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Microsoft to be carbon negative by 2030, launches US$1 billion innovation fund

Global software major US-headed Microsoft Corp. has recently announced an ambitious goal and a new plan to reduce and ultimately remove its carbon footprint. By 2030 Microsoft will be carbon negative, and by 2050 Microsoft will remove from the environment all the carbon the company has emitted either directly or by electrical consumption since it was founded in 1975.

Microsoft President Brad Smith (left), Chief Financial Officer Amy Hood and CEO Satya Nadella preparing to announce Microsoft’s plan to be carbon negative by 2030 (photo courtesy Brian Smale).

At an event on January 16, 2020, at its Redmond campus, Washington (WA), Microsoft Chief Executive Officer Satya Nadella, President Brad Smith, Chief Financial Officer Amy Hood, and Chief Environmental Officer Lucas Joppa announced the company’s new goals and a detailed plan to become carbon negative.

While the world will need to reach net-zero, those of us who can afford to move faster and go further should do so. That’s why today we are announcing an ambitious goal and a new plan to reduce and ultimately remove Microsoft’s carbon footprint. By 2030 Microsoft will be carbon negative, and by 2050 Microsoft will remove from the environment all the carbon the company has emitted either directly or by electrical consumption since it was founded in 1975, said Microsoft President Brad Smith.

The company announced an aggressive program to cut carbon emissions by more than half by 2030, both for its direct emissions and for its entire supply and value chain. This includes driving down its own direct emissions and emissions related to the energy the company uses to near zero by the middle of this decade.

Develop a portfolio of negative emission technologies

By 2030 Microsoft will remove more carbon than it emits, setting it on a path to remove by 2050 all the carbon the company has emitted either directly or by electrical consumption since it was founded in 1975. This will be achieved through a portfolio of negative emission technologies (NET) potentially including afforestation and reforestation, soil carbon sequestration, bioenergy with carbon capture and storage (BECCS), and direct air capture (DAC).

It also announced a new initiative to use Microsoft technology to help its suppliers and customers around the world reduce their own carbon footprints and a new US$1 billion climate innovation fund to accelerate the global development of carbon reduction, capture and removal technologies.

Beginning next year, the company will also make carbon reduction an explicit aspect of its procurement processes for its supply chain. A new annual Environmental Sustainability Report will detail Microsoft’s carbon impact and reduction journey.

Finally, the company will use its voice and advocacy to support public policy that will accelerate carbon reduction and removal opportunities.

Solving our planet’s carbon issues will require technology that does not exist today. That’s why a significant part of our endeavor involves putting Microsoft’s balance sheet to work to stimulate and accelerate the development of carbon removal technology. Our new Climate Innovation Fund will commit to invest US$1 billion over the next four years into new technologies and expand access to capital around the world to people working to solve this problem. We understand that this is just a fraction of the investment needed, but our hope is that it spurs more governments and companies to invest in new ways as well, explained Microsoft President Brad Smith in a blog detailing the announcement.

Brad Smith added that Microsoft will primarily deploy this capital in two areas: (1) to accelerate ongoing technology development by investing in project and debt finance; and (2) to invest in new innovations through equity and debt capital.

We’ll focus our funding on investments primarily based on four criteria: (1) strategies that have the prospect of driving meaningful decarbonization, climate resilience, or other sustainability impact; (2) additional market impact in accelerating current and potential solutions; (3) relevance to Microsoft by creating technologies we can use to address our unpaid climate debt and future emissions; and (4) consideration of climate equity, including for developing economies, Brad Smith wrote.

Microsoft’s pathway to carbon negative by 2030. Microsoft expects to emit 16 million tonnes of carbon 2020. Of this total, about 100 000 tonnes are scope 1 emissions and about 4 million tonnes are scope 2 emissions. The remaining 12 million tonnes all fall into scope 3 emissions (graphic courtesy Microsoft).

To tackle scope 3 emissions, ie the indirect emissions that come from all the other activities in which the company is engaged, including the entire supply chain emissions with the materials in its buildings, the business travel of its employees, and the full life cycle of its products, including the energy customers may consume when using the products, Microsoft will phase in its internal carbon tax to include scope 3 emissions.

Currently, this fee is US$15 per tonne and covers all scope 1 and 2 emissions, plus scope 3 travel emissions.

Unlike some other companies, our internal carbon tax isn’t a “shadow fee” that is calculated but not charged. Our fee is paid by each division in our business based on its carbon emissions, and the funds are used to pay for sustainability improvements. Starting in July, all our business divisions will also pay an internal carbon fee for all their scope 3 emissions. We will start at a lower price per ton than our current fee for other emissions, but we will phase in increases over time until all our scope 1, 2, and 3 emissions are charged the same rate. This will both increase incentives across the company to reduce all scope 3 emissions and fund the added work to reduce our own scope 3 emissions and invest in carbon removal activities, Brad Smith explained.

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