Exclusive: Data center firm inks carbon removal deal

Driving the news: Japan-based NTT Data Group has agreed to buy an unspecified amount of carbon removal credits from Climeworks — the first agreement between the Switzerland-based startup and a major AI infrastructure company.

• The companies aren't disclosing terms of the agreement, but Climeworks co-CEO Christoph Gebald said the deal could provide a few hundred thousand tons over a decade.

Reality check: That's meaningful for a nascent industry, but it's quite small relative to the emissions tied to the AI boom — to say nothing of the far greater reductions needed to avoid the worst impacts of climate change.

The intrigue: The fact that the partnership exists at all could signal the beginning of a trend within the AI industry.

"We've seen increased interest in carbon removal because of the buildout of data centers," said Giana Amador, founding executive director of the Carbon Removal Alliance.

• "Carbon removal is quite attractive" because the technology doesn't have to be built alongside a data center project, Amador said in a recent interview. "They can purchase it as an offset."

The big picture: Climate change — and solutions for it, like carbon removal — have largely fallen off society's radar as the AI boom accelerates a race for power and the Iran war demands attention to imminent crises.

• But the sector is having some success recalibrating in the age of President Trump and amid a pause from its biggest voluntary buyer, Microsoft.

State of play: NTT Data is a data center giant with roughly 200,000 employees worldwide, making it one of the largest providers of digital infrastructure and services underpinning the AI economy.

• On Thursday, company executives reiterated their goals to essentially zero out emissions tied directly to the company's data centers by 2030.
• The deal with Climeworks will help the company offset additional emissions by 2040.

"Clients are asking for sustainability strategies that are measurable, operational and grounded in real data," David Costa, chief sustainability officer at NTT Data, said in a statement.

How it works: The sector includes a range of technologies that pull carbon dioxide from the air and store or use it.

• Climeworks' cornerstone tech uses large fans and filters to capture CO2 from the ambient air.

• Beginning in 2024, the startup also began procuring other types of carbon removal credits, which are often cheaper but can raise questions about how durable they are compared to the engineered type.
• Thursday's agreement includes both the engineered and nature-based type, Climeworks said.

Yes, but: No major companies have stepped in (yet) to fill the void filled by Microsoft's decision to pause its new purchases of credits, according to two sources working within the sector who spoke on the condition of anonymity to discuss private deliberations.

What they're saying: Leaders in the sector say the sheer pace of the AI race leaves little room for climate considerations right now.

• "The breakneck pace to AI development is all consuming and high focus," said Julio Friedmann, chief scientist at Carbon Direct, which works with companies on their carbon management.
• "The unprecedented speed required, money at stake, and degree of difficulty leave little room inside these companies for consideration of" carbon removal.

What's next: In the near term, Gebald of Climeworks said cloud and AI providers could "build the cost [of carbon removal] into their products," with enterprise customers — not end users — ultimately footing the bill.

• He predicts that the tech industry will face increasing pressure to consider their emissions as the AI boom deepens.

What we're watching: As AI use grows, customers will ask "what emissions come with this compute," said Gebald, adding that it will push carbon removal from a "nice-to-have" to a "critical product feature."