Google shakes up carbon offset market as data costs soar

Plus, the UK's Labour Party jumpstarts climate promises after election win.

We’re having a summer sale! We depend on your support to bring you the latest and best investing insights from the world of climate finance. So, we’re kicking off the month with a July 4th Summer Sale. New subscribers can get 40% of the price of an annual subscription for orders placed by the end of the July.

---

In today’s edition:

— How Google’s plan to stop using carbon offsets will shake up an already vulnerable market

— The UK’s Labour Party’s first actions in government tied to climate change

— Record wildfires in Amazon Basin threaten deforestation progress in Brazil

— What slowdown? EV sales in U.S. to triple in next three years, BloombergNEF predicts

— Alaska’s Juneau ice field, 5th largest in U.S., is melting at a rate of 50,000 gallons per second

— BP profit warning on oil trading comes after it slowed clean energy projects

Photo: David Kingham/flickr.

Is this the week Death Valley breaks its own record for the highest temperature reliably recorded on Earth? That record is 130°F, set in 2021. The thermometer hit 129°F there on Sunday, and 129°F on Monday in Tecopa, Calif., just south of the Death Valley.

---

Even accounting for the massive surge in data demand on tech giants from AI development, Google’s GOOGL 0.00%↑ admission last week that its greenhouse gas emissions were up 48% in 2023 over what they were just before Covid was a shocking number. AI development is expected to be one of the battlefields of the coming transition to renewable energy from fossil fuels, as demand soars.

So it makes sense that at some point last year Google stopped buying carbon credits to offset its emissions and claim it was net zero, something it had done since 2007. The price tag of those net zero claims clearly didn’t seem worth it anymore, especially with data center costs to keep soaring.

But Google’s departure from the carbon offset market — which is valued at about $330 billion, according to Statista — is likely to further destabilize a market that is suffering from strained credibility and an ever-shrinking supply of opportunities to remove carbon from the atmosphere and sell the credit.

Other big tech companies continue to use the credits. Microsoft MSFT 0.00%↑, whose emissions are up 30% since 2020, just last month signed what was described as the largest carbon credit deal ever when it agreed to buy eight million offsets from the forestry arm of Brazilian Investment Bank BTG Pactual. And this week it signed another major carbon credit deal with Occidental, which would remove the carbon from the atmosphere using its technology.

But that strategy and those of other big tech companies could be re-evaluated in the wake of the Google decision.

Carbon offsets aren’t the benefit they used to be, particularly as we can see that they aren’t stopping emissions at big tech from growing. Once one big player walks away from the table, it could become a new game entirely. The question now for Google is how on Earth — given its AI plans — will it manage to get down to zero emissions without them?

Don’t forget to contact me directly if you have suggestions or ideas at dcallaway@callawayclimateinsights.com.

Follow us . . . .

Twitter | LinkedIn | Facebook | Instagram

---

Tuesday’s investor-only insights

Londoners gather Sunday to hear the UK’s new Prime Minister Sir Keir Starmer on his arrival at Number 10 Downing Street. Photo: Rory Arnold for No 10/flickr.

Labour’s ‘climate superpower’ plan for UK hinges on data centers