'Makes it even more disappointing': Microsoft backs fossil fuel big time with $7 billion deal in race for AI supremacy

• Microsoft signs massive methane gas deals to sustain growing AI workloads
• AI expansion is driving hyperscalers toward faster fossil fuel power solutions
• Microsoft’s data center emissions are projected to rise sharply by 2028

Microsoft has signed a series of methane gas-powered AI data center deals totaling nearly 5 gigawatts of capacity, marking a departure from the company's climate goals.

The race for AI supremacy is driving hyperscalers to lock in any available power, and Microsoft has turned to fossil fuels to keep its AI tools running without delay.

The agreements include an exclusive partnership with oil giant Chevron for a 2.5 gigawatt plant near Pecos, Texas, alongside additional facilities in Abilene, Texas, and Mason County, West Virginia.

The gap between promises and actions

Research by Stand.earth Research Group claims these projects will increase Microsoft's data center carbon footprint by 160%, reaching approximately 25.25 million metric tons of CO₂e by 2028.

"Microsoft makes great claims about its climate credentials, which makes it even more disappointing to see the company turn toward fossil fuels," said Rachel Kitchin, Senior Corporate Climate Campaigner at Stand.earth.

Three years after its 2020 climate pledge to become carbon negative by 2030, Microsoft's emissions had already increased by at least 30%.

Microsoft President Brad Smith recently declared he was "confident in our ability" to meet the 2030 goal.

At the end of 2024, on-site data centers made up only 5% of all demand for methane gas power being developed in the United States - one year later, this figure ballooned to 39%, as demand for training and running LLMs accelerated faster than renewable capacity could be built.

Developers claim that behind-the-meter methane gas eliminates the burden on existing utility customers - however, industry analysts warn that data center demand has already increased consumer electric bills.

A Virginia Commonwealth University study found that on-site methane gas for a single data center could lead to $53 to $99 million in health-related costs.

A 2021 Harvard University study also found that one in five deaths globally can be linked to air pollution from burning fossil fuels.

Research also suggests data centers may raise local temperatures, indirectly increasing electricity bills through higher home cooling demand.

Microsoft claims to match 100% of its electricity demand with renewables, but these claims are based on energy markets that do not require direct delivery to its data centers.

The gap between what Microsoft says and what Microsoft does appears to grow wider by the day.

Renewables are cheaper than fossil fuels, which makes Microsoft's pivot toward methane gas for its AI tools difficult to defend.

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