Chinese tech giants are lagging behind in renewable energy, and AI will push them further away

Leading Chinese technology companies have made limited progress in meeting their renewable energy targets as energy consumption in the sector is expected to rise amid demand for artificial intelligence (AI) and cloud services, according to a report by Greenpeace East Asia. The group urged tech giants to take stronger action to combat climate change.

The environmental group released a report Thursday that analyzed renewable energy use by 25 of China’s largest cloud service providers and data center operators, which together account for more than half of the cloud services market and more than 60 percent of the data center market.

Alibaba Group Holding, Tencent Holdings and Baidu ranked top three in the top 10 cloud providers for renewable energy purchasing, carbon emission reduction measures and targets and data transparency. GDS, Chindata and VNET Group topped the list of top 15 data center operators for renewable energy purchasing.

“Over the past two years, some leading companies have made significant breakthroughs in renewable energy use,” said Lyu Xin, climate and energy campaigner at Greenpeace East Asia. “But progress has been uneven across the industry.”

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According to Greenpeace, renewable energy purchases by leading Chinese technology companies have increased significantly over the past two years. Last month, five of the 25 companies surveyed – Alibaba, China Telecom, Chindata, GDS and Tencent – reported annual renewable energy rates above 10 percent, compared with only one company, GDS, in 2022 study

The report also found that only eight of those 25 companies had committed to using 100 percent renewable energy by 2030, and only six had set carbon neutrality targets for direct and indirect emissions from purchased energy, known as Scope 1 and Scope 2 emissions, by the end of the decade.

Greenpeace has called on all technology companies to achieve 100 percent renewable energy and carbon neutrality by 2030. Companies should also include scope 3 emissions – indirect emissions in their value chain – in their carbon neutrality targets, the environmental group said.

Greenpeace said it was crucial for technology companies to rapidly increase their use of renewable energy, given the exponential growth of generative artificial intelligence, which could fuel a boom in data center construction and require huge amounts of energy.

According to research by Goldman Sachs, artificial intelligence is predicted to cause a 160 percent increase in energy demand in data centers worldwide by 2030 compared to 2023.

According to the investment bank, data centers are expected to account for 3 percent of global electricity consumption by 2028 and 7 percent by 2035, which equates to about 3,100 terawatt-hours over the course of a decade. Macquarie.

In China, which has the world’s largest 5G network and one of the largest data center industries, carbon dioxide emissions from digital infrastructure are projected to increase by 152 percent, to 310 million tons, by 2035 compared with 2020, according to a 2021 report by Greenpeace.

The group said the sector is estimated to use 782 billion kilowatt-hours of electricity by 2035, about 5% to 7% of the country’s energy consumption, up from 2.7% in 2020.

As China approaches its 2030 deadline for reaching its national carbon dioxide emissions peak, Beijing has set a target rules to decarbonize the energy-intensive digital infrastructure sector, including cloud services and data centers.

Ministry of Industry and Information Technology of China listed this sector as a key decarbonisation target alongside traditional high-emission industries in 2022. The ministry ordered data centre operators and telecommunications service providers to save water and electricity, locate facilities in areas with high renewable energy availability and develop low-energy facilities and equipment.