Speaker 1: Welcome to Zero I am Akshatrati. This week AI's climate impact.
Speaker 1: We've been wanting to do episodes exploring artificial intelligence, energy
Speaker 1: and the climate for some time now, and we have
Speaker 1: some exciting things in the works for you in the
Speaker 1: weeks ahead. There are basically two big questions here, what
Speaker 1: can artificial intelligence do to help fight climate change? And
Speaker 1: on the flip side, how might AI's resource consumption exacerbate emissions?
Speaker 1: Today we are talking about the second question because we've
Speaker 1: just found the first concrete example of how the pursuit
Speaker 1: of AI is colliding with the efforts to cut emissions.
Speaker 1: Last week, my Bloomber colleague Dina Bass and I wrote
Speaker 1: a story about the impact of Microsoft's AI expansion, and
Speaker 1: we interviewed Microsoft president Bradsmith to get his Reactionshi. Hello
Speaker 1: audio test here, Hi les. In twenty twenty, Microsoft pledge
Speaker 1: to remove more carbon than it emits by the end
Speaker 1: of this decade. If the company was on track, then
Speaker 1: its emissions should have been roughly thirty percent lower in
Speaker 1: twenty twenty three, but as the company's AI ambitions have expanded,
Speaker 1: its emissions have instead increased by thirty percent. Some of
Speaker 1: the numbers are startling. Last year, the tech giant's power
Speaker 1: consumption rivaled that of a small European country, Slovenia consumed
Speaker 1: less electricity in twenty twenty three than Microsoft did, and
Speaker 1: its development that's likely to be repeated by other competitors
Speaker 1: that are also chasing their own AI goals. After all,
Speaker 1: Microsoft's AI push has made it the world's most valuable company,
Speaker 1: worth more than three trillion dollars. Companies want what Microsoft has,
Speaker 1: but Microsoft is also the company that's been leading on
Speaker 1: climate plans. It's set one of the most ambitious goals
Speaker 1: for any large company, not just going carbon negative by
Speaker 1: twenty thirty, but also promising to erase its legacy emissions,
Speaker 1: and it came up with a comprehensive plan which is
Speaker 1: throwing money and other resources at almost every possible climate
Speaker 1: solution it could deploy. So when it comes to cutting emissions,
Speaker 1: if Microsoft can't do it, can any other company. On
Speaker 1: today's episode, zero's producer Mightily Rao asks me the questions.
Speaker 2: Hi, that's right, We're going to discuss Microsoft's climate challenge.
Speaker 2: What Brad Smith had to say about the company's rising
Speaker 2: emissions and how to think about climate in the AI
Speaker 2: age Actually let's start with some background in terms of
Speaker 2: reducing emissions. What did Microsoft pledge to do and how
Speaker 2: realistic did that promise seem at the time.
Speaker 1: Let me take one more step back, actually and start
Speaker 1: in twenty eighteen, because before that we didn't even have
Speaker 1: ned zero. It was a report from the Intergovernmental Panel
Speaker 1: on Climate Change that said that if the world wants
Speaker 1: to keep warming below one point five degrees celsius, then
Speaker 1: the entire world needs to reach net zero carbon dioxide
Speaker 1: emissions by twenty fifty. Soon we saw a wave of
Speaker 1: companies coming up with climate targets. Tech companies, which of
Speaker 1: course have a lot of money and mostly have their
Speaker 1: emissions tied to consuming electricity, were ahead in the game.
Speaker 1: We got a goal in twenty twenty from Microsoft saying
Speaker 1: we're going to be carbon negative by the end of
Speaker 1: this decade. Very ambitious, yes, and it wasn't clear then
Speaker 1: how it would reach that. But because it was a
Speaker 1: tech company whose emissions were down to electricity, and electricity
Speaker 1: was getting cleaner, and of course solar and wind were
Speaker 1: getting cheaper, it felt like it is something a tech
Speaker 1: company could do.
Speaker 2: So Microsoft set this climate goal in twenty twenty, but
Speaker 2: around the same time, AI started to become a bigger
Speaker 2: priority for the company. Let's talk about that parallel timeline.
Speaker 1: So a little known story now, but in twenty nineteen,
Speaker 1: just a year before it put out its climate plan,
Speaker 1: Microsoft invested in open Ai, which was then an up
Speaker 1: and coming startup that was starting to build products around
Speaker 1: this thing called generative AI. Of course we know that
Speaker 1: company today as the maker of chad GPT, and everybody
Speaker 1: has their own feelings about it. But what it meant
Speaker 1: was AI is going to start to consume a lot
Speaker 1: of computing resources, a lot of data processing. And Microsoft,
Speaker 1: as a provider of cloud services of computing services, both
Speaker 1: could be a customer to an AI produce, sir, but
Speaker 1: also could be a seller of those AI products. And
Speaker 1: we've seen Microsoft's bet on OpenAI is starting to pay off.
Speaker 1: There is clearly demand for these products. Maybe it's hype
Speaker 1: right now, but what is clear is that other competitors
Speaker 1: want what Microsoft has. So Google is investing in AI, Meta,
Speaker 1: the company behind Facebook, is investing in AI. Amazon is
Speaker 1: doing it. There a bunch of Chinese companies doing it.
Speaker 1: Everybody is in this race now.
Speaker 2: So in the meantime, Microsoft has fallen short on the
Speaker 2: emissions goals that it's set. You asked Microsoft president Brad
Speaker 2: Smith about that, and we can play a little bit
Speaker 2: of his answer.
Speaker 3: You know, in twenty twenty, we unveiled what we called
Speaker 3: our carbon Moonshot, our goal of being carbon negative by
Speaker 3: twenty thirty. That was before the explosion and artificial intelligence.
Speaker 3: So in many ways, as I say across Microsoft, the
Speaker 3: moon has moved. It's it's more than five times as
Speaker 3: far away as it was in twenty twenty. If you
Speaker 3: just think about our own forecast for the expansion of
Speaker 3: AI and its electrical.
Speaker 2: Needs, and again let's go back to the story you wrote,
Speaker 2: because the figures are pretty astonishing. Microsoft's total planet warming
Speaker 2: impact is about thirty percent higher today than it was
Speaker 2: in twenty twenty. So is that all down to AI.
Speaker 1: Well, that seems to be the case. Now. AI has
Speaker 1: two aspects to it. One is that it consumes more
Speaker 1: and more compute, as they say, which requires electricity, And
Speaker 1: of course more compute means it requires more computing power,
Speaker 1: which comes from building data centers that are built out
Speaker 1: of steel, cement and microchips. So because Microsoft says it's
Speaker 1: one hundred percent powered by renewables, it's not really the
Speaker 1: electricity consumption that is contributing towards this emissions increase, which
Speaker 1: means most of those emissions increase is coming from the
Speaker 1: construction of data centers because there is no green cement
Speaker 1: or steel or microchips which are zero carbon that you
Speaker 1: can deploy right away, and that's a big problem for
Speaker 1: Microsoft right now.
Speaker 2: On what basis is Microsoft saying that they're entirely powered
Speaker 2: by renewables.
Speaker 1: It's a good question, and more people should ask this
Speaker 1: question because a lot of companies say they are one
Speaker 1: hundred percent powered by renewables, which is not technically true,
Speaker 1: because what is happening is that Microsoft and other tech
Speaker 1: companies sign something called corporate power purchase agreements PPAs, and
Speaker 1: these are where they actually go out pay a developer
Speaker 1: to deploy a solar plant and consume all the electricity
Speaker 1: that solar plant is producing. So that is renewable energy,
Speaker 1: but there's a lot of electricity there is also consumed
Speaker 1: at night when the sun is not shining that might
Speaker 1: come from a fossil fuel grid, coal or gas. Many
Speaker 1: companies then something called a renewable energy credit, which simply
Speaker 1: turns a coal electron into a solar electron and that
Speaker 1: was fine in the initial days when there wasn't enough
Speaker 1: renewables on the grid, because those extra credits made renewables
Speaker 1: a little more profitable because at the time they were expensive,
Speaker 1: and that meant it incentivized the deployment of renewables. Today,
Speaker 1: those credits do not really incentivize building out more renewables,
Speaker 1: and so work that my colleague Ben Elgin has done
Speaker 1: has found that in fact, using these renewable energy credits
Speaker 1: can mask a company's emissions. Microsoft told us that in
Speaker 1: the long term they want to stop buying these renewable
Speaker 1: energy credits and move to just buying it through power
Speaker 1: purchase agreements, but that still weighs away.
Speaker 2: Right, But because of the data centers needed for AI,
Speaker 2: Microsoft's emissions are still rising. Brad Smith seemed to suggest
Speaker 2: that we shouldn't lose sight of a good AI can do.
Speaker 3: So I think the right way to think about it
Speaker 3: in the first instance is the call it benefits and costs,
Speaker 3: or the good that we think AI will do for
Speaker 3: the world versus the impact on the environment. And I
Speaker 3: think we would clearly say it's going to do far
Speaker 3: more good for the world, especially in terms of the
Speaker 3: need and ability to bring it to everyone in the
Speaker 3: world rather than have a group of AI haves and
Speaker 3: AI have nots in different parts of the world.
Speaker 2: So Microsoft is developing AI and using it for a
Speaker 2: lot of different things. Can you talk me through what
Speaker 2: we might think of as Microsoft's good AI, because from
Speaker 2: what I've seen of chat GPT, I'd be happy to
Speaker 2: be AI have not.
Speaker 1: Yeah, this is the part of AI which is currently
Speaker 1: sort of confusing because chat GPT is only one type
Speaker 1: of AI, it's generative AI. There are other forms of
Speaker 1: AI which can be used for doing climate goods, so
Speaker 1: we know, for example, there are companies that are deploying
Speaker 1: AI models to try and improve weather prediction.
Speaker 3: Yeah, I would say AI is saving lives every day.
Speaker 3: It's helping respond to natural disasters that are occurring more frequently,
Speaker 3: so we shouldn't lose.
Speaker 1: Sight of it that can really help. There are other examples
Speaker 1: of using AI to find new materials that could help
Speaker 1: us make better batteries, for example, or try and find
Speaker 1: new materials to capture carbon. Those are examples where AI
Speaker 1: has been put to use and will be increasingly put
Speaker 1: to use, and it's something we want to explore on
Speaker 1: the podcast. More so, we didn't get into all the
Speaker 1: applications that AI can have for trying to solve some
Speaker 1: of the climate problems we have, etc. But I think
Speaker 1: he was telling us that just like computers and mobile
Speaker 1: phones have done good in the world helping people connect
Speaker 1: and make use of their own abilities to a better
Speaker 1: extent to be more productive, that AI can do that too,
Speaker 1: and that we should try and get this to as
Speaker 1: many people in the world as possible, as quickly as possible.
Speaker 1: But of course he would say that because he has
Speaker 1: AI as a product and he would like to sell that.
Speaker 2: And as we know, AI is also used to help
Speaker 2: oil and gas companies find where to drill kind of
Speaker 2: to expand fossil fuel production, and some people at Microsoft
Speaker 2: aren't happy about the company's commitment to AI.
Speaker 1: Yes, there is a group of ten thousand employees within
Speaker 1: Microsoft who want to push Microsoft to deal with its
Speaker 1: own emissions, but also to ensure that its AI is
Speaker 1: not used to increase emissions. In fact, two former employees
Speaker 1: wrote that they were deeply saddened to be so let
Speaker 1: down by a company we love so much because they
Speaker 1: didn't want Microsoft's AI to be used by oil and
Speaker 1: gas companies for increasing extraction. So we asked Brad about that,
Speaker 1: and he did have an answer. He basically said, we
Speaker 1: have laid out our principle that we will only work
Speaker 1: with energy companies that do have an net zero goal
Speaker 1: and are on the climate pod, and that our AIUS
Speaker 1: is towards the energy transition.
Speaker 2: I want to ask you about something else Brad said
Speaker 2: about Microsoft's long term impact. This goes back to the
Speaker 2: point about the company's need for green cement and green
Speaker 2: steel and green microchips. And what Brad basically said to
Speaker 2: you and Dina was that when a gigantic tech company
Speaker 2: like Microsoft throws its weight around, it can completely change
Speaker 2: market realities and it can maybe even entirely jumpstart green industries.
Speaker 2: Here's what Brad said on the question of green concrete.
Speaker 3: I'm probably especially excited about concrete and steel in a
Speaker 3: way that I never thought I would be working at
Speaker 3: a tech company, mostly because I think we have an
Speaker 3: opportunity to punch way above our weight in starting to
Speaker 3: build new markets for greener steel and greener concrete. One
Speaker 3: of our goals for this next year is to do
Speaker 3: for concrete what we've done, or at least help to
Speaker 3: do for electricity. By that, I mean there are certain
Speaker 3: places where we sense the potential for a market to
Speaker 3: come together to buy green concrete. It may not be
Speaker 3: next door to our data center. But what we're trying
Speaker 3: to do is use our resources to then go buy
Speaker 3: green concrete I'll just say in Finland, and then be
Speaker 3: able to credit that for carbon accounting purposes against a
Speaker 3: data center that might be in southern Europe. And if
Speaker 3: we can do that, we will stimulate demand for green concrete.
Speaker 3: It will help it grow to scale. As it grows
Speaker 3: to scale, the price of green concrete starts to come down.
Speaker 3: And if you then think about the role of the
Speaker 3: tech sector as a whole, because the tech sector as
Speaker 3: a whole has and so committed to meeting these goals,
Speaker 3: and we have the resources to pursue this goal, we
Speaker 3: can make a difference.
Speaker 2: What do you make at this point? Does this kind
Speaker 2: of influence make up for the company's rising emissions?
Speaker 1: So let's look at the numbers. Microsoft's emissions at sixteen
Speaker 1: or seventeen million tons per year are quite small relative
Speaker 1: to say the global emissions which are thirty eight billion
Speaker 1: tons last year, or even other large companies like Exomobil
Speaker 1: which was five hundred million tons. And yes, it's true
Speaker 1: that as Microsoft pursues green steel, green cement, and even
Speaker 1: carbon removals, it is making an expensive product slightly cheaper
Speaker 1: every time it buys it, and that will make it
Speaker 1: easier for other companies to meet that goal. But that
Speaker 1: does not mean Microsoft should get any credit for it
Speaker 1: in its own carbon footprint.
Speaker 2: So basically, the companies arguing for another kind of long
Speaker 2: term thinking, don't just look at our emissions, don't just
Speaker 2: look at our carbon footprint, look at this other intangible
Speaker 2: effect we are having on industries adjacent to ask.
Speaker 1: Right, and you should look at that intangible benefit, But
Speaker 1: you cannot ignore the fact that the company's emissions right
Speaker 1: now are rising. Microsoft has to both reduce its own
Speaker 1: emissions while it may take some reputational benefit from making
Speaker 1: green solutions cheaper.
Speaker 2: After the break, does Microsoft need to choose between its
Speaker 2: net zero commitments and its AI ambitions and has it
Speaker 2: already made that decision? Aksha and Dina put the question
Speaker 2: to Brad and we discuss his answer. And if you're
Speaker 2: enjoying this episode, please do rate and review zero on
Speaker 2: Apple or Spotify. Microsoft is clearly going to keep pushing
Speaker 2: on AI and that means more resources, more electricity, and
Speaker 2: thus probably more emissions. So what happens to its climate target?
Speaker 2: You put that question to Brad Smith. He said, they're
Speaker 2: not abandoning those pledges.
Speaker 4: I don't want to give up now. Can I promise
Speaker 4: that we'll get to this moon by twenty thirty? We
Speaker 4: keep making more progress. The truth is we made so
Speaker 4: much progress at the strategy level over the past year.
Speaker 4: That's the real story to me inside Microsoft.
Speaker 2: Can he have it both ways?
Speaker 1: It's really tough. This is why the story we wrote
Speaker 1: kind of en viral, because there is no good answer
Speaker 1: right now. It's clear, even if your electricity was really clean,
Speaker 1: fully clean one hundred percent renewables twenty four to seven,
Speaker 1: that are still building data centers with steel and cement
Speaker 1: and these chips. That is very common intensive and that's
Speaker 1: going to increase emissions in the short term. So we
Speaker 1: ask Bratsmith what exactly is the plan here? And the
Speaker 1: answer is basically everything possible. Microsoft is investing in existing
Speaker 1: technologies like nuclear power and geothermal, but also frontier technologies
Speaker 1: like nuclear fusion, which we haven't even made work yet,
Speaker 1: but maybe we will in the next decade, and of course,
Speaker 1: if nothing else works, Microsoft is also investing in carbon removal.
Speaker 1: It is the largest purchaser of carbon removal credits in
Speaker 1: the world. And if say, by twenty twenty nine, emissions
Speaker 1: are still high, Bratsmith said, carbon removal is always on
Speaker 1: the table, But of course it is a very expensive
Speaker 1: purchase to try and remove carbon dioxide from the air.
Speaker 1: It would be much cheaper to not emit that carbon
Speaker 1: dioxide in the first place.
Speaker 2: You mentioned that last year Microsoft consume more energy than Slovenia,
Speaker 2: but the same could be said for Google or Meta.
Speaker 2: Probably right, This is not only a problem for Microsoft,
Speaker 2: but is it disproportionately a problem for Microsoft.
Speaker 1: No, it's a problem for all of the tech companies
Speaker 1: trying to get after AI. And I'm sure as we
Speaker 1: see the sustainability reports from Google and metacome for this
Speaker 1: year and it's likely to show an increase in emissions
Speaker 1: not very different from what Microsoft has. So it is
Speaker 1: a problem that tech companies need to find an answer to.
Speaker 1: Because we also ask Google, Meta and Amazon to respond
Speaker 1: to our questions on their own emissions increase, and they
Speaker 1: all said, we are not backing away from our climate targets.
Speaker 1: Which in most cases are either carbon neutrality by twenty
Speaker 1: thirty or in Amazon's case, by twenty forty.
Speaker 2: Because I think most listeners know you've written a book
Speaker 2: called Climate Capitalism, which is about the idea that rather
Speaker 2: than trying to entirely remake our economic system overnight, it's
Speaker 2: more fruitful to focus on getting businesses and governments to
Speaker 2: respond to the reality of climate change within the capitalist
Speaker 2: framework that we already live in. When you see a
Speaker 2: big company like Microsoft move in this direction on its
Speaker 2: own climate commitments, do you worry about capitalism's incentives just
Speaker 2: being too much at odds with green goals.
Speaker 1: Well, it's exactly the thesis of the book, which is
Speaker 1: climate change has to modify how capitalism works. Microsoft isn't
Speaker 1: going to back off from AI if it's got profits
Speaker 1: in there. But as long as governments and people want
Speaker 1: climate targets to be hit, Microsoft will have to find
Speaker 1: a way to make those climate targets work. That may
Speaker 1: mean a lot more investment in greener technologies, or if
Speaker 1: it has to pay a really premium price and remove
Speaker 1: all that carbon dioxide, so be it. But those targets
Speaker 1: need to be set by governments so that we don't
Speaker 1: rely on just voluntary commitments from companies like Microsoft doing
Speaker 1: the right thing on climate. It is possible to hit
Speaker 1: these goals with the technologies that we have and the
Speaker 1: technologies that we do need to invent, because that modeling
Speaker 1: has been done by very reputable organizations like the International
Speaker 1: Energy Agency, Bloomberg and EF the Intergovernmental Panel on Climate Change.
Speaker 1: What is needed is to actually do the work, and
Speaker 1: Microsoft is showing that that work is not easy, but
Speaker 1: it is something you need to be committed to because
Speaker 1: climate is a problem everybody has to deal with. In fact,
Speaker 1: Bradsmith ended our interview by saying exactly that.
Speaker 3: You've got to be willing to invest and pay for it.
Speaker 3: You've got to be willing to persist even when the
Speaker 3: challenge seems so hard. It's all about incredibly sophisticated execution.
Speaker 3: But we need to retain a vision as well, and
Speaker 3: that starts with the recognition that a problem that humanity
Speaker 3: created is also a problem that humanity can solve, and
Speaker 3: let's never lose sight of that. Yeah, it's not like
Speaker 3: this is running the Kentucky Derby, where you get up
Speaker 3: on Monday and the race is over and there's no
Speaker 3: race to run. This is the race of the century,
Speaker 3: and it needs to be run every day throughout the century.
Speaker 3: That's our perspective on it. A THEAI race is more important.
Speaker 1: I don't want to make some people. There are definitely
Speaker 1: people that think that climates should take precedence over rapid
Speaker 1: deployment of AI.
Speaker 3: Yeah, but I think the question you should ask is
Speaker 3: what percentage of global steel consumption in twenty thirty is
Speaker 3: going to be devoted to the construction of data centers
Speaker 3: versus everything else that steel goes into. What percentage of
Speaker 3: the world's concrete consumption is going to go to data centers?
Speaker 3: And then ask yourself this. Every time you go to
Speaker 3: a meeting, every time you see a new innovation, whether
Speaker 3: it's in the technology changes or the market innovation, I'm
Speaker 3: willing to bet you will find someone from Microsoft very
Speaker 3: likely to be there. The day we should worry is
Speaker 3: the day we stop showing up.
Speaker 2: Okay, what do you make of Brad's answer? Do you
Speaker 2: really believe Microsoft's reasoning on this point?
Speaker 1: My takeaway from following net zero from the start to
Speaker 1: company setting these goals, to Microsoft, which has been ahead
Speaker 1: in the game at least in setting goals, is that
Speaker 1: it is hard. Nobody has the perfect answer. But if
Speaker 1: anybody can try and answer that question, it's a company
Speaker 1: with money and a company that is committed to try
Speaker 1: and reach these goals. So I give Microsoft the credit
Speaker 1: that it is still trying to meet these goals, as
Speaker 1: hard as they might be. But Microsoft is the world's
Speaker 1: most valuable company. And if Microsoft can't reach these goals
Speaker 1: or isn't taking them as seriously, then can we expect
Speaker 1: any other company to do so? As a climate reporter.
Speaker 1: That is the bigger question to me, and it remains unanswered. Lukshet,
Speaker 1: thank you, Thank you, This is fun.
Speaker 2: Thank you for listening to Zero. If you liked this episode,
Speaker 2: please take a moment to rate or review the show
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Speaker 2: producer is me Mightily Raw. Our theme music is composed
Speaker 2: by Wonderley Special thanks to Kiara Bindram, Dina Bass and
Speaker 2: Alicia Clanson. Back soon.