Recent scrutiny has exposed major tech companies, including Amazon, Microsoft, and Meta, for underreporting the environmental impact of their AI operations. A primary issue lies in their use of unbundled Renewable Energy Certificates (RECs), which allow them to claim carbon emission reductions without necessarily using renewable energy in real-time. While these RECs are legal under current carbon accounting standards, they obscure the substantial energy consumption of AI models and data centers, which are often powered by fossil fuels.
For instance, Amazon relied on unbundled RECs for 52% of its renewable energy claims in 2022, while Microsoft’s reliance stood at 51%. Both companies have defended their use of RECs but acknowledge plans to reduce their reliance on these instruments. Critics argue that the use of unbundled RECs creates a misleading narrative about AI’s sustainability, as it does not represent real-time reductions in carbon emissions from energy consumption. Meanwhile, Google has taken a different approach by phasing out the use of unbundled RECs entirely in favor of more direct clean energy sourcing.
Experts are calling for urgent reforms in carbon accounting practices, particularly for tech giants, as the rising demand for AI-driven products like Amazon’s AI-powered chatbots and Meta’s LLaMA further accelerates energy consumption. These companies are now facing growing pressure to be more transparent about the real carbon footprint of their AI operations and to adopt practices that lead to genuine reductions in greenhouse gas emissions.
For more insights, check sources such as BNN Bloomberg, Energy Connects, StockMarketIndia, Energy Connects and Business Standard.