Executive Summary

• Artificial Intelligence (AI) is increasing the technology sector’s electricity demand, with data center energy use projected to more than double by 2030. This limits tech companies’ ability to meet renewable energy targets that were originally pledged in a less energy-intensive market.
• Google and Microsoft have implemented 24/7 Carbon-Free Energy (CFE) in their facilities, investing in supplying data centers with constant local renewable energy, while Amazon and Meta rely on renewable energy certificates (RECs), purchasing renewable energy off-site.
• Geographic grid disparities, regulatory constraints, and differences in institutional capacity are creating a two-speed transition, where only a few companies are positioned to lead meaningful decarbonization efforts.

Introduction

The digital economy is rapidly evolving due to artificial intelligence (AI), which is leading to an expansion of its energy footprint. Major technology companies, including Google, Microsoft, Amazon, and Meta, have led the private sector in consuming clean electricity, from purchasing renewable energy certificates (RECs) to utilizing 24/7 Carbon-Free Energy (CFE).

A REC represents proof that one megawatt-hour (MWh) of electricity was generated from a renewable source and added to the grid. Data centers acquire RECs through utilities, brokers, direct contracts (Power Purchase Agreements), or regional markets, depending on their size, goals, and location. While RECs offer a flexible and cost-effective way to claim renewable energy use, they lack time and location specificity, which is crucial because clean energy must be generated when and where it is consumed to truly displace fossil fuels and achieve real-time emissions reductions rather than just accounting-based offsets.

In contrast, 24/7 CFE is sourced without climate-warming emissions, ensuring electricity used at a specific location is entirely emissions-free. The “24/7” in 24/7 CFE means that the electricity consumed is matched with carbon-free energy generated every hour of every day, ensuring continuous, real-time alignment between energy use and clean energy supply. Although more complex and expensive to implement, companies invest in CFE because it drives real, measurable emissions reductions, supports cleaner energy infrastructure, enhances sustainability credibility, and helps future-proof operations against tightening climate regulations, ultimately advancing the development of a fully decarbonized energy system.

This trend raises a central question: why are companies like Google and Microsoft transitioning to CFE sourcing, while others like Amazon and Meta continue to rely on RECs?

Historical Background of Corporate Climate Commitments

Around the early 2000s, a few pioneer companies began experimenting with using electricity generated by renewable energy, mostly on-site or purchasing RECs. This was until the 2015 Paris Agreement, which created a global expectation that all sectors, including private companies, had to reduce emissions. In response, companies started setting science-based targets, including 100% renewable electricity goals, to align with the 1.5–2°C global warming target. Since the 2020s, big tech companies have begun shifting from RECs to CFE. This shift reflects a changing understanding that achieving true decarbonization requires not just buying RECs but aligning energy consumption with where and when CFE is generated. Aligning energy use with clean energy generation ensures real-time emissions reductions, whereas relying solely on RECs does not guarantee a tangible climate impact.

The rapid expansion of AI technologies is significantly increasing the electricity demand across the technology sector, primarily due to the growing energy requirements of data centers that support AI workloads. According to the International Energy Agency (IEA), electricity consumption by data centers is expected to more than double by 2030, with AI applications identified as the driver of this surge. Training and running AI models require substantial computational power, which translates to high energy use. This growth challenges companies’ ability to meet CFE commitments, as the need for continuous, reliable power often conflicts with the intermittent nature of renewable energy sources.

Company Analysis: Google, Microsoft, Amazon, and Meta

In 2021, Google became the first company to commit to CFE, pledging to match every hour of electricity use at every facility with locally sourced clean power by 2030. Google aims to match every hour of electricity use with carbon-free sources on the same grid where it is consumed. As of 2023, the company had reached a global average of 64% CFE, with some data centers surpassing 90%. The broader goal of Google’s transition to CFE is to decarbonize the broader electricity grid; it forces the grid to add low-carbon resources exactly when demand is highest.

Microsoft has pledged to be carbon-negative, removing more carbon dioxide from the atmosphere than they emit, and use entirely CFE by 2030. In addition to eliminating its operational emissions, Microsoft has committed to removing all the carbon it has ever emitted, directly or through electricity use, since its founding by 2050. The company is investing in hourly energy tracking, carbon accounting tools, and grid decarbonization partnerships.

Amazon, through its Amazon Web Services (AWS) division, has committed to and achieved using 100% renewable energy by 2025, moving its target forward from 2030. It is now the world’s largest corporate buyer of renewable energy, signing large-scale solar and wind deals. However, Amazon still relies on annual energy matching, rather than locally matching its energy to renewable energy. As the company rapidly expands AI and cloud services, particularly in fossil-fuel-heavy grids like Ohio and Virginia, it faces growing scrutiny over the gap between its renewable claims and real-time carbon emissions.

Meta, formerly Facebook, has powered its global operations with 100% renewable energy since 2020, primarily through large-scale procurement of wind and solar power. The company has invested in over 10 gigawatts of renewable energy capacity, largely to support its expansive data center network. Most of Meta’s data centers are located in areas like Iowa, Georgia, and Alabama, regions where the grid still contains a significant share of fossil fuels.

Key Trends

• Evolving Standards of Corporate Responsibility: As public and investor expectations around climate action have intensified, the standard for what qualifies as “renewable” and “clean” energy is shifting. A growing number of companies, such as Google or Microsoft, are embracing CFE, which reflects the actual emissions profile of electricity consumption. However, not all firms are moving at the same pace. Many, including Amazon and Meta, seem to still view sustainability as a compliance task, relying on RECs, which are easier to implement but less reflective of real-world emissions.
• Geographic and Grid-Access Constraints: The geography of CFE plays a critical role in shaping corporate strategies. Electricity grids across the U.S. vary in their carbon intensity, regulatory transparency, and infrastructure maturity. Amazon and Meta, operating in fossil-fuel-heavy regions often face limited options for sourcing real-time renewable energy. Meanwhile, companies like Google and Microsoft, which operate in areas with a variety of different types of energy sources (like parts of the West and Northeast), offer more flexibility and incentives for matching. These structural constraints lead to uneven progress, where companies located in more flexible regions can lead to easier adoption of CFE. The shift to CFE helps the grid by incentivizing the development of renewable energy when electricity demand is highest, promoting grid flexibility.
• Disparities in Technical and Financial Readiness: The shift toward CFE sourcing demands significant technical and institutional capacity. This includes access to high-quality grid emissions data, software for real-time energy tracking, and the ability to sign innovative procurement contracts. Companies like Google and Microsoft, which have invested heavily in sustainability teams and climate-tech infrastructure, are better positioned to lead this transition. Conversely, companies such as Amazon and Meta, particularly those rapidly expanding or operating at massive scale, prioritize cost, speed, and operational flexibility.

Conclusion

The divergence in renewable energy strategies among major technology companies highlights a pivotal moment in corporate climate leadership. As AI accelerates electricity demand, firms are increasingly expected to move beyond RECs and toward more accurate and location-based CFE sourcing. The transition led by companies like Google and Microsoft shows that CFE is no longer just a branding tool but part of a broader commitment to decarbonizing the grid itself. However, not all companies are moving at the same pace. Amazon and Meta, while making large investments in renewables, continue to rely on annual matching systems that obscure real-time emissions. These differences reflect broader challenges, including access to CFE infrastructure, regional grid limitations, and differences in institutional readiness. Without supportive policy, market incentives, and transparency standards, the shift to CFE will likely remain limited to a small number of firms. While early leaders may shape practices, a fully decarbonized digital economy is still far from certain.