Every hyperscaler matches 100% of its electricity with renewables, and every one of them reported higher emissions this year. The rules behind that paradox are being rewritten. Here is the standard we think the industry should hold itself to.
This publication has "carbon neutral" in its name, so we should say what we mean by it.
The timing matters. On September 27, EU rules took effect that ban claims a product is climate "neutral" when the claim rests on carbon offsets. Two weeks earlier, ISO replaced its carbon neutrality standard with a new single-part ISO 14068:2026. The GHG Protocol is rewriting how companies account for purchased electricity, and in June the Science Based Targets initiative (SBTi) finalized version 2 of its Corporate Net-Zero Standard. Each of these changes the arithmetic behind a data center's climate claim.
Meanwhile the numbers are moving the wrong way. The largest operators in the world report that they match 100% of their electricity use with renewable energy, and their emissions are rising anyway.
Microsoft's fiscal 2025 data shows the problem clearly. The company used 37.0 TWh of electricity and matched all of it with renewable purchases on an annual basis. Its market-based Scope 2 emissions, the figure that reflects those purchases, were 2.71 million tonnes. Its location-based Scope 2 emissions, which reflect what the grids its data centers actually draw from emitted, were 12.03 million tonnes. That is a 4.4x gap. Total emissions rose about 25% year on year and sit 57% above the 2020 baseline.
Google's 2026 environmental report tells a similar story. It matched 100% of annual electricity use with renewables for the ninth straight year, while total emissions rose 18%, its largest annual increase, to roughly 81% above 2019. Electricity use rose 37%. The more telling figure is Google's hourly carbon-free energy (CFE) share: about 65% in 2025, down slightly from 66% in 2024, despite signing a record 12 GW of new clean energy contracts.
Amazon reported 80.9 million tonnes of emissions for 2025, up 16%, with Scope 2 up 34%, while also claiming 100% renewable matching.
None of this involves bad faith. It is what the current rules allow. Under today's market-based method, a company can buy renewable energy certificates generated anywhere in a broad market, at any time of year, and count them against consumption. A solar farm producing at noon in one state can cover a training run at 2 a.m. on a coal-heavy grid in another. On paper, both hours are clean.
AI data centers make the mismatch worse for three reasons.
First, they run flat out. A training cluster or a busy inference fleet draws close to constant power around the clock, so the hours when solar is unavailable carry as much load as the hours when it is.
Second, they are concentrated. New campuses of 1 GW or more are landing in specific grid regions, often where the marginal generator is gas. Certificates from elsewhere do nothing for those regions.
Third, many new campuses now generate their own power with gas turbines. Onsite generation is Scope 1, and no certificate offsets it under any credible standard. The IEA expects 15 to 27 GW of onsite gas to be powering data centers by 2030, mostly in the US.
Four shifts are converging on the same answer: the time, place, and physics of electricity will matter.
GHG Protocol Scope 2 revision. The public consultation closed January 31, 2026. The draft would require contractual instruments to be "issued and redeemed for the same hour as the energy consumption," and would require that certificates come from a market boundary that can physically deliver power to the site. Smaller companies below a consumption threshold would be exempt from hourly matching, but data center operators will almost always be above it. The draft also floats a legacy clause so existing contracts are not penalized. Feedback summaries published in July and August showed resistance to hourly matching but broad support for deliverability. A draft consolidated standard is expected in the second quarter of 2027, with publication targeted for late 2027 and phased implementation after that.
SBTi Net-Zero Standard v2. Released June 12, 2026, it requires electricity procurement to come from the same deliverability region as consumption, generally from plants no more than 15 years old, and requires companies with significant electricity use to report their hourly matched share. Hourly matching earns recognition rather than being mandatory. Version 2 becomes mandatory for new targets from February 2028.
EU rules. The Empowering Consumers Directive, applicable from September 27, 2026, bans consumer-facing claims of "neutral, reduced or positive" impact based on offsetting. Whether business-to-business cloud marketing falls in scope depends on how each member state transposed it, so legal teams should check. Separately, on September 21 the European Commission adopted a data center rating scheme for sites above 500 kW. As reported by Freshfields, an A rating requires a PUE of 1.15 or lower and a water usage effectiveness (WUE) of 0.1 L/kWh or lower. First labels are expected in 2027.
US disclosure. The SEC proposed rescinding its climate disclosure rule in May, but California's SB 253 is moving ahead. The first Scope 1 and 2 reports are due November 10, 2026, pending approval of the revised rule, with limited assurance starting in 2027.
Even perfect electricity accounting leaves most of the footprint untouched. By our arithmetic on Microsoft's fiscal 2025 data, Scope 3 is about 86% of the company's total, and emissions from capital goods alone (servers, networking, buildings) were 9.04 million tonnes, 2.6 times the 2020 figure. Google reports that data center construction accounts for roughly 20% of its Scope 3 emissions.
The good news is that embodied carbon responds to procurement decisions. Microsoft's hybrid timber, steel, and concrete data centers in Northern Virginia cut embodied carbon 35% against conventional steel construction and 65% against precast concrete. Schneider Electric's modeling found that extending server life by one year cuts embodied carbon by about 16%. Low-carbon steel and concrete are commercially available today.
Carbon removal has a role, but the market is signaling its limits. Microsoft contracted about 45 million tonnes of removal in fiscal 2025, most of the global market by volume. Reporting by Heatmap and Bloomberg indicates its new purchases fell roughly 80% in 2026, which the company described as "a disciplined approach, not a change in ambition." Notably, Microsoft's 2026 report is the first in which removal credits are not netted against emissions.
ISO 14068:2026 keeps the principle that reductions and removals within the value chain come first, with offsets only for the remaining footprint. SBTi v2 describes credits as "a complement, not a substitute" for reductions. A data center that is emitting more each year cannot buy its way to neutral.
Here is the standard we will use when we describe a facility or a company as carbon neutral, and the one we think buyers should use in procurement. A data center earns the claim when it can show all six of the following.
By this definition, few facilities qualify today. That is the point. The term should describe an outcome, not a purchase.
For operators, the practical steps are the same whichever version of the GHG Protocol is finalized:
For corporate buyers of cloud and AI capacity:
We will track which operators meet this bar and report it in our buildout tracker. If you think our definition is wrong, tell us. We would rather get the standard right than have it to ourselves.
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