a founding partner. The company has its own near‑term climate goals. By 2026, it aims to cut 98% of its Scope 1 and 2 emissions from operations compared to a 2015 baseline.

The pharma giant has already achieved 88.1% reduction by the end of 2025. Its long‑term target is to reach net zero by 2045, including deep cuts in emissions across its suppliers and partners.

The Clean Heat Program is designed to go beyond simple planning. It aims to help companies move from studying options to actually acting on decarbonizing heat.

The program combines:

• Supply chain data tools that show where heat is used and emitted.
• Technical support to find practical ways to reduce emissions.
• Financing options to help companies afford projects that cut heat emissions.

Secaro maps heat emissions across supply chains while ERM designs bankable projects, heat pumps, biomass conversion, and electrification upgrades. Notably, financing leverages EU funds and carbon credit revenue to de-risk upfront costs, moving companies from analysis to implementation.

Unlike many efforts that focus on one plant or site, the program looks at supplier networks. This broader view helps companies pinpoint where changes will have the biggest impact.

Why High-Temperature Heat Is Hard to Replace

Industrial heat is one of the largest sources of industrial emissions. According to the International Energy Agency, around 70% of industrial energy demand goes to producing heat for processes such as steel, cement, and chemicals.

Estimates from IEA data show that heat-related emissions are about 6.5 gigatonnes of CO₂ each year. This underscores the significant decarbonization needed.

The same analysis suggests that these emissions must drop to less than 1 gigatonne by 2050. This pathway needs quick action from various industries. It also requires strong investment in technology and changes in supply chains to cut emissions in high-temperature processes.

Industrial heat often uses natural gas or other fossil fuels. While electricity can now come from wind or solar, renewable options for high‑temperature heat are still emerging. Solutions such as electrification, biomass fuels, or hydrogen require new equipment and deep planning.

Electrification technologies work for low-temperature heat below 200°C. But industries that need higher heat still rely on fossil fuels. Secaro’s data show that 80% of industrial energy consumption is tied to heat, and 60% of these come from natural gas.

This complexity makes industrial heat one of the hardest parts of decarbonization — even for companies with net‑zero goals. In many cases, heat emissions make up a large share of a company’s direct emissions, known as Scope 1 emissions. 

Currently, less than 10% of sites use biofuels or other renewable energy. Industry forecasts suggest that renewable heat may reach only 15% of industrial use by 2028 unless strong action is taken.

Pressure’s On: Regulators, Investors, and Rising Energy Costs

Pressure to cut heat emissions is growing from both regulators and investors. New rules such as the European Union’s Carbon Border Adjustment Mechanism (CBAM) and updated disclosure requirements from the U.S. Securities and Exchange Commission (SEC) require more detailed emissions reporting and climate risk disclosure.

Companies that ignore their emissions might face penalties. They could also lose contracts with buyers who want cleaner supply chains.

Energy price volatility also plays a role. Firms that rely on fossil fuels for heat may face wide swings in energy costs. Decarbonizing heat can help companies stabilize fuel expenses and reduce exposure to price shocks, which investors increasingly watch closely.

Tools and Support for Heat Decarbonisation 

Secaro’s data platform is central to the program. It now offers heat-specific insights, which show where emissions are highest and highlight chances for change. The platform links buyers, suppliers, and solution providers to highlight high‑impact decarbonization actions.

ERM steps in with its technical expertise. It helps companies assess options and build project plans to attract investment.

These can include:

• Higher energy efficiency
• Switching to low-carbon fuels
• Installing heat recovery systems
• Adopting new technologies, like high-temperature heat pumps

Financing is also part of the program. Many industrial heat projects stall because of upfront costs. The initiative aims to connect companies with financing options, including funds based in the European Union and other mechanisms that help lower financial barriers.

Markets Are Warming Up: Forecasts for Industrial Decarbonization

Efforts like the Clean Heat Program are significant as the market for industrial decarbonization is growing. A recent market outlook projects that global industrial heat decarbonization could grow steadily over the next decade.

From 2025 to 2033, the market is expected to expand at a compound annual growth rate (CAGR) of about 6%, reaching an estimated $380 billion by 2033.

Technologies such as industrial heat pumps are also gaining traction. These devices can reuse waste heat and reduce energy losses. A market forecast shows that the global industrial heat pump market will rise to over 13,150 units by 2035. Revenues may exceed $9.1 billion by that time.

Even though many low‑carbon heat solutions exist, adoption has been slow. For example, only a small share of industrial sites in some sectors currently use renewable heat sources. Without stronger action, forecasts suggest renewable heat may reach only around 15% of industrial heat use by 2028.

A Clear Path for Companies and Supply Chains

The Clean Heat Program offers companies a way to close the gap between their climate goals and the real challenges of industrial heat. It helps companies move beyond early analysis and toward real projects that reduce emissions, improve energy security, and meet investor and regulatory expectations.

For supply chain partners and smaller suppliers, the program can lower barriers to entry. Many small and mid‑tier suppliers struggle to access data, technical support, or financing. This initiative aims to change that by giving a clearer path to decarbonization. If widely adopted, this approach could help reduce significant emissions from industrial heat worldwide and support broader climate goals.

• READ MORE: How Power Demand, Emissions, and China Will Shape the Global Energy System to 2030

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This agreement reflects a structural shift in global energy markets. India is positioning itself not just as a clean energy producer, but as a future exporter of green fuels.

At the same time, the deal highlights a growing global race to secure long-term supplies of low-carbon energy. As industries look to decarbonize, green hydrogen and ammonia are becoming critical building blocks of the future energy system.

India’s Hydrogen Vision Meets Global Demand Reality

The agreement aligns with India’s broader policy push. Led by the Ministry of New and Renewable Energy, the National Green Hydrogen Mission aims to turn the country into a global hub for hydrogen production and exports.

The government has proposed around $2.2 billion in funding through 2030. Its targets are ambitious. India plans to build at least 5 million metric tonnes of annual green hydrogen capacity, supported by 125 GW of new renewable energy.

The economic and environmental impact could be substantial. Investments may exceed ₹8 lakh crore. The mission could create over 600,000 jobs while cutting fossil fuel imports by ₹1 lakh crore. In addition, it aims to reduce around 50 million tonnes of greenhouse gas emissions each year.

However, market realities remain complex. As of August 2025, about 158 hydrogen projects were under development. While announced capacity is already more than double the government’s target, only a small fraction is under construction or operational. This gap highlights execution risks.

Reliance Builds a Fully Integrated Green Energy Platform

To capture this opportunity, Reliance is building a deeply integrated clean energy ecosystem. The company is not only producing green hydrogen but also controlling the entire value chain.

This includes renewable power generation, energy storage, hydrogen production, and downstream products like green ammonia. A key focus is domestic manufacturing of critical technologies such as solar modules, battery systems, and electrolysers.

This strategy serves two purposes:

• First, it reduces costs by localizing supply chains.
• Second, it strengthens India’s position as a manufacturing hub for clean energy technologies.

At the center of this ecosystem is the Dhirubhai Ambani Green Energy Giga Complex in Jamnagar. Spread across 5,000 acres, it will house multiple gigafactories producing solar panels, batteries, electrolysers, fuel cells, and power electronics.

In parallel, Reliance is developing a large renewable energy project in Kutch. By combining solar, wind, and storage, the project will provide round-the-clock clean electricity. This power will feed into hydrogen and ammonia production facilities in Jamnagar.

The company has also committed to achieving net-zero emissions by 2035, placing it among the more aggressive corporate climate targets globally.

• ALSO READ: India-Europe Hydrogen Highway: AM Green and Rotterdam Join Forces to Drive $1B Green Fuel Trade

Samsung’s Offtake Deal Brings Stability to the Green Hydrogen Market

The partnership with Samsung C&T plays a crucial role in addressing one of the hydrogen sector’s biggest challenges—demand uncertainty.

By securing a 15-year offtake agreement, Reliance gains revenue visibility. This makes it easier to finance large-scale projects. At the same time, Samsung C&T Corporation benefits from a stable and cost-competitive supply of green ammonia.

The company operates across more than 40 countries and is active in trading industrial materials and developing renewable energy projects. Access to green ammonia strengthens its ability to decarbonize operations and expand its clean energy portfolio.

This is particularly important as global companies face rising pressure to meet environmental, social, and governance (ESG) targets. Green ammonia can be used in fertilizers, as a hydrogen carrier, and even as a shipping fuel. Therefore, securing supply early provides a strategic advantage.

From Slow Start to Rapid Scale: McKinsey and PwC Map Hydrogen Growth

Global demand trends add another layer to the story. According to McKinsey & Company, clean hydrogen demand could reach between 125 and 585 million tonnes per year by 2050. This is a sharp increase from today’s levels, where nearly 90 million tonnes of hydrogen are still produced using fossil fuels.

In the near term, demand growth is expected to remain gradual. McKinsey notes that traditional sectors like fertilizers and refining will drive early adoption as they switch from grey to cleaner hydrogen. However, newer applications—such as steelmaking, synthetic fuels, and heavy transport—will likely scale up after 2030, accelerating overall demand.

While long-term demand looks strong, short-term growth is expected to be gradual. Insights from PwC suggest that hydrogen demand will remain limited until 2030.

There are several reasons for this. First, most current projects are still in early stages and operate at relatively small scales. Many electrolyser facilities today have capacities below 50 MW. Even planned projects, which may exceed 100 MW, are still small compared to existing fossil-based hydrogen plants.

Second, infrastructure development takes time. Building pipelines, storage systems, and export terminals can take seven to twelve years. Without this infrastructure, large-scale hydrogen trade cannot take off.

As a result, PwC expects stronger demand growth after 2030, with a more rapid acceleration after 2035. This timeline aligns with broader climate goals and the need to scale clean energy systems globally.

Challenges Still Loom Over the Sector

Despite growing momentum, the green hydrogen sector faces several hurdles. High production costs remain a major barrier. In many regions, green hydrogen is still more expensive than fossil-based alternatives.

In addition, global standards are still evolving. Different countries use different definitions for “green” or “low-emission” hydrogen. This creates uncertainty and complicates international trade. Demand visibility is another concern. Although many projects have been announced, actual uptake depends on policy support, pricing mechanisms, and technological progress.

These challenges explain why only a small portion of announced capacity has moved into construction or operation so far.

In conclusion, the Reliance-Samsung deal highlights a key turning point. It shows how large-scale, long-term agreements can unlock investments and accelerate project development.

At the same time, it signals India’s growing role in the global hydrogen economy. With strong policy backing, rising investor interest, and integrated industrial strategies, the country is building a foundation for large-scale exports of green fuels.

• READ MORE: India and Japan Strike a Green Ammonia Offtake Deal

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