By Mike Feibus
Amazon, Alphabet, Meta Platforms and Microsoft are just a few tech giants making use of carbon credits
Tech titans have a well-deserved reputation for moving fast and breaking things. But in the credibility-battered sustainability segment of carbon credits, Big Tech giants including Alphabet (GOOGL) (GOOG), Amazon.com (AMZN), Apple (AAPL), Meta Platforms (META) and Microsoft (MSFT) are the ones doing the fixing. And they’re taking time to do it right – at a high level only they can.
The market for carbon credits, the instruments that companies typically buy to support carbon-dioxide reduction, or CDR, cratered after a series of reports bashed their ineffectiveness. Even so, survey after survey reveals demand is as strong as ever – but only for verifiable, high-impact CDR initiatives like what Big Tech is spinning up.
If successful, these massive regional efforts could play a crucial role in capping rising global temperatures at around 1.5 degrees Celsius over pre-industrial levels, something scientists say will be necessary to sidestep the most devastating effects of climate change.
That’s compelling for many enterprises – even in the U.S., in the face of hurricane-force political headwinds. Executives say the dollars-and-sense rationale of sustainability is too compelling to ignore. Investors demand it. Consumers prefer it. Some of today’s brightest minds insist on it.
If there’s a downside to the wave of Big Tech-supported projects, it’s that while they’re big enough to make a difference, their projects may be too stratospheric for down-to-earth-sized companies. But even that may be starting to change.
The CDR imperative
To keep rising temperatures in check, two broad directives came out of the 2016 Paris climate accord. One was the “net zero” mandate, which called for the globe to neutralize greenhouse-gas emissions from energy, transportation and industrial sectors by 2050. The other was to help the planet remove a lot more carbon than it’s now capable of doing.
How much more? Depending on how the next 25 years unfold, we’ll have to find ways to extract at least 100 billion metric tons more CO2 from the atmosphere – and perhaps as much as 1 trillion tons – by the end of the century.
All of which raises the question: Who is going to pay for all of this?
The voluntary carbon market, or VCM, stepped in with a mechanism to help companies fund carbon reduction. That put the market on a spectacular growth trajectory, quadrupling to about $2.1 billion in 2021.
Two years later, though, the market withered to $723 million, barely a third of its peak. The dramatic reversal was sparked by a series of critical reports that exposed a wide array of questionable accounting practices, including:
— Double- and triple-counting documented emissions reductions.
— Charging to preserve parcels in no danger of deforestation.
— Claiming to halt deforestation for land-clearing projects that developers relocated.
Carbon credit 2.0
Sales may have shriveled, but demand never did. Buyers now insist on higher-quality credits with built-in evidence of impact. Oversight is improving. Next-gen accreditations are buttoning up.
Carbon-removal efforts largely fall into two broad camps: nature-based initiatives, like working to halt deforestation and reforesting already cleared lands; and innovative technology-centric projects like direct air capture, or DAC, which extracts CO2 from the atmosphere, and ocean alkalinity enhancement, or OAE, which helps salt water absorb more carbon. Credits to fund technology-based projects are just starting to ramp.
Nature-based and technology-based initiatives each have advantages and disadvantages. But due to the magnitude of the problem, Earth will need myriad ways to capture and store emissions. Which is why most Big Tech companies spread their investments across a mix of approaches.
In the nature-based arena, Big Tech is unquestionably going big. In May, Microsoft partnered with a carbon-credit management firm to buy 18 million tons of high-quality, long-term nature-based credits. Last year, Alphabet, Meta, Microsoft and Salesforce (CRM) launched a coalition of big buyers to support nature-based CDR.
Amazon sets the pace
Nowhere is that more evident than with what Amazon.com is helping to craft in the Amazon – nature’s grandest rainforest. There, the pioneer of online shopping and cloud computing is playing a pivotal role in regional-scale projects that extend across nearly a quarter of the Amazon rainforest, combined.
The massive project is a jurisdictional effort, an emerging class of regional initiatives that enlists governments to address the root cause of deforestation at a scale large enough to offer long-term benefits to local communities as well as the climate.
A major part of the funding is coming from the LEAF Coalition, which has raised more than $1 billion to sponsor projects like Amazon’s. LEAF was co-founded by Amazon along with governments like Norway, the U.K. and large enterprises like Salesforce and Nestle (CH:NESN).
Perhaps most intriguing for smaller companies pining for difference-making credits, Amazon recently announced it will offer credits from a selection of initiatives, including jurisdictional projects in the Amazon, and technology-based efforts via a new service. The first credits from the service will be available later this year, Amazon says. To buy credits, companies must first meet eligibility criteria that demonstrates their decarbonization commitment.
Democratization coming?
It’s too early to say whether Amazon’s credits are a harbinger of broader availability for A-List credits. In the meantime, some companies – like Ryan Companies , a top-50 domestic general contractor – are happy to see the new service come available.
Joe Rozza, Ryan’s chief sustainability officer, says that up to now, the company has been focused on decarbonizing operations. But Ryan is now ready to invest in carbon credits – and Amazon’s service caught its attention.
“I’m really excited about the potential for scale and the impact that could come from this,” Rozza said. “It’s an exciting development for a lot of us, I think. This concept of democratizing access to high-quality carbon credits that are having an impact on climate change right now, it gives us an opportunity in some small way to have a much more immediate effect.”
Mike Feibus is principal analyst at FeibusTech, an independent market-research firm in Scottsdale, Ariz. He does not own shares in any of the companies mentioned.
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-Mike Feibus
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07-05-25 1356ET
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