Energy-hungry tech groups express interest in US-led carbon credits scheme

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Tech groups including Meta and Netflix have joined the list of companies expressing interest in backing a carbon credits scheme spearheaded by former US climate envoy John Kerry, as they grapple with a surge in emissions from power-hungry data centres and artificial intelligence.

But Kerry warned, at the same time, that the businesses must cut their emissions directly, even as a growing number prepare to pour money into offsets.

“You just don’t have the free ability to go out and take all your emissions, and say, well, you know, we’re just going to pay for the offset,” said Kerry, who first launched the US state department’s carbon credits scheme, dubbed the Energy Transition Accelerator, in 2022.

Under the scheme, regional governments or state bodies will earn carbon credits by reducing their power sector’s emissions as fossil fuel infrastructure, such as coal-fired plants, is cut and renewable energy increases. The sale of the credits to polluting companies would help finance the shift to renewable energy.

The renewed push for a carbon credits market is among the key themes at New York climate week, in a series of discussions held at the sidelines of the UN General Assembly this week.

As governments everywhere find themselves under economic pressure and companies struggle to cut emissions, the subject has taken on increased momentum.

Amazon, Salesforce, PepsiCo and McDonald’s are among earlier supporters of the ETA, along with banks including Bank of America, Morgan Stanley, Standard Chartered and more recently Santander.

They are joined by about another 20 companies, including Nike, and REI, who are meeting in New York to discuss next steps for the ETA programme and their notional interest in supporting the scheme.

Earlier this year, Google reported that an expansion of the data centres that underpin AI had caused its emissions to surge by 48 per cent over the past five years. Microsoft has also reported an emissions increase of almost a third since 2030, which it attributed to constructing data centres.

Kerry has long touted carbon credits as a means to attract private money to clean energy projects in developing nations, in particular in Africa, south-east Asia and South America, and is a prominent speaker on the subject at New York climate week discussions.

The former secretary of state said he believed the increased energy demand globally begged the question of whether it was possible that participating in a carbon market could help to solve the problem.

“The answer is yes . . . but [it is] also attracting other technologies to the table much more rapidly than they might have been otherwise,” he said.

The ETA is examining pilot decarbonisation projects in Chile, the Dominican Republic and the Philippines. Ministers from those countries attended the meeting in New York this week.