Fwd: Why going carbon-free 24/7 matters

[Loretta Lohman]

Companies are backing away from the important pledge ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌

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Many companies are beginning to realize that the AI boom is incompatible with their climate goals. The technology is simply too energy hungry to be fed by zero-emission sources, at least right now. Today’s newsletter looks at what it could cost the planet if companies walk away from ambitious plans to power their operations with clean electricity 24/7. Plus, a climate adaptation funding milestone in Asia and Germany falls behind on its green targets. Subscribe to Bloomberg for unlimited access to all our stories. Accounting gulf By Alastair Marsh When Microsoft Corp. announced a plan in 2021 to buy enough renewable energy to match all its electricity use on an hourly basis, it said the strategy would encourage more zero-carbon energy to be added to power grids, and do away with dirty sources over time. Just how effective a tool for decarbonization it could be was revealed in a recent report from the Electric Power Research Institute. Matching electricity consumption with clean power in the same hour, on the same grid, can cut 42 times more carbon-dioxide emissions compared with only matching it on an annual basis. The latter is still the preferred approach for many companies that have less ambitious climate targets than Microsoft and some of its Big Tech peers. In annual matching, businesses buy renewable energy credits that are aggregated over a year and used to offset total electricity consumption. A Microsoft data center in Virginia. Photographer: Lexi Critchett/Bloomberg While hourly matching, also known as 24/7 carbon-free energy, appears a clear win for the climate, its appeal among companies is fading in the era of artificial intelligence. As Bloomberg News reported earlier this month, Microsoft, one of the few companies to commit to hourly matching 100% of the time, is considering dropping that goal as it tries to remove hurdles that could hold it back in the race to power data centers. Google, which was the first major company to pledge it would run on 24/7 clean power, has said hourly matching “is a far more complex and technically challenging goal” than annual targets. That’s because companies that use annual matching can rely on coal and gas power plants in regions and times of day where clean energy is unavailable — all they have to do is purchase renewable energy certificates, which are cheap and widely available, to cover a full year of consumption. But such an approach undermines trust and slows the energy transition, according to the nonprofit EnergyTag. How much energy a solar or wind farm can generate depends on whether the sun shines and the wind blows. Annual matching doesn’t capture this constraint — it doesn’t matter if clean energy isn’t actually available when it’s needed. In contrast, the hourly approach forces companies to match actual consumption with clean electricity supply in a given place and time, incentivizing more battery investments, according to Killian Daly, executive director of EnergyTag. “Buying a solar certificate produced at midday in the middle of June and using it to say that you’re consuming solar at midnight on Christmas Eve is obviously completely absurd,” he said. “But that’s the way a lot of companies operate today.” The climate benefits of companies running on 24/7 carbon-free energy could be significant. The EPRI study show that, under a scenario where 10% of the energy used by commercial and industrial customers in the US is procured using annual matching, power system emissions would be roughly 1 million tons of CO2 lower per year than had no matching been employed. If 10% of customer load was covered by hourly matching, the annual emissions savings would be much larger, at 42 million tons. “When carbon-free electricity must be available hour by hour, all day, every day, it could drive investment and operation of resources that could displace fossil generation in the hours it would otherwise run,” said Arin Kaye, program manager at EPRI and one of the authors of the paper. And even as one of the biggest corporate champions of hourly matching may choose to shelve the approach, 24/7 carbon-free energy is gaining broader traction, from European Union policy to carbon accounting standards. Still, inside Microsoft, the costly and energy-intensive buildout of data centers is raising questions about the feasibility of climate commitments made before the rise of AI. That includes its so-called 100/100/0 goal to match 100% of its electricity consumption, 100% of the time, with zero-carbon energy purchases from the same grids it draws power from. A spokesperson for the company has said it continues to look for opportunities to maintain an annual matching goal, without commenting on the future of its hourly commitment. Get more Tough deadline 2030 The year Microsoft set for reaching its 100/100/0 target to match 100% of its electricity consumption, 100% of the time, with zero-carbon energy purchases. Difficult choice “AI is an existential fight for survival for Big Tech, and so all and any funds at their disposal are being diverted to building as much AI possible” Alexia Kelly Former director of net zero and nature at Netflix Inc. $100 billion milestone By Ishika Mookerjee Governments, investors and banks have poured about $100 billion into efforts to handle the effects of climate change in Asia in the past five years, with water and infrastructure projects attracting the majority of the capital. More than 90% of the investment between 2021 and 2025 was made by state-related organizations or development finance institutions, according to a study of 165 funding groups published Monday. Road elevation and drainage, water basin management, and training for farmers were among the activities that attracted the most funding, said the report by the Centre for Impact Investing and Practice, in conjunction with partners including Singapore’s state investor Temasek Holdings Pte., Invesco Ltd., and ImpactSF. The study mainly analyzed investments in China, India and Southeast Asia. Read more Germany’s challenge By Petra Sorge Germany is likely to miss key climate targets as it waters down emission-reduction programs, an advisory group said Monday. The government in March set out an €8 billion ($9.3 billion) plan to slash carbon as it chases a 2030 goal to cut emissions by two-thirds from 1990 levels. But the Council of Experts on Climate Change now warns the country may exceed its target by as much as 100 million tons of CO2. Chimneys from the Scharnhorststrasse combined heat and power (CHP) natural gas power plant in Berlin. Photographer: Yen Duong/Bloomberg Emission reductions are “likely to be considerably lower than assumed by the federal government,” Barbara Schlomann, chairwoman of the panel, said in a report. “There is an urgent need for political action.” With the Iran war driving up costs for households and businesses, Chancellor Friedrich Merz’s coalition is under pressure to revive Germany’s stagnant economy. Last week the government agreed to abandon a heating law that mandated a certain share of renewable energy in new buildings. The cabinet has also approved plans for new gas-fired power plants. The German Environment Agency published a much more optimistic outlook shortly before Merz took office last year, predicting the country was on track to meet 2030 climate targets. A spokesperson for the agency said Monday that the panel’s report provides “valuable feedback” which will be studied closely. Read more More from Green Danish Fund, GPSC Said to Mull Sale of Taiwan’s Changfang and Xidao Offshore Wind Farm The project has total installed capacity of nearly 600 megawatts. Top India Utility Backs Local Reactors to Meet 2047 Nuclear Goal NTPC cautioned against over-dependence on a single innovation or source in order to fend off risks to supply chains. UBS Says Clients Expect Firms Axing Net Zero to Face Market Hit Investors made clear that they’re still monitoring corporate statement for climate progress, the analysts said. 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