Understanding the Math Behind Microsoft’s Commitment to Become Carbon Negative by 2030 (Part 1/3)
Microsoft has an ambitious goal: become carbon negative by 2030. I look at how they plan to achieve it and what other leaders can learn from their example.
TL;DR
Microsoft has done the math on what it will take for them to go carbon negative by 2030.
First, they measured emissions across three different scopes: Direct (Scope 1), Indirect (Scope 2), and Value-Chain (Scope 3)
Then, they outlined a plan of how to reduce their emissions across those scopes
Next, they’re investing heavily in projects that will allow them to remove all their emissions, since inception, by 2050
Microsoft has a bold plan: become carbon negative by 2030. This isn’t just lip service either, they’ve done the math and have a plan to make it happen.
Microsoft’s Commitment: Carbon Negative by 2030
Microsoft has aligned their corporate goals with the Paris Agreement and done one better: they’re going carbon negative by 2030.
In their words, “those of us who can afford to move faster and go further should do so.”
Let’s explore their “moonshot” plan to make this happen.
Microsoft’s initiative focuses on two goals to get to carbon negative within the next decade:
Reduce their emissions by half
Remove more carbon than they emit
Here’s how they plan to do it1:
And by 2050, they have committed to removing all the carbon emissions, both direct and by electrical consumption, since Microsoft was founded in 1975.
The Math of Going Carbon Negative
Going carbon-negative simply means removing more carbon than one emits. The hard part is having accurate measurements. Microsoft is doing this and holding themselves accountable. Here I take a look at their current emissions and how they’re tackling each emissions category.
For reference, in 2020, they emitted 15 million metric tons of carbon. To make offsetting this total more achievable, they’ve broken their emissions into three categories, or scopes following carbon accounting industry standards:
Scope 1 - Direct Emissions
This covers direct emissions that Microsoft’s activities pump out, like their vehicles and other owned business activities.
In 2020, Microsoft emitted 100,000 metric tons of direct emissions.
Scope 2 - Indirect Emissions
Indirect emissions come from the energy Microsoft consumes, like their heat and electricity.
In 2020, Microsoft emitted 4 million metric tons of indirect emissions.
Scope 3 - Indirect Value-Chain Emissions
These indirect emissions are outputs caused along the full value chain, such as CO2 emissions from the food eaten at Microsoft’s corporate cafeterias or their building materials. Think of this category as things outside of their direct control but the emissions their vendors cause.
In 2020, Microsoft emitted 12 million metric tons of indirect value-chain emissions.
Actions Microsoft is Taking to go Carbon Negative
Now that they understand their outputs, their team has created an action plan to balance it out and reduce and remove their carbon footprint.
To reduce their Scope 1 and 2 emissions, they will:
Be at 100% renewable energy by 2025
Have a global electrical vehicle fleet by 2030
Work towards International Living Future Institute Zero Carbon certification and LEED Platinum certification for their Silicon Valley Campus and Puget Sound Campus
To reduce their Scope 3 emissions, they will:
Develop new supplier processes to reduce their emissions and ensure accurate reporting
It’s worth calling out that Scope 3 is the largest emitter and thus where much of the hardest work need to happen. And it’s why I believe Microsoft deserves some good press right now. They’re not just cleaning up their emissions, they’re taking responsibility for their entire value chain and showing others how to do the same.
And by 2050, they claim to remove all the carbon they have emitted since inception through:
Negative Emission Technologies (NET), like afforestation, reforestation, soil carbon sequestration, bioenergy with carbon capture and storage (BECCs), and direct air capture (DAC).
All of these plans require financial backing, which they have baked into their strategy as well.
How Will They Fund Their Carbon Negative Ambitions?
Through their internal carbon fee, which they are increasing to $15 per metric ton. Since being implemented in 2012, this internal tax has helped them hold their business lines accountable for their carbon emissions, just like any other business metric.
Microsoft is also launching a technology initiative to help their customers and suppliers reduce their carbon footprints as well as ensuring their products are sustainable.
Perhaps most exciting, they’ve created a $1 billion climate innovation fund that will focus on deploying capital to:
Accelerate technology development through project and debt finance
Invest in new innovations through equity and debt capital
Within the fund, they’ll be focusing on projects that meet at least one of four criteria:
Must have meaningful decarbonization, climate resilience, or other sustainability impact strategies
Must accelerate current or potential sustainability solutions
Must be relevant to Microsoft
Contribute to climate equity, especially in developing economies
Alongside this, they’ll also continue to use their AI for Earth program to support projects across the globe through AI tools and data.
How Will They Be Held Accountable?
Any plan is only as good as how it’s enacted. To hold themselves accountable, Microsoft has developed an annual Environmental Sustainability Report that measures their progress across carbon initiatives, water use, waste, and creating resilient ecosystems. We can all learn something from the way Microsoft has laid out their plans.
In this post, I covered Microsoft’s plan to achieve their ambitious goal. In the next two posts, I will cover lessons learned from their early 2020 carbon removal purchase program and how they buy carbon credits in 2021.
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