Today Microsoft announced it has met its 2025 renewable energy goal — first announced in 2020 — of purchasing enough renewable energy to match 100% of the electricity used by all its datacenters, buildings and campuses by 2025.

Microsoft has contracted to add 40 gigawatts of renewable energy to the grid — the vast global infrastructure that keeps electricity flowing from power plants via high-voltage lines and local networks to datacenters and local communities. Of that contracted volume, 19 gigawatts of renewable energy are now online.

Microsoft and other corporate renewable energy buyers enter into contracts known as power purchase agreements (PPAs) to help power plant developers bring new projects forward. These are typically 10- to 15-year commitments that enable developers to build new power plants and in exchange provide them with predictable returns that make their investments feasible.

Meeting Microsoft’s renewable energy targets requires different strategies, each tailored to local geographies, community needs and regulatory frameworks. Below is a look at six companies across the globe that helped Microsoft meet its commitment to match 100% of its electricity use in datacenters and other operations with renewable energy purchases by 2025.

Sol Systems: Advancing community investment and sustainable agriculture through dual-use solar farms 

Grain is growing in southwestern Illinois, but it’s not your typical farm. Instead, the hardy grain has been planted in neat rows underneath a huge array of solar panels built to generate 270 megawatts of solar energy at peak sunlight.

Located in the rural farming town of Eldorado, Illinois, this unique energy farm is the result of a power purchase and community investment agreement between Sol Systems and Microsoft that is expected to add over 500 megawatts of solar energy to the grid from sites in Illinois, Ohio and Texas. The agreement includes an innovative investment fund, expected to be $50 million for the next 20 years, designed to benefit the local communities.

In Eldorado, that includes educational initiatives that range from a virtual reality welding simulator to hydroponic garden towers, bringing a full hands-on experience and career exposure to elementary school students, and a state-of-the-art hydroponic greenhouse cooperative at Eldorado High School, providing job skills and fresh produce for the local school lunch program. Two other dual-use solar projects under the Sol Systems-Microsoft agreement in Illinois feature grazing sheep and other sustainable land management initiatives, like pollinator habitat and specialty crop farming.

Yuri Horwitz, chief executive of Sol Systems since its founding in 2008, said he hopes its agreement with Microsoft can be a blueprint for community investment between energy buyers and renewable energy producers to fuel long-term economic and environmental impact.

Prior to the work in Eldorado, the funding helped Bright Solar Futures, an early career education program established by the Philadelphia Energy Authority to develop and implement a curriculum for high school students interested in solar careers. It also enabled trainees at PowerCorps PHL, which focuses on training 18- to 26-year-olds in the Philadelphia metropolitan area to earn their OSHA 30 certificates, an essential certificate in the energy industry.

“From the beginning, our goal with Microsoft was to show what’s possible when energy buyers and developers work hand-in-hand with local communities,” Horwitz said. “These projects are designed to produce power but, just as importantly, to create opportunity, trust and lasting value in the places where they’re built.”

The grain growing on the Eldorado solar farm, called Kernza®, is a type of hardy perennial grain developed by The Land Institute. It is renowned for its nutty flavor and deep root systems, which both improve soil health and serve as a natural carbon storage system.

Sol Systems leases the land for its solar farm operations from farmers and other local landowners, to be returned to farming upon decommissioning of the solar project.

Incorporating agriculture allows for continued and sustainable use of the land.

“We think of ourselves as stewards of the land beneath our projects. We hope to one day give this land back to the community with rich and healthy soils to enable continued farming,” he said.

Brookfield: Bringing renewable power to the grid at scale

When the Hawk’s Nest hydroelectric plant in Gauley Bridge, West Virginia, first began generating electricity in 1936, it was considered a remarkable engineering feat because of its sheer size and the difficulty of digging out a water-diversion tunnel deep inside a mountain. Historically, the plant powered a nearby industrial manufacturing facility and was never connected directly to the broader grid.

With energy demand surging, plant owner Brookfield is working to bring the facility into the modern age and for the first time deliver a portion of its power into the local utility grid, bringing new capacity online to support the broader electricity needs of the community.

“With the benefit of our offtake agreement with Microsoft, we’ve made major investments over the last five years to ensure that an asset that’s been around for nearly 100 years will continue for the next 100 years,” said Stephen Gallagher, chief executive officer of North American operations for Brookfield’s renewable group. Microsoft expects to begin receiving power from the Hawk’s Nest plant next year.

The West Virginia facility is one of many projects that Brookfield is developing as part of an agreement with Microsoft to deliver over 10.5 gigawatts of renewable power capacity. The Brookfield portfolio contracted to Microsoft includes the Aspen Road solar farm in Pennsylvania and the Jones Farm and Egypt Road solar projects in Maryland, each of which include wildlife corridors and pollinator habits. These projects were specifically structured to not impact prime farmland and offer local landowners the opportunity to preserve large open tracts of land once the projects are decommissioned. The companies are initially focused on building capacity in the U.S. and Europe, with the opportunity to expand to other parts of the world.

Brookfield works closely with local and regional utilities to address the ongoing challenge of grid upgrades needed to integrate more solar, wind and other forms of renewable energy and reduce bottlenecks. “All of us are struggling with the timelines it takes to connect to the grid,” said Gallagher. Even before construction can begin, energy producers must navigate the lengthy permissions and engineering studies required by regional utilities, a process that typically takes five to seven years for solar and even longer for wind projects. Construction itself may last 12 to 18 months.

Brookfield also looks for opportunities to leverage inventory and supplier relationships to help utilities solve supply chain issues and ease bottlenecks that often also lead to delays in connecting renewable energy to the grid. Where local regulations allow, “we try to help utilities by prefunding procurement or delivering transformers or breakers earlier so they can get us on faster,” said Gallagher. “Because our pipeline is so large, we can bring projects on a lot more rapidly than others.”

Auren Energia: Operating a women-run wind farm in Brazil 

Hertha Ayrton would be impressed.

Ayrton was an electrical engineer — and one of the first women to be recognized as a pioneer in the male-dominated field of electricity at the turn of the last century.

If Ayrton were to travel to Brazil’s distant northeast today, she would discover an advanced wind farm operated by women.

The wind farm is owned and operated by Auren Energia, one of Brazil’s leading renewable power companies. As part of a power purchase agreement signed in 2023, Microsoft purchases renewable energy from the 154-megawatt Cajuina wind complex, which includes the women-run wind farm. “As you can imagine, power generation, it’s mostly operated by males so it’s very different and something we are very proud of,” said Eduardo De Oliveira Diniz, director of trading and clients at Auren Energia. Recruiting and training the staff was done with an institution focused on workforce development and innovation for Brazilian industry.

Brazil’s remote northeast has become a hub for renewable energy due to its high winds and vast open land. Auren has invested heavily in roads and clean-water access for the more than 200 people who live around and sometimes work for the wind farm complex. It also provides support for nearby schools and construction jobs during site buildouts. The PPA made the project and its related community benefits possible, said Diniz.

Historically, Brazil’s large network of rivers and intense rainy season made hydroelectricity Brazil’s main energy source, but in the last few years wind and solar have grown rapidly as costs have fallen, said Diniz. Auren dispatches energy within the national energy grid that delivers power generated in the north to population centers over 1,300 miles away in the southeast. The project feeds into the broader grid that Microsoft datacenters are connected to.

“Auren has a 100% renewable energy portfolio with a strategically complementary mix of sources between hydro, wind and solar generation,” said Diniz. “We really believe in the power of our portfolio.”

FRV Australia: The importance of knowing your neighbors

After the construction staff of a new solar energy facility in New South Wales, Australia, finished unpacking tens of thousands of solar panels, a local nonprofit group received an unexpected offer: Would the group have any use for the empty wood pallets used to transport over 700,000 panels on their journey to southeast Australia?

In fact, they did, recycling the wood frames into handmade toys later sold to benefit local charities.

“It may sound silly, but it made a big impact,” said Michael Steiner, chief business development officer at FRV Australia, part of the Fotowatio Renewable Ventures energy company. It was, he said, an example of the importance of making time to get to know your community.

The Walla Walla solar facility is a 300-megawatt project located in east Australia. FRV Australia signed a 15-year power purchase agreement with Microsoft to provide renewable energy from Walla Walla, which also supports the regional government’s economic and renewable energy goals. The Microsoft contract was “the fundamental ingredient for making such a project a reality,” said Steiner.

The Walla Walla solar farm is also part of a much larger effort across Australia to transition to renewable energy. “Replacing 14 gigawatts of coal-fired generation in the next 10 years is a humongous task,” said Steiner.

The vast facility, where sheep still graze across the landscape, covers 605 hectares and will produce enough solar energy to power more than 90,000 New South Wales homes annually. Construction generated roughly 350 local jobs before it was completed in the fall of 2025. One advantage of the site location was its proximity to the existing national electricity grid, which allowed the solar facility to deliver power using an existing transmission line easement.

The agricultural landscape, like nearly all of rural Australia, is naturally at risk of fire. FRV worked closely with the local community on strict fire prevention standards and plans. FRV also provided funding for local infrastructure improvements, including the restoration of Walla Walla Memorial Hall, which will preserve a valuable piece of local heritage and provide a versatile space for community events and activities. Additionally, these funds will be used for upgrades to local community infrastructure and playground and swimming pool facilities. Steiner said FRV will continue to engage with the local government to fund deserving community initiatives over the life of the solar facility.

“We need to create this trust and engagement from day one on every project that we do,” said Steiner. “If you don’t, you will not get anywhere, and your project probably will fail before you even start building.”

ENGIE: Repowering renewable energy assets boosts capacity and reduces environmental impact

A wind farm in southern France is generating twice as much renewable energy for the French power grid thanks to a repowering that is supported by a power purchase agreement between Microsoft and ENGIE, a multinational company based in France focused on low-carbon energy solutions.

The wind farm is located in the historical town of Fitou, known for its red wines and high winds, making it a favorite for wind and kite surfers.

The makeover of the Fitou wind farm after 22 years of wind power production involved the careful dismantling of the wind farm’s foundations, turbines and blades and replacing them with more powerful and efficient parts. The process, known as “repowering,” helps increase energy production without occupying additional land. According to ENGIE, the upgrade nearly doubled the site’s total capacity.

The project recycled and reused as many parts as possible and drew from nearly two decades of operational insights to reduce the repowered wind farm’s impact on the local environment and wildlife. For example, the updated wind farm includes sensors that automatically slow down blades when birds are detected nearby. 

“We enhanced our longstanding biodiversity and noise management measures with the latest technologies and an AI tool,” said Katrin Fuhrmann, managing director for ENGIE’s B-to-B activities in Central Europe.

Besides boosting energy production, ENGIE has used novel methods for engaging the community around other wind farms in its portfolio, including crowdfunding to give local residents a chance to become co-owners of the Landes de Couesme complex, also in France.

More broadly, ENGIE and Microsoft have built a long‑term, strategic collaboration centered on renewable power purchase agreements (PPAs). These contracts allow Microsoft to secure additional renewable electricity while giving ENGIE the long‑term visibility needed to develop new wind and solar assets across Europe. Together, the two companies have already enabled the development of 26 renewable energy projects in France and seven in Germany, representing 416 megawatts of renewable capacity currently online. This approach, grounded in innovation and decarbonization, is accelerating the deployment of low‑carbon electricity that benefits both the grid and local communities.

“Electricity consumption is increasing, and renewable production is increasing exponentially,” said Furhmann. Repowering existing plants helps accelerate the production of renewable energy by allowing producers to reuse existing sites and grid connections. “And Microsoft is helping us in developing these renewable assets,” she added. “It really is a win-win situation.”

EDP Renewables North America: Providing reliable power, benefits and income

From the prairies of Texas to rolling hills in Illinois and Ohio, Microsoft has contracted with EDP Renewables North America (EDPR NA) to bring 675 megawatts of solar and wind energy online through power purchase agreements — or enough electricity to power more than 150,000 U.S. homes.

Across all these projects, EDPR NA has worked to deliver tangible benefits for the communities in which it operates — from upgrading access roads and investing in community projects to offering landowners accustomed to fickle weather, crop or cattle prices predictable income from lease payments for hosting wind turbines or solar panels on their properties.

For instance, the Cattlemen Solar II project in Milam County north of Austin, Texas, is expected to generate more than $41 million in revenue over the project’s lifetime to local governments to support public services and infrastructure, EDPR NA estimates. The project also is expected to deliver over $50 million in payments to landowners to diversify revenue and provide a steady source of income. In addition, EDPR NA has helped fund the construction of accessible bleachers at the local high school and the purchase of an emergency services vehicle for the county.

“Depending on the project and the location, we work really hard to find our place, the right place in each community,” said Kelly Snyder, executive vice president of origination for EDPR NA.

In the same way that lease payments for solar and wind projects help give landowners financial predictability, power purchase agreements executed by Microsoft can give renewable energy developers like EDPR NA revenue stability needed to finance new renewable projects at the lowest possible cost — making them more attractive for banks and other lenders to finance. In turn, those projects add cleaner, reliable power to the grid in key regions where Microsoft operates.

“As energy demand rises across the country, these agreements support investment in domestic energy infrastructure while delivering long-term value for customers, communities and the broader economy,” said Snyder.

Top image: A wind farm in Fitou, France. Photo courtesy of ENGIE.

Related links:

Learn more: A milestone achievement in our journey to carbon negative

Learn more: As the world goes digital, datacenters that make the cloud work look to renewable energy sources

Learn more: Microsoft will be carbon negative by 2030

Learn more: Advancing sustainability

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Over a decade of investment: 40 gigawatts of new renewable energy contracted

What began in 2013 with a single 110 megawatt (MW) power purchase agreement (PPA) in Texas — a small first step to demonstrate how corporate procurement could scale clean energy(3) — has evolved into one of the largest clean energy portfolios in the world. This first deal not only supported Microsoft’s early cloud services but also set in motion a decade of commercial partnerships and learning-by-doing that served to demonstrate how corporate demand for advanced energy solutions can help to achieve a more affordable and sustainable power system, while supporting reliability for customers.

Since our carbon negative announcement in 2020, we have contracted 40 gigawatts (GW) of new renewable energy supply across 26 countries, working with more than 95 utilities and developers across 400+ contracts and counting. To put that amount in perspective — that’s enough energy to power about 10 million US homes. Of that contracted volume, 19 GW are now online, delivering new clean energy supply to the power grid, while the remainder are slated to come online over the next five years.

Our new renewable energy procurement continues to deliver significant environmental benefits, including the reduction of Microsoft’s reported Scope 2 carbon dioxide emissions by an estimated 25 million tons(4) and the mobilization of billions of dollars’ worth of private investment in regions where we operate.

Microsoft’s global renewable energy procurement footprint

Catalyzing market investment through bankable, repeatable models

Microsoft is among the early pioneers in developing technical and commercial practices that help advance bankable, repeatable and scalable procurement tools suitable for each market. Our clean energy purchasing navigates a global patchwork of power market designs, requiring creativity in how we balance cost, time to market and project sizing in our portfolio across planning, contracting and management.

Our work has benefited from a broad coalition of partners helping to build this market together. According to Bloomberg New Energy Finance, more than 200 global corporations collectively purchased nearly 200 GW of clean energy around the world since 2008. Working alongside other clean energy buyers — as well as hundreds of utilities, manufacturers, financiers, developers and engineers — we have helped reduce transaction costs, expand developer access to financing and streamline procurement approaches that other buyers can adopt.

This global flywheel of partnership, investment, technology and policy innovation is expected to continue to facilitate billions of dollars’ worth of investment into infrastructure and jobs. And as we’ve seen repeatedly, when Microsoft sends a clear market signal for world-class, first-of-a-kind technologies and infrastructure, the power sector rises to the challenge. Our procurement over the past decade has demonstrated that partnerships, communities and innovation are essential ingredients that help to accelerate first-of-a-kind technologies and infrastructure at scale.

Scaling partnerships to scale infrastructure

Critical to Microsoft’s success in expanding digital infrastructure and supporting our local communities is our ability to build trusted partnerships with the over 95 global energy suppliers that support our clean energy portfolio. We have sourced clean energy through multiple requests for proposal or information, bilateral engagements and clean tariffs to evaluate over 5,000 unique carbon-free energy projects around the world.

Today, Microsoft has six energy company partners with which we have over 1 GW of contracted renewable energy capacity, and more than 20 energy supplier partners where each partner has at least five separate renewable energy projects with Microsoft — evidence of the durable, repeatable relationships necessary to scale clean energy. Combining scale with speed, Microsoft’s landmark 10.5 GW framework agreement with Brookfield sends a long-term, 2030 demand signal to the market that enables developers to raise funding more efficiently, bolster supply chains, hire engineers and construct world-class energy infrastructure.

Putting communities first

Our renewable energy procurement has mobilized billions of dollars in private investment, supported thousands of jobs across the communities where we operate and delivered meaningful co-benefits. Through partnerships with developers and nonprofit organizations, we’ve worked to embed community-driven benefits into our energy portfolio. These benefits include robust infrastructure, economic inclusion and support for community-focused organizations.

Our support for communities shows up in projects like our 500 MW PPA with Sol Systems, or our 250 MW PPA with Volt Energy Utility that provided local training and jobs, as well as grants to community nonprofit organizations and habitat restoration. We’ve also signed over 1.5 GW of distributed solar, bringing clean energy directly into hundreds of communities around the world. Landmark agreements like our 500 MW offtake with Pivot Energy, or our 270 MW offtake with PowerTrust are expected to foster employment, energy cost savings and grid resilience in communities across the United States, Mexico and Brazil. More details on the above examples and our approach to community benefits in clean energy agreements can be found in a dedicated Microsoft whitepaper.

Innovation unlocks new markets and pathways

Microsoft’s clean energy procurement continues to play an important role in catalyzing technical, commercial and regulatory innovation. Our commercial efforts have helped lower barriers to entry into new markets and expand access into multi-technology contracts that accelerate decarbonization.

In Japan, Microsoft signed one of the first corporate PPAs in the country’s restructured power market. Our 25 MW, 20-year agreement with Shizen represents the first single-asset virtual PPA executed in the country, which helped pave the way to over 2GWs of corporate procurement since 2024, according to Bloomberg New Energy Finance. Alongside opening new markets, we have structured several multi-technology offtakes in nascent markets for corporate procurement. In India, Microsoft purchased a combined 437 MW solar/wind hybrid offtake from Renew, where our projects will support energy access and rural electrification. In Microsoft’s home state of Washington, our datacenters in Douglas County are supplied by 100% carbon-free energy, as we leverage a creative blend of new wind power and hydropower storage to deliver around-the-clock clean energy.

Looking forward to 2030 and beyond

In 2025, the International Energy Agency (IEA) described a new “Age of Electricity,” marked by accelerating electricity demand from electric vehicles, air conditioners, data centers and heat pumps. As the world electrifies more of the economy, the demand for affordable, reliable and clean electricity will continue to rise.

Our experience building Microsoft’s clean energy portfolio both reflects and furthers global trends. According to IEA data, since 2000, renewable energy generation has expanded nearly four-fold. In many power markets across the world, clean energy is one of the fast-growing sources of generation, and often the one with the fastest time-to-market. Corporate buyers like Microsoft continue to serve as an important catalyst in driving commercial demand for innovation and infrastructure across the power industry.

As we continue our journey toward becoming carbon negative by 2030, Microsoft will continue to push for an expansive focus on adding all forms of carbon-free electricity solutions, complementing and adding to our portfolio of renewable energy resources. We recognize that the world’s rising electricity needs require a balanced, all-of-the-above decarbonization strategy to meet global economic growth and environmental goals, and our sustainability goals will continue to support this approach moving forward. Such a strategy requires a broader set of carbon-free energy and grid-enabling technologies, including nuclear energy, next-generation grid infrastructure and carbon capture technology. Just as renewable energy was a relatively small part of global energy grids in 2013 when we signed our first PPA, today many advanced energy technologies remain early in their development but offer significant promise to accelerate progress towards an affordable, reliable and sustainable energy future.

Microsoft has already taken early steps to support the advancement of a broader set of carbon-free energy technologies as we partner with Helion and Constellation Energy on a 50 MW fusion project in Washington state and work with Constellation to restart the 835 MW Crane Clean Energy Center in Pennsylvania. Microsoft’s Climate Innovation Fund has allocated $806 million of capital to 67 investees, with 38% directed toward Energy Systems — advancing carbon-free power and fuels, energy storage and energy management solutions.

We welcome continued collaboration with our power sector partners to bring these innovations to market and incorporate new technology tools in the process to accelerate their development.

We will continue to build and leverage new AI-driven tools to design, permit and deploy new power technologies that help expand and more efficiently operate the electricity grid, bringing more clean energy online faster. This work is exemplified by our recently announced collaborations with Idaho National Laboratory and the Midcontinental System Operator, among other examples.

And as we advance innovative energy technologies, we recognize that standards must evolve alongside innovation. That is why we will continue participating in industry forums that strengthen carbon accounting frameworks — so that our clean energy procurement is measured with greater accuracy and delivers real world emissions reductions, with a continued focus on maintaining the high level of integrity that the world has come to expect from Microsoft.

Our carbon negative commitment remains a call to action — for Microsoft, our customers and the broader technology sector — to invest in an affordable, reliable and sustainable power system. As we look toward 2030, that call to action has never been clearer.

Gratitude — and momentum for the work ahead

Today’s milestone represents a shared achievement among the utility professionals, clean energy developers, community leaders, technology innovators and forward-thinking policymakers who continue the deployment of renewable energy. Meeting today’s milestone shows what partnership can deliver in bringing big ideas to life. The future of carbon-free energy is one that we will create – together.

As Microsoft’s Chief Sustainability Officer, Melanie Nakagawa leads the company’s targets to be carbon negative, water positive, and zero waste by 2030. She brings deep experience at the intersection of policy, business, and technology to advance climate and sustainability solutions globally.

As President of Cloud Operations + Innovation at Microsoft, Noelle Walsh leads the organization that powers the global Microsoft Cloud. She oversees the company’s physical cloud infrastructure and operations, with a charter focused on safety, security, availability, sustainability, and competitive infrastructure growth—bringing decades of global operational leadership.

Footnotes

1. Renewable energy is defined within Microsoft’s fact sheet https://aka.ms/SustainabilityFactsheet2025, which represents FY24 data.
2. To date, Microsoft’s renewable energy target includes two primary categories: renewable energy from contracted projects and grid mix. The first is renewable energy delivered under PPAs or similar long-term contracting mechanisms, generally for new projects where our financial involvement in the project’s development is critical for its success. This category represents more than 90% of the renewable energy applied to achieve our 2025 target.The second category is “grid mix” – renewable energy supported via our standard utility relationships and rates, inclusive of policy programs such as renewable portfolio standards and state and utility decarbonization goals.Our 2025 100% renewable target does not include purchases from short-term, so-called “spot market” renewable energy credits (RECs) sourced from operational clean energy projects.With the above in mind, Microsoft leverages a straightforward formula to determine our 100% renewable energy metric on a global, annual basis. We update and further detail the methodology and assumptions behind this formula in our annual sustainability reports:
3. Clean energy— also referred to in this blog as carbon free energy —is defined within Microsoft’s fact sheet https://aka.ms/SustainabilityFactsheet2025, which represents FY24 data.
4. Reduction of reported Scope 2 emissions are calculated between FY20-25, the cumulative difference between location based and market-based emissions, excluding the use of short-term, so-called “spot market” RECs

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At Microsoft, we see this shift clearly in our conversations with customers globally. Leaders are moving quickly to scale AI, while remaining accountable for sustainability commitments to customers, investors, regulators, and employees. Too often, these goals are positioned as tradeoffs. In practice, they are reinforcing. When AI transformation is approached with intent and discipline, it can drive stronger business performance while advancing sustainability outcomes.

That belief is the foundation of our new Strategic Guide: Aligning AI Transformation with Sustainability Goals.

Why AI transformation and sustainability belong together

The most meaningful impact from AI comes not from isolated pilots, but from transformation—when intelligence is embedded across strategy, operating model, and culture. That’s the premise of Microsoft’s Frontier transformation AI vision, where organizations are enriching employee experiences, reinventing customer engagement, reengineering core business processes, and bending the curve on innovation.

What’s often overlooked is that these same shifts deliver sustainability gains. More efficient processes require less energy and fewer resources, better data reduces waste and overproduction, and modern cloud and AI architectures—when designed intentionally—can shrink digital footprints while increasing speed and resilience.

Five practices for sustainable AI transformation

Our new Strategic Guide: Aligning AI Transformation with Sustainability Goals makes this connection explicit and practical, offering five essential practices leaders can apply today to turn AI ambition into measurable business and sustainability outcomes.

1. Adopt a modern cloud strategy.
   Moving workloads to efficient, hyperscale cloud environments is often the single biggest step organizations can take to reduce energy use while improving performance. Modern cloud platforms enable organizations to scale AI intelligently—optimizing compute, storage, and cooling in ways that are difficult to achieve on‑premises.
2. Assess your cloud provider’s sustainability and trust goals.
   An organization’s environmental footprint increasingly extends beyond its own walls. Transparency, renewable energy commitments, and responsible datacenter operations matter because your partners’ practices become part of your sustainability equation.
3. Manage data responsibly for efficient and accurate AI.
   Efficient data pipelines, strong governance, and thoughtful lifecycle management do more than reduce risk. They also reduce unnecessary compute and storage, helping AI systems become more accurate, scalable, and sustainable.
4. Optimize cloud workloads.
   As AI moves from pilots to production, sustainability outcomes increasingly depend on how workloads are designed and run in the cloud. Right‑sizing compute, reducing idle resources, and streamlining data movement lowers energy use while improving performance and cost control.
5. Fit the model to the mission.
   With efficient cloud foundations in place, leaders can focus on selecting the right AI models for the right jobs. Aligning model choice with business objectives, performance requirements, and sustainability goals enables organizations to scale AI responsibly—maximizing impact without unnecessary complexity or resource use.

Together, these practices help leaders move beyond aspiration to execution—delivering what the guide describes as a dual return: stronger business performance alongside reduced environmental impact.

What the research shows

AI can deliver better results—faster and more sustainably

In a simple experiment highlighted in the Strategic Guide: Aligning AI Transformation with Sustainability Goals, Microsoft set out to understand how efficiently AI could perform a common knowledge work task.

Five professionals were asked to summarize a 3,000-word technical report into 200 words. Completing the task took a median of 41 minutes and consumed an estimated 13.7 watthours of laptop energy.

Using a single prompt, Microsoft Copilot completed the same task in under a minute—using just 0.29 watthours of datacenter energy. That’s roughly 55 times faster and 47 times more energy efficient. Independent reviewers also rated the AI-generated summary higher for clarity, accuracy, completeness, and overall quality.

The takeaway is clear: when AI is applied thoughtfully, it can reduce time, energy consumption, and friction—while delivering stronger outcomes.

What this looks like in practice

Across industries, organizations are already demonstrating how AI transformation and sustainability reinforce one another.

ABB, a global leader in electrification and automation, is using AI to help energy and asset intensive industries operate more efficiently while meeting increasingly ambitious sustainability goals. The Genix Industrial AI Platform helps ABB customers deliver from 25% efficiency gains in data centers to 18% energy savings in cement production.

In the construction sector, Giatec is tackling one of the world’s most carbon intensive materials: concrete. Built on Microsoft Azure, Azure IoT Hub, and Azure OpenAI in Foundry Models, Giatec’s intelligent platform optimizes mix designs, reduced 2.5 million tons of carbon emissions, and increased profit margins for concrete producers by up to 100%.

Space Intelligence uses AI to turn vast amounts of satellite data into trusted, actionable insights for global climate and conservation efforts. The company moved to Microsoft Foundry and the Planetary Computer ecosystem to reduce the time required to map the world’s forests by 75%, completing coverage of more than 50 countries in just one year, something that would’ve taken six years—delaying the ability to drive and verify real world climate impact.

Becoming a Frontier organization—responsibly

These examples point to a broader trend: the organizations leading in AI are also redefining what responsible innovation looks like. Frontier organizations don’t treat sustainability as a separate initiative or reporting exercise. They design it into their transformation from the start.

Solving systemic challenges like climate change requires collaboration—across value chains, ecosystems, and sectors. It also requires leaders who are willing to ask better questions about how technology is deployed, measured, and governed.

This perspective is demonstrated by Microsoft’s recent announcement on community-first AI infrastructure. As we scale AI, we have a responsibility to consider not only what these systems can do, but how and where they are built. That means investing in infrastructure that supports local communities, prioritizes renewable energy, manages water responsibly, and is designed with transparency and long-term partnership in mind. Building AI responsibly isn’t just about reducing risk—it’s about earning trust and ensuring that the benefits of innovation are shared broadly—from the datacenter outward.

Used thoughtfully, AI can help us make smarter decisions, operate more efficiently, and unlock entirely new ways of creating value—while staying within planetary boundaries. Used carelessly, it risks accelerating the very challenges we’re trying to solve.

That’s why clarity matters. Frameworks matter. And practical guidance matters.

What leaders can do next

If you are responsible for shaping your organization’s AI strategy, sustainability agenda, or both, I encourage you to explore the Strategic Guide: Aligning AI Transformation with Sustainability Goals. It is designed to help you cut through complexity, identify where to start, and move forward with clear actionable strategies.

At Microsoft, we’re committed to helping our customers become Frontier organizations that lead with innovation, responsibility, and impact.

The challenges we face are complex. But with the right strategy, the right technology, and a shared commitment to progress, AI can help us build a more sustainable and prosperous future—for everyone.

Strategic Guide: Aligning AI Transformation with Sustainability Goals

Read the guide

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Today, a wide range of advanced carbon dioxide removal projects are underway – and accelerating.

In Europe, construction is underway to enable carbon to be captured and condensed by Stockholm Exergi so it can be stored, beginning in 2028, deep under the North Sea. In the US, Lithos Carbon is spreading finely crushed volcanic rock across farmlands to convert carbon into bicarbonate ions that are stored for millennia deep in the ocean. And in Bolivia, Exomad Green is locking up carbon by processing sustainable forestry residues into biochar, a soil enhancement, using a type of thermal decomposition that was developed to break down organic materials in the absence of oxygen.

The goal is to help restore carbon balance lost through carbon dioxide emissions generated by modern life – from agriculture and construction to chemical and energy production.

Elementary school children are taught that plants remove carbon dioxide from the air through photosynthesis, so it’s no surprise that initial carbon removal management efforts, beginning in the 1970s, focused mainly on planting and conserving trees. Today, scientists have much more insight into what generates carbon dioxide emissions and alternative methods to remove them.

Building on that knowledge, a growing number of carbon dioxide removal firms around the world are developing innovative projects, and Microsoft is helping build a market for those solutions at larger scale.

In fiscal year 2025, Microsoft signed agreements to remove a record 45 million metric tonnes of carbon dioxide with 21 companies across the globe. That’s the equivalent of removing 9.8 million internal combustion cars from the road for a year.

Since the launch of Microsoft’s carbon dioxide removal program, the pace and scale of projects have continually accelerated. Microsoft’s carbon dioxide removal agreements in fiscal year 2025 are two times the volume contracted in the preceding fiscal year and nine times the volume contracted in fiscal year 2023. Projects span the globe, including ones in the US, Brazil, Denmark, Sweden, Bolivia, Norway, India, Panama, Canada and Switzerland.

And while this sharp increase in advance purchase commitments indicates rapid market advancement, there is a long road ahead to get to the seven to nine billion tonnes of carbon dioxide removal that experts say the world needs annually by 2050.

Microsoft has committed to become carbon negative by 2030 and to remove its historic emissions by 2050. The company takes a reduction-first approach. Carbon reduction is the most powerful lever for achieving carbon negative because it directly lowers emissions at the source, said Phil Goodman, director of the carbon removal portfolio at Microsoft. From there, carbon removal provides a direct pathway to address residual and historical emissions that cannot be mitigated through reduction. Microsoft advances carbon dioxide removal by signing contracts with carbon removal project developers to deliver volumes of high-quality carbon dioxide removal.

Key to this process is the carbon removal credit, representing the removal of one metric tonne of carbon dioxide. Credits are listed by project developers on registries, where they are bought by companies seeking to advance carbon markets and meet net-zero goals. Registration requires independent auditors to verify carbon removal claims according to the registry’s methodology. Registries retain a public ledger to ensure transparency and prevent double counting so the credit cannot be used twice.

However, due to the small size of the carbon market, in the past several years Microsoft increasingly has worked directly with carbon dioxide removal suppliers during early stages of project design and development before they list their credits on registries. After conducting extensive due diligence, Microsoft invests to help develop innovation by signing contracts with carbon removal project developers.

“With any form of carbon removal, you need someone out there to buy the credits so that the economic model works,” said Goodman. “By securing that forward demand commitment, suppliers can actually go raise financing, hire staff and build out their projects. We buy only a fraction of a project’s total credits, and we hope other companies can make faster procurement decisions knowing that projects in our portfolio underwent deep due diligence.”

Measurement is the essential backbone

Growing awareness of the harms of excess carbon dioxide in the atmosphere has spurred scientists to develop increasingly sophisticated methods for removing it and storing it safely – in soil, geologic formations, in trees and in the ocean.

Despite progress, carbon markets have also faced setbacks. In the last several years, scrutiny of credits generated by forest preservation projects helped lead to a regulatory crackdown.

To ensure the integrity of its program, Microsoft applies a rigorous due diligence process. Potential suppliers must submit comprehensive documentation detailing strategies for project design and implementation, methodologies, validation processes and other essential plans for addressing Microsoft’s quality criteria.

“Measurement is the essential backbone of this industry, because there needs to be a common understanding of what a carbon credit means,” said Goodman. “You’re not buying a physical good. You’re buying this environmental attribute that you need to feel confident can be consistently applied across project types, apples to apples.”

Microsoft takes what it calls a “portfolio” approach, spanning a combination of nature-based and engineered solutions, which it believes is needed to catalyze market development, said Goodman. The company evaluates projects based on durability – or the length of time that carbon dioxide is expected to remain out of the atmosphere – including some that are expected to store carbon dioxide for less than 100 years to 1,000 years or longer.

Projects must show they will remove more carbon dioxide than they emit, to ensure that the net removal accounts for all operational and embodied emissions, and that local communities and ecosystems won’t be negatively impacted by other parts of the process.

Enhanced rock weathering: Captured on the farm for storage in the ocean

Measurement is at the heart of Lithos Carbon, co-founded by two academics from Yale and Georgia Tech who helped pioneer monitoring, risk mitigation and verification of a process known as enhanced rock weathering to remove carbon dioxide and improve soil health.

The process begins with the sourcing of finely ground basalt, a type of volcanic rock that is widely available as a waste byproduct of quarrying and already used in composite materials for construction, roads and in other industries. Carbon dioxide removal depends on the chemical reactions that occur after the ground rock is spread over farmland, where it mixes with rainwater and atmospheric carbon to create stable bicarbonate ions. These ions then seep into waterways and rivers before heading out to sea, where they are stored for 10,000 years or more.

Lithos’ approach accelerates and condenses a process that normally takes tens of thousands of years into a few seasons. “Essentially, we’re helping nature do something it already does – just much faster,” said Chief Executive Officer Mary Yap. Following an initial pilot project, Lithos and Microsoft signed a three-year contract in 2024 to remove over 11,400 metric tonnes of carbon dioxide.

Lithos uses high-density soil sampling and advanced laboratory analysis to make the invisible elements in soil visible, followed by AI-powered predictive modeling tools, water runoff samples and natural water chemistry to determine the end-to-end flow of bicarbonate ions from farms to waterways. Microsoft also assisted Lithos in creating a new, highly sensitive technique for detecting bicarbonate in rivers that originates from crushed basalt. Collaborating with Microsoft “helped accelerate the science and operational discipline that will help define the future of our work in this field,” said Yap.

For farmers, the benefit is improved soil health, which leads to higher crop yields. “We roll up with a bunch of trucks,” said Yap. “We spread this volcanic, nutrient-rich dust that restores their soils, reduces soil erosion and replenishes essential nutrients. It helps both farmers and the planet at the same time.”

Regenerative farming: Capturing carbon while improving soil and crop yields

Changing farming and ranching practices offer other avenues for addressing and removing global greenhouse gas emissions. Excessive fertilizer use can lead to nitrous oxide emissions, a powerful greenhouse gas, while traditional tilling accelerates the oxidation of soil organic carbon, releasing it into the atmosphere as carbon dioxide. Tractors and other farm machinery burn fossil fuel. Given its size and impact, agriculture “is a sector that just cannot be ignored,” said Dylan Lubbe, commercial director at Agoro Carbon Alliance, which works with the agricultural sector to store carbon.

To attack the problem, Agoro has recruited a small army of agronomists and other agriculture experts to help an expanding network of farmers and ranchers move away from traditional agricultural practices in favor of regenerative farming and ranching, a practice that removes carbon, improves soil health and boosts crop yields. It includes no-till soil preparation and the use of clover and other so-called cover crops with deep root systems that transfer atmospheric carbon into the soil through root biomass and microbial processes. Ranchers are encouraged to rotate animals to avoid over-grazing and stimulate plant growth.  

“Soil is a natural carbon sink,” said Lubbe. “Traditional agricultural practices disturb the soil, essentially letting that stored carbon dissipate into the atmosphere.”

In June 2025, Microsoft reached an agreement with Agoro to purchase 2.6 million metric tonnes of carbon dioxide removals over 12 years. Extensive soil sampling validated by third parties is expected to confirm the project’s carbon removal and storage and soil enhancement.

Agoro provides financial support for farmers and ranchers so they can feel more comfortable that changing to new farming and ranching methods won’t hurt their bottom line. “It’s very important to have a for-profit or market mechanism approach to a problem,” said Lubbe. “If there’s money to be made, then people are incentivized to address something.”

BECCS: Bioenergy with carbon capture and geological storage  

Another way to remove carbon dioxide is to capture it from burning biomass and store it underground in geological formations, using know-how first developed by the oil and gas industry. Stockholm Exergi, a Swedish energy giant, is addressing the complexity and high upfront costs of this approach by retrofitting its enormous bioenergy plant on the Stockholm waterfront so carbon dioxide can be captured by burning forestry waste from sustainably managed harvests.

Besides generating electricity, the plant already uses heat generated by its bioenergy process to warm the city of Stockholm. Now construction is underway to make it possible for carbon dioxide to be separated from flue gases and condensed so it can be transported by ship to the North Sea for storage. It will then be injected more than 800 meters beneath the ocean floor into porous bedrock, where it mineralizes over time. This elaborate process is known as bioenergy with carbon capture and storage, or BECCS.

“We are creating a flow of carbon from the atmosphere to the geosphere,” said Erik Rylander, head of commercial operations at Stockholm Exergi.

In May 2025, Microsoft reached an expanded ten-year agreement with Stockholm Exergi to remove over 5 million metric tonnes of carbon dioxide. “This has never been done before at this scale and wouldn’t have been possible without their commitment to buying our product,” said Rylander. Working with Microsoft, “we are really trying to develop something that can become a market standard for BECCS.”

Tropical reforestation: Drones and satellites replace tape measures

Harnessing trees to capture carbon dioxide has come a long way since the 1980s. While measuring the width of tree trunks with tape measures still plays an important role in the field, as was typical of early reforestation efforts, Brazil’s re.green increasingly uses light-emitting drones and satellite imagery to monitor forest growth and carbon removal. Drones also distribute fertilizer and seeds over remote areas and steep hills. Satellite images and machine learning models help identify prime areas for reforestation.

To lock up carbon dioxide, re.green operates as an ecological restoration company, reclaiming lands that were deforested decades or even centuries ago. “Our effort is to restore the original ecosystem,” said chief executive Thiago Picolo. “We’re not just planting rows of trees.” Their work ranges from selecting the most suitable native species for each landscape to sowing a diverse mix of seedlings to removing invasive exotic grasses and controlling ants that attack seeds and seedlings.

In January 2025, re.green and Microsoft reached an expanded agreement to purchase a total of nearly 6.5 million metric tonnes of carbon dioxide and restore a total of 33,000 hectares in the Amazon and Atlantic Forest biomes. “Scale is key to biodiversity, resilience and efficiency,” said Picolo.

While trees consume carbon dioxide as they grow, they also release it as they decay, die or catch fire. Because their carbon-absorbing capacity also plateaus over time, re.green strategically harvests select native timber to maintain forest health for carbon capture and enhance biodiversity. While planting and sustainable harvesting also create local jobs, the priority is supporting the restoration of a healthy tropical forest.

“My dream, my Holy Grail, is not only for re.green to be a successful company, but for us to be a leader in a thriving, sustainable, new economic sector,” said Picolo.

Top image: While planting and sustainable harvesting creates local jobs, re.green’s priority is restoring healthy tropical forests. Photo provided by re.green.

Related links:

Learn more: Microsoft’s carbon dioxide removal portfolio

Learn more: Microsoft’s carbon dioxide removal program

Learn more: Microsoft’s sustainability commitments

Sally Beatty writes about AI and innovation at Microsoft, focusing on the company’s most cutting-edge breakthroughs and how emerging technologies are improving the lives of ordinary people. Previously, Sally was a feature reporter for the Wall Street Journal in New York, where she broke news about media and marketing. A California native, Sally lived in Hong Kong in the early 1990s, where she wrote for the Journal about the societal impact of economic and political reforms and consumer spending trends. You can contact Sally at LinkedIn.

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Thousands of global leaders are gathering at Climate Week NYC 2025, one of the largest events of its kind focused on climate action. From business and government to science and civil society, the conversations this year reflect both a shared urgency and a growing sense of possibility. 

Across industries, leaders are using AI to turn constraints into catalysts for innovation. Companies are using AI to help balance competing objectives such as reducing costs and environmental impacts while driving growth. 

The business case is clear: Morgan Stanley reports that companies investing in climate risk mitigation are seeing average returns of 8X on their initial investment.¹ And, according to the World Economic Forum, every dollar invested in climate adaptation and resilience can generate up to $19 in avoided losses.² 

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AI in action: How leaders are driving change 

Sustainability challenges often span functions, geographies, and time horizons, and AI is proving valuable in helping people collaborate to solve highly complex problems. For example: 

• Faced with increasingly frequent flooding, the City of Stuttgart needed a faster way to prepare. Traditional geospatial modeling would have taken months. Instead, by partnering with Esri, Microsoft, and NVIDIA, city planners built a full-scale 3D digital twin in just 24 hours—a 99% improvement in processing time. With AI-powered simulations, these city planners can now visualize rainfall, model water flow, and test mitigation strategies in near real time. The result: faster response, smarter planning, and a more resilient city.

• In Japan, supermarket chain Super Hosokawa and logistics partner Imamura Shoji used Azure Databricks, Azure OpenAI, and Snowflake to build a demand forecasting system that shares two-day-ahead predictions across the supply chain. The impact was immediate: food waste dropped by over 50% for key products, and trial items outperformed expectations, even during periods of declining sales. These results are inspiring broader AI adoption across Japan’s food logistics ecosystem. 

•  In Washington state, researchers at Pacific Northwest National Laboratory partnered with Microsoft to reimagine how we discover next-generation battery materials. Using AI and Azure Quantum Elements, they narrowed down 32 million possibilities to 18 viable candidates in just 80 hours—a process that would traditionally take years. This is a glimpse into the future of scientific research and development: AI-powered discovery, faster time-to-impact, and new frontiers in energy and materials. 

Advancing the sustainability of AI with innovations in datacenter cooling

As AI adoption accelerates, managing its resource use is a strategic imperative, to enable customers and partners to scale AI responsibly and competitively. Three areas of focused investment for Microsoft include (1) optimizing datacenter energy and water efficiency, (2) advancing low-carbon materials, and (3) improving the energy efficiency of cloud and AI services.

The latest cloud and AI technologies run on chips that consume more power than previous generations, and the more power that runs through a chip, the hotter it gets. Future generations of chips for AI are expected to become even more powerful, with even greater demands on the cooling systems in datacenters. 

To help address this problem, Microsoft has successfully tested a new microfluidic cooling system with up to three times better cooling performance than cold plates, depending on the workloads and configurations involved. Taking the heat signatures of chips, we’re able to identify the hot spots and then etch channels into the back of the silicon chips to direct liquid coolant more efficiently to the hot spots, optimizing how we do cooling. These channels are micrometers in size, similar in size to a human hair.

As part of the prototyping effort, the team used AI to help optimize a bio-inspired design to cool chips’ hot spots more efficiently than straight up-and-down channels.

Microfluidics is part of our whole-systems approach to optimizing every part of the cloud and AI stack, from datacenters to servers to silicon. Because cooling impacts so many aspects of cloud infrastructure design, from server density to rack density to power management and load balancing between servers, these innovations promise improvements for sustainability as well as other metrics, such as cost, reliability, speed, and consistency.

Getting started with AI for sustainability 

Sustainability progress starts with curiosity. Begin by identifying where your organization can reduce risk and improve efficiency, whether through better visibility, smarter supply chain decisions, or new value streams.

To learn more about how AI can help your organization make tangible progress toward your sustainability and resilience goals, read Insight to Impact: AI Use Cases to Advance Sustainability. 

¹Corporate Sustainability: Long-Term Value Creation Opportunity, Morgan Stanley , July 30, 2015.

²With climate risks set to slash earnings, what can CEOs do?, World Economic Forum, December 12, 2024.

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Zero waste by 2030 is a cornerstone of our sustainability strategy, along with becoming carbon negative, water positive, and protecting more land than we use. This recent milestone, driven by a culture of innovation and cross-functional collaboration, reflects the growing momentum to integrate zero waste and circularity practices across the technology industry.

Working alongside our recovery partners and suppliers, we are advancing the sustainability of our cloud supply chain and driving toward our zero-waste target in three key areas: (1) piloting the sustainable extraction of rare earth minerals from hard disk drives at scale, (2) continuing to expand our Circular Centers around the world, and (3) co-creating recyclable packaging solutions for transporting datacenter hardware.

Innovating to create a US-based supply of recycled rare earth elements

Today, we’re announcing a collaboration with Western Digital, Critical Materials Recycling, and PedalPoint Recycling demonstrating how we transformed approximately 50,000 pounds of end-of-life hard disk drives (HDDs) and other materials into critical, high-value materials, recovering rare earth elements (REEs) like neodymium and precious metals like gold and copper. By enabling the REE recovery process to be managed domestically, the program was designed to minimize transportation emissions and boost the resilience of the United States REE supply chain by decreasing dependence on imported materials.

When HDDs are retired from service, the data-carrying components are sanitized and shredded to ensure data security, while other components are separated in order to enable recycling and recirculation of REE materials. This initiative tackled some of the persistent technical challenges with recycling REEs: developing methods to achieve a high recovery rate for the materials, finding a recycling technique that avoids the use of harsh chemicals, and proving that the REE recycling process can be economically viable in the long term.

The innovative, acid-free dissolution of shredded HDDs delivered an impressive 90% high-yield recovery of elemental and rare-earth materials. In addition, the recycling process has an estimated 95% reduction in emissions compared to traditional mining and processing practices, based on life cycle analysis. Setting a new standard for industrial recovery of critical materials, this initiative was one of the first demonstrations of large scale, in-country recycling of essential metals and materials.

Expanding Circular Centers around the globe

Across the company, our teams are working to improve resource efficiency and expand the lifetime value of materials through the three Rs: reduce, reuse, and recover. Within our global datacenters, our Microsoft Circular Centers are foundational to our progress, enabling us to process and route decommissioned servers and hardware components to their next useful lives, such as internal reuse, other electronic supply chains, or academies that train datacenter technicians.

By redesigning systems to reduce waste, then reusing and recovering materials wherever possible, we’re saving costs, gaining efficiency, and discovering new opportunities for hardware and infrastructure components. For example, we have successfully reused more than 3.2 million components through internal and external channels in 2024, recognizing a 30% increase or more in value recovery through our Circular Center program.

Since opening our first Circular Center in Amsterdam, the Netherlands, in 2020, we’ve built five additional facilities in the United States—Boydton, Virginia; Chicago, Illinois; and Quincy, Washington—as well as in Dublin, Ireland, and Singapore. To continue to connect our reuse and recycling around the globe, new Circular Centers are planned for Cardiff, Wales; New South Wales, Australia; and San Antonio, Texas.

As we build on progress over the past five years, we’re excited to continue accelerating circularity practices across our business. Preventing waste remains the core of our zero-waste strategy. In addition, we’re continuing to invest in expanding markets for circular solutions and collaborating with local organizations to support circularity in the communities where we operate and work.

Co-creating novel packaging solutions for datacenter hardware

In addition to advancing hardware circularity, we are also tackling the challenge of packaging for all of the hardware and components we use in our datacenters. With more than 150 original equipment manufacturers (OEMs) supplying our datacenters, solutions need to ensure the same level of protection and security for servers, racks, and components as traditional packaging methods.

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Sustainability and waste reduction in our datacenters

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One of the key challenges with packaging for the hardware and components in our datacenters is that it is typically multi-layered—for example, packaging for server racks might include a layer of wood, then glue, foam, then more wood. Because of this, the packaging was traditionally not recyclable via curbside pickup. Over the past 18 months, our Cloud Logistics team has worked with suppliers, logistics service providers, and recyclers to take those pallets and separate the layers, making the materials recyclable through local collaborations.

As a result, packaging from more than 30,000 server racks was processed through our global packaging recycling program, diverting more than 2,500 metric tons of waste from landfills. Moving forward, we are exploring the expansion of this recycling program to other types of packaging such as those used for cables, spares, and network components.

Beyond recycling, our teams look for opportunities to reuse materials within the value chain to reduce the need to procure something new and enable increased waste diversion, whether for hardware, components, or packaging. For example, we are working to reduce the hard-to-recycle, plastic-based, expanded polyethylene (EPE) foam in packaging, replacing it with more sustainable paper and pulp alternatives.

Another impactful way to increase circularity in our supply chain is with innovations in packaging for our server racks. We’re currently testing reusable solutions that advance sustainability and improve business efficiency by reducing cost and providing consistency in the unpacking experience for datacenter teams, all while keeping server racks safe during transport and handling.

Explore Microsoft’s work to reduce waste in our datacenters

To learn more about Microsoft’s work to reduce waste in our datacenters, check out datacenters.microsoft.com/sustainability.

For business leaders interested in developing a circular strategy for their organization, read the whitepaper Four pillars of a successful circular datacenter hardware program with deeper insight into four essential aspects of Microsoft’s Circular Center program. 

The post Sustainable by design: Innovating for zero waste appeared first on The Microsoft Cloud Blog.

In a recent playbook, Accelerating sustainability with AI: Innovations for a better future, we outlined our five plays to advance sustainability, providing insight into our work at Microsoft and how business leaders around the world are creating a new path forward.

The reason to choose AI for this work? It has three unique abilities that can help organizations overcome key bottlenecks. AI can: (1) measure, predict, and optimize complex systems, (2) accelerate the development of sustainability solutions, and (3), empower the sustainability workforce. These capabilities make AI a critical enabler of progress.

Accelerate sustainability with AI

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How can business leaders harness AI to accelerate resilience, efficiency, and sustainability in their organization?

I recently met with Lindsay Myers, Vice President, Commercial Cross Solutions at Microsoft, who leads our Commercial Sustainability business, to talk more about this guidance and how business leaders can harness AI to accelerate resilience, efficiency, and sustainability in their organizations.

Toby: Hi Lindsay, before we dive into the playbook, can you share your thoughts on how organizations are adopting AI to address these interconnected goals of resilience, efficiency, and sustainability?

Lindsay: It’s important to highlight how interconnected these goals are in many organizations today. We often see initiatives started by sustainability teams result in significant cost savings for organizations. This might be efficiency gains for existing operations, or entirely new approaches like digital twins that enable rapid iteration before initial prototypes are built. When companies choose an approach like digital twins, it can reduce the materials needed for physical models—saving time and costs—while improving resilience through agility.

Explore customer and partner examples of AI innovation

Toby: Can you give me some examples of customers and partners who are doing this work today?

Lindsay: AI is making a real difference in helping organizations prepare for climate risks, innovate for maximum efficiency, and solve complex challenges. For example, in Germany, where urban flooding is a major concern, cities are searching for innovative ways to mitigate the impacts of heavy rainfall and its impact on communities and infrastructure. Esri, a global leader in geographic information system (GIS) software is helping cities unlock the power of digital twins driven by geospatial data and AI. This solution helped the City of Stuttgart cut its reality mapping time from five months to 24 hours, enabling local government and public safety staff to understand potential impacts and make decisions faster.

Stadtwerke München (SWM), the municipal utilities company serving Munich, has made it its mission to drive every aspect of the city’s energy, heating, and mobility transition forward. To accomplish this, it needed maximum-efficiency processes, such as predictive infrastructure maintenance and optimized operations planning. It has turned to Microsoft Azure and Azure IoT to efficiently provide power to its public transport fleet of 100% electrified vehicles.

Unlock new possibilities with data and AI

Toby: Those are inspiring examples; they give a real sense of AI’s potential. The playbook outlines 5 plays, or ways that organizations can unlock this potential. Could you describe some of these?

Lindsay: Let’s talk first about the first two plays and how they work together.

Investing in AI solutions to measure, predict, and optimize complex systems can drive both innovation and efficiency, helping companies focus on the most strategic priorities for business resilience.

For example, Mitiga Solutions, a global leader in climate risk intelligence and a Microsoft Climate Innovation Fund investment leverages AI, high-performance computing, and advanced climate models to predict the impact of physical climate hazards on any asset, anywhere in the world, from now until the end of the century. This helps infrastructure, commercial real estate, insurers, and companies across industries comply with climate disclosure regulations while proactively strengthening their resilience.

 With AI-powered solutions, businesses can swiftly tackle complex challenges across their own supply chains and for their customers. This not only positions companies as leaders in sustainability but can also unlock new market opportunities and enhance their competitive advantage.

It’s crucial to build a strong digital and data infrastructure to maximize AI’s potential—your AI is only as good as the data it relies on. That’s why having high-quality, representative data and the right processing infrastructure is essential. It enables teams to make informed decisions and provides accurate input for AI applications.

For many of our customers and partners, these two plays are closely linked. The foundational work involves bringing all the necessary data together in one place, like in Microsoft Fabric. What’s amazing about Fabric is it lets you reason over both internal and external data, which is incredibly helpful for things like regulatory reporting.

Once your data is set up properly, your team can use solutions such as Microsoft Copilot to ask questions of their data, generate reports, and learn from industry best practices. Copilot streamlines these tasks, reducing manual work and enabling practitioners to focus their time on new strategic initiatives.

Minimize resource use in AI design and operations

Toby: When I talk to organizations looking to adopt AI, customers and partners often want to learn more about what Microsoft is doing to reduce the environmental impact of AI. Could we talk a bit about that?

Lindsay: Absolutely. Let’s talk about play 3 and how that relates to our work at Microsoft.

AI has its own energy and water demands, so it’s crucial to minimize resource use and move toward powering AI systems with carbon-free energy. In addition, since AI infrastructure is often concentrated in specific regions, it is essential to support the local communities where datacenters are located. At Microsoft, we’re innovating across three critical areas to continue to advance the sustainability of cloud and AI services:

1. Optimizing datacenter energy, water, and waste efficiency while protecting ecosystems.
2. Advancing low-carbon materials and creating global markets to promote industry-wide sustainability.
3. Enhancing the energy efficiency of AI and cloud services.

Many of our customers and partners want to know not only what we’re doing, but also what they can do to manage resource use. Our Well-Architected Framework sustainability guidance provides a great starting point, as well as small language models that perform specific tasks using fewer resources than larger models.

Build workforce capacity to use AI for sustainability

Toby: The pace of innovation in this domain is incredible. Is there anything more you’d like to add in terms of how your team helps leaders move their ideas from concept to implementation?

Lindsay: The way forward on this journey is through people working together, and this is an area where we can help customers and partners make progress. Let’s talk about the final play first:

For companies to be able to put AI’s three game-changing capabilities to work, they must have skills to use AI effectively. Microsoft has training programs focused on building AI fluency, supporting nonprofits, businesses, and governments in advancing workforce AI technical skills and promoting safe and responsible AI development.

Microsoft’s AI learning hub can empower customers on their AI transformation journey, and customers can also use Copilot to connect with their data in Microsoft Cloud for Sustainability and sustainability data solutions in Microsoft Fabric. With these tools, employees can quickly gain insights, understand gaps, and identify what’s needed to move initiatives forward.

Toby: Thank you, Lindsay!

Transform business using generative AI

For business leaders wanting to put these plays in action and guide their organizations through effective AI adoption, we’ve published the 2025 AI Decision Brief: Insights from Microsoft and AI leaders on navigating the generative AI platform shift. This report is packed with perspectives from top Microsoft leaders and insights from AI innovators, along with stories of companies across industries that have transformed their businesses using generative AI.

2025 AI Decision Brief

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Beginning in August 2024, Microsoft launched a new datacenter design that optimizes AI workloads and consumes zero water for cooling. By adopting chip-level cooling solutions, we can deliver precise temperature control without water evaporation. While water is still used for administrative purposes like restrooms and kitchens, this design will avoid the need for more than 125 million liters of water per year per datacenter.*

Zero-water evaporation and the quest for ultra-low Water Usage Effectiveness 

These new liquid cooling technologies recycle water through a closed loop. Once the system is filled during construction, it will continually circulate water between the servers and chillers to dissipate heat without requiring a fresh water supply. 

We measure water efficiency through Water Usage Effectiveness (WUE), which divides total annual water consumption for humidification and cooling by the total energy consumption for IT equipment. We are continually investing in improving the design and operation of our datacenters to minimize water use. In our last fiscal year, our datacenters operated with an average WUE of 0.30 L/kWh. This represents a 39% improvement compared to 2021, when we reported a global average of 0.49 L/kWh.  This WUE reduction is due to our ongoing efforts to actively reduce water wastage, expand our operating temperature range, and audit our data center operations. We also expanded our use of alternative water sources, such as reclaimed and recycled water, in Texas, Washington, California, and Singapore. 

We have been working since the early 2000s to reduce water use and improved our WUE by 80% since our first generation of datacenters. As water challenges grow more extreme, we know we have more work to do. The shift to the next generation datacenters is expected to help reduce our WUE to near zero for each datacenter employing zero-water evaporation. As our fleet expands over time, this shift will help reduce Microsoft’s fleetwide WUE even further.

Mitigating energy impacts 

Traditionally, water has been evaporated on-site to reduce the power demand of the cooling systems. Replacement of evaporative systems with mechanical cooling will increase our power usage effectiveness (PUE). However, our latest chip-level cooling solutions will allow us to utilize warmer temperatures for cooling than previous generations of IT hardware, which enables us to mitigate the power use with high efficiency economizing chillers with elevated water temperatures. 

The result is a nominal increase in our annual energy usage compared to our evaporative datacenter designs across the global fleet. Additional innovations to provide more targeted cooling are in development and are expected to continue to reduce power consumption. 

Pilot projects and implementation 

Although our current fleet will still use a mix of air-cooled and water-cooled systems, new projects in Phoenix, Arizona, and Mt. Pleasant, Wisconsin, will pilot zero-water evaporated designs in 2026. Starting August 2024, all new Microsoft datacenter designs began using this next-generation cooling technology, as we work to make zero-water evaporation the primary cooling method across our owned portfolio. These new sites will begin coming online in late 2027. 

Advancing sustainability: Sustainable by design 

Learn more about how Microsoft is advancing the sustainability of cloud and AI through our blog series:  

• Sustainable by design: Advancing the sustainability of AI
• Sustainable by design: Transforming datacenter water efficiency
• Sustainable by design: Innovating for energy efficiency in AI, part 1
• Sustainable by design: Innovating for energy efficiency in AI, part 2
• Sustainable by design: Advancing low carbon materials
• Sustainable by design: Innovating for zero waste

Insight to Impact: AI Use Cases to Advance Sustainability

Explore five actionable ways that organizations use AI.

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*Based on our FY 2024 global average withdrawal WUE of 0.30 L/kWh.

The post Sustainable by design: Next-generation datacenters consume zero water for cooling appeared first on The Microsoft Cloud Blog.

As we work to advance the sustainability of our business, we are also advancing the sustainability of the datacenter infrastructure needed to deliver cloud and AI innovations. At Microsoft, we are working to decarbonize datacenters by focusing on how we design, build, and operate. To support this work, we are also investing to help scale markets for low-carbon building materials.

As a sector, building materials such as steel and concrete are some of the highest contributors to the embodied carbon of new construction, together producing an estimated 13.5% of global carbon emissions.¹ Embodied carbon is a measure of the carbon emitted during the manufacturing, installation, maintenance, and disposal of a product or material.  

Innovations in lower-carbon steel and concrete are emerging around the globe, however, these markets are still nascent and need significant investment to bring the needed supply online. Through our $1 billion Climate Innovation Fund and the collaboration of pioneering teams across datacenter engineering and procurement, we’re investing to accelerate these markets.  

Innovating for energy efficiency

Explore how we’re advancing the power and energy efficiency of AI

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Novel construction materials and new methods of creating those materials show promise in sectors that are traditionally described as “hard to abate,” these are sectors we believe are necessary to abate. For example, we’re breaking ground on mass timber datacenters, investing to accelerate market availability of near-zero carbon steel, and expanding options for low-carbon concrete in construction. 

Innovating with mass timber datacenter construction to reduce embodied carbon 

In Virginia, we’re building our first datacenters made with superstrong, ultra-lightweight wood with the goal of reducing the embodied carbon of the buildings by 35% compared to conventional steel construction, and 65% compared to typical precast concrete. 

Although this is a novel approach to datacenter construction, it’s a material we’ve used before. In 2021, when we chose cross-laminated timber (CLT) for a new building on our Silicon Valley campus, the approach brought numerous environmental benefits. With ecological design elements ranging from water reuse to clean energy production to new public pathways and restoration of native ecology, the structure earned recognition for sustainable design excellence from the American Institute of Architects.  

The CLT market is well-established in Europe and rapidly growing in the United States, due to demand in the residential segment and adaptability of CLT to new designs. However, our innovative work to apply this material to building a hyperscale datacenter has required everyone to work differently, from our engineers to our procurement teams to the suppliers involved in construction.  

Because CLT is prefabricated offsite, it brings additional benefits such as a faster and safer onsite installation than traditional corrugated steel. Built commonly out of spruce, pine, or fir, CLT shows remarkable structural integrity and resilience even under high temperatures, developing a char and providing insulation in scenarios where steel is likely to fail. But few datacenter building specialists have experience with the material, reducing the availability of skilled contractors, and the materials come at a premium cost in certain regions.  

Throughout this project, our teams have risen to the challenge by sharing best practices across disciplines, crafting new procurement strategies, ensuring skilling pathways, and working collaboratively to validate new material combinations. Expanding the building material options for datacenter construction opens new paths toward achieving climate goals and contributes to expanding the market for sustainable building materials, including markets for regionally sourced materials and contractors working with these materials. 

Accelerating market availability of near-zero carbon steel 

Last year, Microsoft’s Climate Innovation Fund became an investor in Sweden’s Stegra (formerly H2 Green Steel), which is building the world’s first large-scale green steel plant in northern Sweden, achieving up to a 95% reduction in carbon emissions compared to traditional steelmaking.² Another promising investment within our Climate Innovation Fund is Boston Metal, which uses renewable electricity and a unique process that generates oxygen instead of carbon dioxide when making steel.

In addition, Microsoft is a founding member of the Sustainable Steel Buyers Platform of RMI, a first-of-its-kind buyers’ group accelerating steel decarbonization through collaborative procurement and market action. Our engineering and procurement teams are working to incorporate low-emissions steel and repurposed steel in new construction. 

Expanding options for low-carbon concrete for construction  

The bulk of emissions associated with concrete come from cement production. A key ingredient of cement is limestone, which is typically heated with clay to around 2,650 degrees Fahrenheit in a coal or gas-fired kiln where it undergoes a chemical reaction called calcination that releases carbon dioxide as a byproduct. In Washington, our pilot program utilizes cement alternatives like biogenic limestone (grown in place by algae instead of quarried) and fly ash and slag, testing mixes that can lower the embodied carbon in concrete by more than 50% compared to traditional mixes.  

While transitioning to low-carbon concrete production is not as capital intensive as steel manufacturing, the supply chain is fragmented and manufacturing processes can be complex—causing delays and slowing adoption of new techniques. For this reason, we’re looking to expand options for construction across the low-carbon concrete value chain. 

One of the Climate Innovation Fund’s earliest investments is CarbonCure, a company deploying low carbon concrete technologies that inject captured carbon dioxide into concrete, where the CO2 immediately mineralizes and is permanently embedded as nanosized rocks within the physical product. This not only acts as a carbon sink but also strengthens the material, enabling a reduction in the amount of carbon-intensive cement required. Another investment is Prometheus Materials, a company producing zero-carbon bio-concrete through a unique process that combines naturally occurring microalgae with other components.  

Explore the Sustainable by design series

With these investments, we aim to facilitate the commercialization of materials innovations that can make an outsized impact on carbon reduction for our own buildings and for built environments around the world. 

Learn more about our work to advance the sustainability of AI with the Sustainable by design blog series: 

• Sustainable by design: Advancing the sustainability of AI
• Sustainable by design: Transforming datacenter water efficiency
• Sustainable by design: Innovating for energy efficiency in AI, part 1
• Sustainable by design: Innovating for energy efficiency in AI, part 2
• Sustainable by design: Innovating for zero waste

¹ Nature Research, Cement and steel—nine steps to net zero. 

² Stegra, Green platforms—green hydrogen, green iron, and green steel. 

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