Nearly 15 years after journalist David Owen and I tangled — and then united — over Jevons Paradox, the New York Times today published a guest essay on that subject by a Murdoch-employed London journalist. David and I went deeper and did better, as you’ll see in a moment.
Jevons Paradox denotes the tendency of economies to increase, not decrease, their use of something as they learn how to use that thing more efficiently. Its 19th-century archetype, observed by Britisher William Stanley Jevons, was that “as steam engines became ever more efficient, Britain’s appetite for coal [to power them] increased rather than decreased,” as Sky News editor Ed Conway put it today, in The Paradox Holding Back the Clean Energy Revolution. Why? Because the “rebound” in use of steam as its manufacture grew cheaper more than offset the direct contraction in use from the increased efficiency.
Illustration by Joost Swarte for “The Efficiency Dilemma,” in the New Yorker magazine’s Dec. 20, 2010 print edition (Dec. 12 on line).
Where does David Owen come in? In October 2009 he published an op-ed in the Wall Street Journal claiming that congestion pricing could never cure traffic congestion, on account of the bounceback in car traffic due to lesser congestion. (Funnily enough, the Journal never runs opinion pieces maintaining that induced demand prevents highway expansions from “solving” road congestion.) My subsequent rebuttal in Streetsblog, Paradox, Schmaradox, Congestion Pricing Works, changed David’s mind. The disincentive of the congestion toll, he told me, could probably stave off enough of the rebound in driving to allow congestion pricing to fulfill its promise of curbing gridlock.
A year later, when David revisited Jevons Paradox in a full-blown New Yorker magazine narrative, The Efficiency Dilemma, he made sure to point to “capping emissions or putting a price on carbon or increasing energy taxes” as potential ways out. I was thrilled. and I published a post in Grist riffing on “The Efficiency Dilemma.” I’ve pasted it below. I hope to comment on Conway’s NY Times essay in a future post soon.
If efficiency hasn’t cut energy use, then what?
By Charles Komanoff, reprinted from Grist, Dec. 16, 2010.
One of the most penetrating critiques of energy-efficiency dogma you’ll ever read is in this week’s New Yorker (yes, the New Yorker). “The efficiency dilemma,” by David Owen, has this provocative subtitle: “If our machines use less energy, will we just use them more?” Owen’s answer is a resounding, iconoclastic, and probably correct Yes.
Owen’s thesis is that as a society becomes more energy efficient, it becomes downright inefficient not to use more. The pursuit of efficiency is smart for individuals and businesses but a dead end for energy and climate policy.
This idea isn’t wholly original. It’s known as the Jevons paradox, and it has a 150-year history of provoking bursts of discussion before being repressed from social consciousness. What Owen adds to the thread is considerable, however: a fine narrative arc; the conceptual feat of elevating the paradox from the micro level, where it is rebuttable, to the macro, where it is more robust; a compelling case study; and the courage to take on energy-efficiency guru Amory Lovins. Best of all, Owen offers a way out: raising fuel prices via energy taxes.
Thirty-five years ago, when the energy industry first ridiculed efficiency as a return ticket to the Dark Ages, it was met with a torrent of smart ripostes like the Ford Foundation’s landmark “A Time to Choose” report — a well-thumbed copy of which adorns my bookshelf. Since then, the cause of energy efficiency has rung up one triumph after another: refrigerators have tripled in thermodynamic efficiency, energy-guzzling incandescent bulbs have been booted out of commercial buildings, and developers of trophy properties compete to rack up LEED points denoting low-energy design and operation.
Yet it’s difficult to see that these achievements have had any effect on slowing the growth in energy use. U.S. electricity consumption in 2008 was double that of 1975, and overall energy consumption was up by 38 percent. True, during this time U.S. population grew by 40 percent, but we also outsourced much of our manufacturing to Asia. In any case, efficiency, the assertedly immense resource that lay untapped in U.S. basements, garages, and offices, was supposed to slash per capita energy use, not just keep it from rising. Why hasn’t it? And what does that say for energy and climate policy?
A short form of the Jevons paradox, and a good entry point for discussing it, is the “rebound effect” — the tendency to employ more of something when efficiency has effectively cut its cost. The rebound effect is a staple of transportation analysis, in two separate forms. One is the rebound in gallons of gas consumed when fuel-efficiency standards have reduced the fuel cost to drive a mile. The other is the rebound from the reduction in car trips after imposition of a road toll, now that the drop in traffic has made it possible to cover the same ground in less time.
Rebound effect one turns out to be small. As UC-Irvine economics professor Ken Small has shown, no more than 20 percent of the gasoline savings from improved engine efficiency have been lost to the tendency to drive more miles — and much less in the short term. Rebound effect two is more significant and becoming more so, as time increasingly trumps money in the decision-making of drivers, at least better-off ones.
Rebound effects, then, vary in magnitude from one sector to another. They can be tricky to analyze, as Owen unwittingly demonstrated in an ill-considered 2009 Wall Street Journal op-ed criticizing congestion pricing, “How traffic jams help the environment.” He wrote:
If reducing [congestion via a toll] merely makes life easier for those who drive, then the improved traffic flow can actually increase the environmental damage done by cars, by raising overall traffic volume, encouraging sprawl and long car commutes.
Not so, as I wrote in “Paradox, schmaradox. Congestion pricing works”:
When the reduction in traffic is caused by a congestion charge, life is not just easier for those who continue driving but more costly as well. Yes, there’s a seesaw between price effects and time effects, but setting the congestion price at the right point will rebalance the system toward less driving, without harming the city’s economy.
Rebound effects from more fuel-efficient vehicles, as depicted in “Energy sufficiency and rebound effects,” a 2018 concept paper by Steve Sorrell, Univ. of Sussex, and Birgitta Gabersleben & Angela Druckman, Univ. of Surrey, UK.
More importantly, as Owen points out in his New Yorker piece, a narrow “bottom up” view — one that considers people’s decision-making in isolated realms of activity one-by-one — tends to miss broader rebound effects. On the face of it, doubling the efficiency of clothes washers and dryers shouldn’t cause the amount of laundering to rise more than slightly. But consider: 30 years ago, an urban family of four would have used the washer-dryer in the basement or at the laundromat, forcing it to “conserve” drying to save not just quarters but time traipsing back and forth. Since then, however, efficiency gains have enabled manufacturers to make washer-dryers in apartment sizes. We own one, and find ourselves using it for “spot” situations — emergencies that aren’t really emergencies, small loads for the item we “need” for tomorrow — that add more than a little to our total usage. And who’s to say that the advent of cheap and rapid laundering hasn’t contributed to the long-term rise in fashion-consumption, with all it implies for increased energy use through more manufacturing, freight hauling, retailing, and advertising?
Owen offers his own big example. Interestingly, it’s not computers or other electronic devices. It’s cooling. In an entertaining and all-too-brief romp through a half-century of changing mores, he traces the evolution of refrigeration and its “fraternal twin,” air conditioning, from rare, seldom-used luxuries then, to ubiquitous, always-on devices today:
My parents’ [first fridge] had a tiny, uninsulated freezer compartment, which seldom contained much more than a few aluminum ice trays and a burrow-like mantle of frost … The recently remodeled kitchen of a friend of mine contains an enormous side-by-side refrigerator, an enormous side-by-side freezer, and a drawer-like under-counter mini-fridge for beverages. And the trend has not been confined to households. As the ability to efficiently and inexpensively chill things has grown, so have opportunities to buy chilled things — a potent positive-feedback loop. Gas stations now often have almost as much refrigerated shelf space as the grocery stores of my early childhood; even mediocre hotel rooms usually come with their own small fridge (which, typically, either is empty or — if it’s a minibar — contains mainly things that don’t need to be kept cold), in addition to an icemaker and a refrigerated vending machine down the hall.
Air conditioning has a similar arc, ending with Owen’s observation that “access to cooled air is self-reinforcing: to someone who works in an air-conditioned office, an un-air-conditioned house quickly becomes intolerable, and vice versa.”
If Owen has a summation, it’s this:
All such increases in energy-consuming activity [driven by increased efficiency] can be considered manifestations of the Jevons paradox. Teasing out the precise contribution of a particular efficiency improvement isn’t just difficult, however; it may be impossible, because the endlessly ramifying network of interconnections is too complex to yield readily to empirical, mathematics-based analysis. [Emphasis mine.]
Defenders of efficiency will call “endlessly ramifying network” a cop-out. I’d say the burden is on them to prove otherwise. Based on the aggregate energy data mentioned earlier, efficiency advocates have been winning the micro battles but losing the macro war. Through engineering brilliance and concerted political and regulatory advocacy, we have increased energy-efficiency in the small while the society around us has grown monstrously energy-inefficient and cancelled out those gains. Two steps forward, two steps back.
I wrote something roughly similar five years ago in a broadside against my old colleague, Amory Lovins:
[T]hough Amory has been evangelizing “the soft path” for thirty years, his handful of glittering successes have only evoked limited emulation. Why? Because after the price shocks of the 1970s, energy became, and is still, too darn cheap. It’s a law of nature, I’d say, or at least of Economics 101: inexpensive anything will never be conserved. So long as energy is cheap, Amory’s magnificent exceptions will remain just that. Thousands of highly-focused advocacy groups will break their hearts trying to fix the thousands of ingrained practices that add up to energy over-consumption, from tax-deductible mortgages and always-on electronics to anti-solar zoning codes and un-bikeable streets. And all the while, new ways to use energy will arise, overwhelming whatever hard-won reductions these Sisyphean efforts achieve.
I wrote that a day or two after inviting Lovins to endorse putting carbon or other fuel taxes front-and-center in energy advocacy. He declined, insisting that “technical efficiency” could be increased many-fold without taxing energy to raise its price. Of course it has, can, and will. But is technical efficiency enough? Owen asks us to consider whether a strategy centered on technical and regulatory measures to boost energy efficiency may be inherently unsuited for the herculean task of keeping coal and other fossil fuels safely locked in the ground.
I said earlier that Owen offers an escape from the Jevons paradox, and he does: “capping emissions or putting a price on carbon or increasing energy taxes.” It’s hardly a clarion call, and it’s not the straight carbon taxers’ line. But it’s a lifeline.
The veteran English economist Len Brookes told Owen:
When we talk about increasing energy efficiency, what we’re really talking about is increasing the productivity of energy. And, if you increase the productivity of anything, you have the effect of reducing its implicit price, because you get more return for the same money — which means the demand goes up.
The antidote to the Jevon paradox, then, is energy taxes. We can thank Owen not only for raising a critical, central question about energy efficiency, with potential ramifications for energy and climate policy, but for giving us a brief — an eloquent and powerful one — for a carbon tax.
Author’s present-day (Feb. 22, 2024) note: I overdid it somewhat in belittling energy efficiency’s impacts on U.S. energy use in that 2010 Grist post. Indeed, in posts here in 2016 and again in 2020 I quantified and enthused over improved EE’s role in stabilizing electricity demand and slashing that sector’s carbon emissions.
Carbon Footprint
Study Shows How AI Can Cut Over 5 Billion Tons of Carbon Emissions in 3 Key Sectors
Artificial intelligence (AI) is rapidly changing how industries operate, and it could also help fight climate change. A major study published in npj Climate Action finds that AI could cut global carbon emissions by up to 5.4 billion tonnes per year by 2035. That’s more than the total annual emissions of the United States.
The study is led by researchers from the London School of Economics and Systemiq. The report entitled “Green and intelligent: the role of AI in the climate transition” shows that applying AI to three key sectors—food, electricity, and mobility—can unlock enormous environmental benefits.
AI’s strength lies in its ability to process large datasets, identify patterns, and optimize systems in real time. When used strategically, this can translate into greater efficiency, lower energy use, and less waste. These improvements are essential to reduce greenhouse gas emissions and slow climate change.
A Sector-by-Sector Breakdown: Where AI Delivers the Most Cuts
The study highlights three areas where AI can drive the biggest reductions in carbon dioxide equivalent (CO₂e) emissions:
- Food: 0.9–1.6 billion tonnes CO₂e per year (up to 3.0 GtCO₂e in a highly ambitious scenario)
- Energy (Electricity): Up to 1.8 billion tonnes CO₂e per year
- Mobility (Transport): 0.5–0.6 billion tonnes CO₂e per year
These figures are significant. Together, they represent 8% to 10% of total global greenhouse gas emissions. That’s a substantial contribution to international efforts like the Paris Agreement, which aims to limit global warming to well below 2°C.
In the food and agriculture sector, AI can improve productivity while reducing environmental harm. Smart sensors and machine learning tools help farmers use just the right amount of water, fertilizer, and pesticides.
AI also enables precision farming, reducing waste and cutting emissions from overuse of chemicals. It can predict crop yields and improve food distribution. This helps cut spoilage and lowers emissions from storage and transport.
AI helps the clean energy transition in electricity generation. It manages supply and demand more efficiently. Moreover, AI algorithms can predict electricity use. They also enhance energy storage and optimize the integration of solar and wind power.
Additionally, AI helps stabilize power grids and boosts low-carbon energy use. This cuts down the need for dirty backup systems that run on coal or gas.
For mobility and transport, AI improves logistics, reduces fuel use, and supports the development of cleaner vehicles. Fleet managers use AI to plan efficient routes, avoid traffic, and reduce idle times. AI is key to making self-driving cars. These vehicles could boost road safety and cut emissions even more.
The chart below shows the projected global emissions by 2035, with AI adoption differing from business-as-usual and ambitious reduction scenarios for the three sectors identified.
AI Carbon Reductions in Other Sectors
AI is also critical in industries like cement and steel, where emissions are hard to abate. Machine learning helps monitor production processes and reduce energy waste. AI also enables real-time emissions tracking and reporting, helping companies stay accountable to their climate goals.
A recent McKinsey report shows that AI technologies can help businesses lower CO₂ emissions by up to 10%. They can also reduce energy costs by 10–20%. Additionally, buildings could save 20% on energy, while transportation systems might save 15%.
Complementing this, the International Energy Agency (IEA) estimates that adopting existing AI applications across end-use sectors like energy, industry, transport, and buildings could reduce emissions by about 1.4 gigatons of CO₂ annually.
Together, these findings underscore AI’s significant role in accelerating decarbonization across multiple sectors. And the good news? These AI applications already exist and are being tested or deployed by companies around the world. What’s needed now is rapid scaling.
- SEE MORE: The Top 6 AI-Powered Companies and How They Transform Climate, Nature, and Carbon Solutions
The Role of Policy and Industry Action
The study authors say AI’s benefits will only happen with strong guidance from policymakers and investors. Without supportive rules and incentives, AI might raise emissions. It could increase demand for power-hungry data centers. Also, it may automate processes that lead to more production and consumption.
To avoid these risks, the researchers call for:
- Public and private investment in climate-focused AI tools
- Open access to high-quality environmental datasets
- Standards and guardrails to guide responsible use
They also warn against “AI rebound effects,” where efficiency gains are offset by increased consumption. For example, making vehicles more fuel-efficient might encourage people to drive more. That’s why careful planning and strong governance are essential.
Another key recommendation: include developing countries in the AI transition. These regions often face the greatest climate risks but have limited access to technology. Thus, international partnerships and funding will be needed to ensure AI’s climate benefits are shared globally.
AI as a Climate Enabler, Not Just a Tool
AI can also strengthen other climate solutions. For example:
- Carbon removal. AI helps track carbon storage in forests and soils, improving the quality of carbon credits and offset programs.
- Resilience planning. AI models assist cities in getting ready for floods, heat waves, and other climate effects. They do this by simulating different scenarios and testing response plans.
- Energy optimization. AI manages heating, cooling, and lighting in buildings. It cuts energy waste while keeping comfort high.
These applications make climate solutions smarter, cheaper, and faster. AI doesn’t just reduce emissions—it helps manage the clean energy transition more effectively.
Governments are starting to notice. The European Union and Canada have launched initiatives to support green AI. Companies like Google, Microsoft, and Amazon are also building AI tools for climate forecasting, carbon tracking, and energy management.
Tech vs. Time: Can AI Help Us Beat the Climate Clock?
The new study offers compelling evidence that AI could play a leading role in slashing global carbon emissions. The estimated 3.2 to 5.4 billion tonnes of CO₂e reductions by 2035 are not just theoretical; they’re within reach if the right steps are taken.
These findings come at a time when many countries are off track in meeting their 2030 and 2050 climate goals. AI may help close that gap by offering fast, reliable, and affordable emissions cuts in important sectors.
Private companies, too, are under pressure to deliver on net-zero commitments. For them, AI can provide tools to track emissions, meet regulatory standards, and optimize energy use. Investors are also watching closely, with many ESG (environmental, social, governance) funds now looking for AI-powered climate solutions.
The bottom line? AI can become one of the world’s most powerful climate allies. But its impact depends on how it’s used, who controls it, and whether its benefits are shared widely. By focusing on climate-smart applications in food, electricity, and transport, AI can help build a cleaner, more resilient future.
The post Study Shows How AI Can Cut Over 5 Billion Tons of Carbon Emissions in 3 Key Sectors appeared first on Carbon Credits.
Mars, the global company behind famous brands like M&M’s, Snickers, and Pedigree, has announced a major new initiative: a $250 million Sustainability Investment Fund. The fund supports innovations in agriculture, ingredients, and packaging. It focuses on areas that have the biggest impact on Mars’ environmental footprint and carbon emissions.
Mars is also working on its climate goals through the “Sustainable in a Generation” plan. The aim is to cut emissions in half by 2030 and reach net zero by 2050. Here’s how the fund fits into Mars’s sustainability journey—and why it matters for the food and consumer goods sector.
Why Mars Is Betting Big on Sustainability
Mars has tied up to 2,000 senior leaders’ compensation to emission reductions, showing strong internal accountability. But much of its carbon footprint—over 70%—comes from purchased goods and services like farming, animal feed, and materials.
Thus, the new fund will invest in the following areas to address those emission sources:
- Advanced Agriculture,
- Innovative Ingredients, and
- Next‑Gen Packaging
These focus areas target Mars’s main emissions hotspots. They aim to speed up solutions that go beyond traditional carbon offsets.
Here is how the fund will drive systemic change in the company’s quest for sustainability.
Modern Farming Practices
Mars will provide digital tools for farmers. These tools will help track fertilizer use, monitor soil health, and boost yields. They will also aid in reducing emissions. Remote sensing and satellites will help fight deforestation. They also improve traceability, which is important for sourcing ingredients.
Low‑Carbon Ingredients
The fund will finance innovation in plant-based proteins and raw materials. Shifting from animal-based inputs can significantly reduce emissions, water use, and supply‑chain risk.
Circular Packaging
Packaging improvements include replacing flexible plastics with compostable or recyclable alternatives. Mars has already achieved meaningful shifts and now seeks to support emerging materials at scale.
All these help the company advance its path to net zero by 2050.
A Net-Zero Game Plan Backed by Real Numbers
Mars has made strides in its emission reduction and net-zero goals. It cut greenhouse gas emissions by 16.4% since 2015. At the same time, revenue rose by 69%, hitting $55 billion in 2024. That includes a 1.9% drop in 2024 alone, as seen in the chart below.
By 2030, Mars aims to cut emissions by 50% throughout its entire value chain—Scopes 1, 2, and 3. The company will also integrate sustainability into executive performance.
The company also achieved several milestones in its net-zero journey, including:
- Transitioned 58% of its operations to renewable electricity, aiming for 100% by 2040.
- Made 64% of consumer packaging recyclable, reusable, or compostable.
- Launched climate-smart agriculture projects in 29 countries, across 60+ partnerships, including protecting 8,000 ha of forest in palm oil supply chains.
CEO Poul Weihrauch said during the launch of the sustainability investment fund,
“I’m pleased to see our continued ability to decouple our business growth from our carbon footprint while simultaneously investing in innovation and getting behind start-ups that will be creating new solutions and advance breakthroughs to help companies address resilience challenges. These are important areas to make meaningful progress in helping us to reduce exposure to future environmental risks, and eventually, turn it into profit and competitive advantage.”
This change marks a major step in blending scale with sustainability. Moreover, the company is buying high-quality carbon removal credits to offset emissions it cannot eliminate directly. These credits support carbon-neutral products like the Mars Bar. They help projects that remove CO₂ from the air, like reforestation and soil carbon efforts. The credits are verified by trusted standards, including the Gold Standard and Verra.
Mars views carbon removals as a key tool in its Net Zero by 2050 strategy. This is especially true for tough sectors like agriculture. The company invests in projects like the €150 million Livelihoods Carbon Fund 3. This fund supports nature-based carbon removal and helps develop communities.
Beyond Carbon: Mars’s Broader ESG Mission
Mars goes beyond carbon. Its reef restoration initiative has received over $10 million since 2020, deploying innovative “Reef Stars” in 12 countries to boost coral recovery.
The company also works on water stewardship and farmer livelihoods, aiming to help 30% of suppliers earn a living income by 2027. Some rice projects in Thailand increased yields by up to 43% while cutting water use by over 40%.
More notably, Mars ties 20% of executive pay to emissions progress. This makes sustainability a key part of its corporate culture.
Market Momentum Meets Mission-Driven Investment
Mars’s Sustainability Fund comes at a time when global demand for sustainable solutions is rapidly growing. The sustainable packaging market, a key focus area for Mars, is experiencing significant expansion. The market is expected to rise from $292.7 billion in 2024 to USD 423.6 billion by 2029, growing at a compound annual rate of 7.7%.
Additionally, over 54% of U.S. consumers now choose eco-friendly packaging. Also, 90% prefer brands that use it. Mars’s move towards sustainable materials matches what consumers want and where the market is heading.
The fund also taps into expanding carbon credit markets, particularly in agriculture, forestry, and land use (AFOLU). The market could rise from $5.8 billion in 2024 to $7.5 billion in 2025. This shows a nearly 29% annual growth rate. By 2029, it could hit $20.8 billion.
Carbon farming—which aligns with Mars’s agricultural footprint—could generate as much as $13.7 billion in credits annually by 2050. These trends suggest that innovative ag-focused investments may yield strong returns while advancing climate impact.
On the broader carbon removal front, the market is set to rise from about $733 million in 2024 to nearly $2.85 billion by 2034. This shows a projected growth rate of 14.5% each year. As Mars supports sustainable farming and packaging technologies, these markets offer both environmental value and long-term economic opportunity.
Why This Matters to Industry and Investors
Mars is a major player in food and pet care, including snack favorites and pet nutrition. Its investments set sector-wide signals on value-chain decarbonization, sustainable sourcing, and packaging evolution.
The fund’s 250 million-dollar commitment matches the scale already seen in clean agriculture and materials innovation. It provides early funding for innovative solutions. This way, it links financial success to environmental performance.
Investors should note Mars’s strong execution: a 16% emissions cut amid significant growth shows ambitious goals are feasible.
Mars’s Sustainability Investment Fund marks a strategic leap beyond internal emissions cuts. It tackles systemic issues—agriculture, packaging, ingredients—using innovative solutions.
As consumer goods and agriculture industries face climate pressures, Mars offers a model of responsible leadership. It funds future technologies and places sustainability at its core. This shows that profitable growth and caring for the planet can go hand-in-hand.
The post Mars Invests $250M in Sustainable Innovations to Boost Net Zero Journey appeared first on Carbon Credits.
As the race to reach net-zero intensifies, artificial intelligence (AI) has emerged as a powerful tool for combating climate change. AI is changing how we measure and reduce environmental damage. It helps decarbonize industries and verify carbon offset projects. Investors are now eyeing a new frontier where climate innovation meets digital intelligence.
In this article, we spotlight three rising companies using AI to drive real-world environmental impact: AECOM, Stem Inc., and Verdantix.
Why AI is The Brain Behind the Green Revolution
AI is not just a buzzword in climate circles anymore. It’s a key enabler in scaling up decarbonization, nature monitoring, and sustainability efforts. PwC says AI in climate actions might cut global greenhouse gas emissions by 4% by 2030. That’s about the same as the yearly emissions from Australia, Canada, and Japan together.
Moreover, AI could create up to $5.2 trillion in global economic value. This is because it can make industries more efficient and sustainable.
AI supports both environmental stewardship and financial performance. AI helps companies meet demands from regulators and ESG-minded investors. It provides real-time insights and boosts transparency, as well as guides strategies to cut emissions. It also improves corporate accountability.
Here are four critical ways AI is accelerating climate action:
- Carbon Accounting
AI improves the accuracy and efficiency of emissions tracking across complex systems like global supply chains. It enables detailed Scope 1, 2, and especially Scope 3 data capture. Capgemini found that 48% of organizations already use AI to measure and reduce emissions.
- Project Verification
Remote sensing, satellite images, and AI models can verify carbon offset projects. This includes reforestation and soil carbon storage. McKinsey says automated tools can lower verification costs by up to 80%. In turn, this helps build trust and cut down on greenwashing.
- Climate Forecasting
AI models help governments and insurers simulate extreme weather risks. They also predict long-term climate impacts. Tools like Google’s DeepMind and ClimateGPT provide local forecasts. They also model risks for decades ahead.
- Deforestation Monitoring
Machine learning algorithms scan satellite data to detect illegal logging or land degradation. For instance, Global Forest Watch uses AI to alert stakeholders quickly. This helps protect biodiversity and carbon sinks.
Notably, AI is speeding up climate innovation. The top AI companies below are using their power to excel in ESG performance, sustainability reporting, and environmental impact.
AECOM (NYSE: ACM): Engineering Smart Cities for a Hotter World
- Sector: Engineering and Infrastructure
- Market Cap: $15.3 billion
- Headquarters: Dallas, Texas
AECOM is a global infrastructure consulting firm. They use AI and data analytics to design sustainable cities. Their goals are to reduce construction emissions and build climate-resilient systems. It works on major public and private projects worldwide and has become a key partner in developing net-zero urban environments.
Key initiatives include:
- Uses AI to model and simulate infrastructure against flood, heat, and climate risks.
- Launched ScopeX, a tool that reduces embodied carbon in construction projects by up to 50%.
- Applies predictive analytics across transportation, water, and energy systems to lower lifecycle emissions.
- Supports net-zero urban development through AI-enhanced planning and design.
Net-Zero and ESG Strategy
AECOM aims for net-zero emissions by 2040. This goal follows science-based targets and covers Scope 1, 2, and major Scope 3 categories. Between 2019 and 2022, it cut operational emissions by 37%, with a target of a 50% reduction by 2030. The company has a total emissions of 11,459 tCO2e as of 2024 reporting period.
The company helps clients reduce carbon emissions in their infrastructure through sustainable engineering practices. As part of its ESG strategy, the company aligns its disclosure with leading frameworks like TCFD, CDP, and SASB.
AECOM is also a signatory to the UN Global Compact and the Business Ambition for 1.5°C pledge.
As for its financial performance, AECOM generated $14.4 billion in revenue in FY2023 and recently announced a $1 billion stock buyback program. Its strong financials and ESG credentials position it as a reliable and future-ready investment.
Stem Inc. (NYSE: STEM): AI-Powered Batteries That Beat the Peak
- Sector: Clean Energy & Battery Storage
- Market Cap: $72 million
- Headquarters: San Francisco, California
Stem Inc. operates one of the world’s most advanced AI-powered energy storage platforms. Its Athena™ software balances solar and battery usage to reduce emissions and grid congestion. AI-driven energy storage is key for stability and decarbonization as the grid adds more renewable energy.
Major efforts include:
- Athena™ uses machine learning to optimize battery dispatch and avoid peak fossil fuel generation.
- Helps large commercial users cut Scope 2 emissions by shifting to renewable energy at strategic times.
- Partners with solar developers to provide grid services at a lower carbon intensity.
- Manages over 1.6 GWh of storage capacity across North America.
Sustainability and Impact
Though Stem hasn’t issued a formal net-zero pledge, its business model is strongly aligned with emissions reduction. Its systems help clients dodge carbon-heavy electricity during peak times. They also speed up clean energy use.
In its latest sustainability update, the company highlighted plans to track Scope 3 emissions. It also aims to improve lifecycle transparency. The image below shows the company’s recently available GHG emissions, broken per category or emissions source.
Athena’s AI capabilities also allow customers to integrate ESG goals into energy decisions, such as prioritizing low-carbon sources or optimizing for emissions reductions.
The company has over 16,000 customers around the world. It manages storage assets at more than 1,000 sites and oversees solar assets at over 200,000 locations globally. Stem serves over 260 cities and partners with more than 40 utilities. This shows its wide reach and strong influence in clean energy.
Stem raised over $600 million through a SPAC merger and continues to grow through strategic partnerships. The company plans to achieve profitability with software-driven energy services. It will also scale its grid-interactive clean energy assets.
Verdantix: The ESG Whisperer for Climate Accountability
- Sector: ESG Intelligence and Software
- Type: Private Company
- Headquarters: London, UK
Verdantix is a leading research and advisory firm helping organizations manage ESG risks and opportunities. Its AI-powered tools assist corporations in tracking, reporting, and improving sustainability performance. As regulations grow worldwide, Verdantix is emerging as a key player in ESG compliance and climate disclosures.
Below are some of the company’s clients from various industries:
The company’s research shows key market trends. The EHS services market is set to reach $63 billion. Also, the industrial asset management software market is expected to hit $17 billion by 2030.
Key initiatives in the space are:
- Offers AI-based benchmarking tools to assess ESG maturity and climate risk exposure.
- Uses natural language processing (NLP) to analyze climate disclosures and sustainability reports.
- Helps clients align with global frameworks like TCFD, CSRD, and ISSB.
- Advises Fortune 500 firms on net-zero planning, ESG strategy, and emissions tracking.
ESG and Environmental Contributions
Verdantix also does not have its own net-zero pledge. However, it helps boost ESG performance in many industries. Its software supports accurate measurement of Scope 1–3 emissions, scenario analysis, and sustainability KPI tracking. This is vital for clients aiming to meet science-based targets and prove real climate progress.
As more regulations make climate disclosures mandatory, Verdantix’s role in ensuring data quality and ESG transparency is expanding. It helps create stronger carbon markets by verifying environmental claims and providing reliable sustainability data.
Verdantix is growing rapidly across North America and Asia, with clients in finance, tech, and heavy industry. As climate rules get stricter, demand for its services will likely grow. This is especially true for multinational companies getting ready for the required ESG reports in the EU and the U.S.
Investor Takeaway: Why Climate + AI = Smart Money
As global markets aim for net-zero, AI and climate join forces. This mix offers a unique chance for impact, innovation, and investment. AI does accelerate climate solutions; it makes them smarter, more accurate, and scalable.
Each of the companies profiled in the article offers a distinct edge:
- AECOM delivers reliable ESG-aligned growth by embedding AI in sustainable infrastructure.
- Stem Inc. offers scalable climate impact through real-time clean energy optimization.
- Verdantix ensures that ESG progress is measurable, verifiable, and aligned with compliance requirements.
Artificial intelligence is helping firms reduce their emissions, measure progress, and prepare for climate risks. These companies stand out not just for their tech but for their ability to deliver measurable environmental and ESG outcomes.
For impact-driven investors, policymakers, and sustainability professionals, these are the companies to watch in 2025 and beyond. Their work shows that climate ambition, powered by digital intelligence, can drive real transformation across sectors and value chains.
- SEE MORE: The Top 6 AI-Powered Companies and How They Transform Climate, Nature, and Carbon Solutions
The post 3 AI Companies To Watch in 2025 and How They Power the Net-Zero Revolution appeared first on Carbon Credits.
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