Sitting on the fence, saying one thing and doing another? Microsoft is accused of waving the flag of carbon reduction on one hand while selling AI products to energy giants on the other

As a Silicon Valley giant, Microsoft has always been establishing its role in environmental protection. In recent years, as a leader in the AI industry, it has been continuously promoting how to use AI to "accelerate decarbonization." However, media reports suggest that Microsoft's actions are "quite hypocritical" because it is also selling AI technology to a number of fossil energy companies, including ExxonMobil and Chevron, to help them use AI to develop new oil and gas fields and maximize production.

Pushing for decarbonization on one hand, while selling AI tools to fossil energy companies to expand extraction on the other

An article in The Atlantics stated that over the years, companies that have collaborated with Microsoft include Schlumberger, Chevron, Halliburton, ExxonMobil, Baker Hughes, and Shell, among others. However, around 2020, Microsoft set ambitious climate commitments, including achieving carbon negativity by 2030. The company gradually reduced publicity about these partnerships and instead focused on messages about net-zero emissions.

Microsoft then shifted its transactions with the fossil fuel industry behind the scenes. Relevant documents show that Microsoft has won business in the energy industry by promoting drilling optimization, automation, and maximizing oil and gas production. Over the past year, Microsoft has increased its promotion of generative AI products, attempting to secure more deals, each potentially worth hundreds of millions of dollars. Microsoft employees pointed out that the oil and gas industry represents a market opportunity of $35 billion to $75 billion annually.

Internal documents spanning hundreds of pages and interviews with 15 current and former employees and executives over the past year revealed that Microsoft executives view these generative AI tools as a secret weapon for customer outreach. During an internal conference call in September last year, Microsoft's energy lead, Bilal Khursheed, stated that since the company invested in generative AI, the energy industry has started seeking guidance from Microsoft on AI, a situation that "hardly ever happened before." He recalled, "We need to maximize this opportunity. We need to pave the way for the adoption of generative AI."

Hema Prapoo, Microsoft's global head of oil and gas business, also mentioned in the documents that generative algorithms can be used to model oil and gas reservoirs and maximize their extraction. Several documents also emphasized that Microsoft's unique relationship with OpenAI is an additional selling point for energy customers, implying that GPT can enhance productivity beyond fossil fuel extraction.

However, Microsoft believes that these partnerships do not mean the company is violating its climate commitments. Microsoft executives believe that AI can also help fossil fuel companies improve their environmental operations, making it not contradictory because AI services can make oil and gas production more efficient, increasing output while reducing emissions. In addition, some companies also operate wind farms and solar power plants, which further benefit from Microsoft's cloud technology. Microsoft has also promoted exploratory academic research on how to use AI to discover new materials that reduce carbon dioxide in the atmosphere However, the view that the climate benefits of AI will outweigh its environmental costs is still largely speculative, especially considering that generative AI itself is very energy-intensive. Over the next six years, developing and running the next generation AI models that Microsoft invests in may consume more electricity than the entire country of India, requiring millions of gallons of water for cooling.

Energy Saving and Emission Reduction? AI is a double-edged sword

A former Microsoft employee who has already left this year stated that with Microsoft's climate commitments made in 2020, their ambitions have gradually expanded. These commitments were made during the peak of climate action, when millions of people around the world, including employees in the tech industry, protested the lack of coordinated action to reduce carbon emissions.

However, since then, Microsoft's annual emissions have not decreased. According to the latest environmental report released by Microsoft in May this year, the company's emissions have increased by 29% since 2020—much of this growth comes from the latest developments in the AI field, as explained in the report. The employee stated, "All of Microsoft's public statements and publications depict the wonderful uses of AI in sustainable development," but "this focus on positive impacts obscures a much darker story."

For example, in March 2021, Microsoft expanded its partnership with Schlumberger to develop and launch an AI-enhanced service running on the Microsoft Azure platform. Azure's cloud computing services are suitable for various organizations, but this product is specifically tailored for the oil and gas industry to assist in the production of fossil fuels and other purposes. According to two internal demo slides I reviewed, this service is designed to help Microsoft win business from many major fossil fuel suppliers.

Another document shows how Microsoft's tools enable ExxonMobil to increase its annual revenue by $1.4 billion—$600 million of which comes from so-called "sustainable production," drilling for oil using less energy. Other documents provide details on multiple agreements signed between Chevron and Microsoft to access the tech giant's AI platform and other cloud services. A strategic memo from June 2023 indicates that Microsoft hopes to pitch OpenAI's GPT-3.5 and GPT-4 to Chevron to "deliver more business value."

This is the contradiction: on one hand, AI may help reduce the environmental impact of drilling; but on the other hand, it is also used to accelerate drilling speed.

Is Microsoft's approach pragmatic?

Within Microsoft, employee groups dedicated to sustainability have petitioned the leadership multiple times to change the company's stance on these contracts. Some employees have also requested the company's leadership to amend its "Responsible AI" principles to address the technology's impact on the environment.

During this period, Microsoft released a new set of principles that regulate the company's collaboration with oil and gas customers. The new principles include a provision that Microsoft will only provide support for fossil fuel extraction to companies that have "publicly committed to achieving net-zero carbon goals."

Some employees believe that Microsoft's approach is pragmatic, as fossil fuel companies must participate in the transition to clean energy, and they will only do so when they have economic incentives to do so According to reports, Microsoft plans to invest $100 billion to build a supercomputer to support OpenAI's next-generation technology; the energy consumption of this supercomputer each year could be equivalent to that of 4 million American households. An apt metaphor is that if this plan is abandoned due to environmental concerns, it would be like designing an entire highway system and then banning cars. However, the exact amount of resources that new technology will consume remains unknown