Going Carbon Neutral and Putting an Internal Price on Carbon

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Going Carbon Neutral and Putting an Internal Price on Carbon

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 Over the past three years, my team and I have worked to drive the types of changes that would consistently improve Microsoft’s carbon footprint and reduce our impact on the environment.  As I noted in my previous blog, we have made some great progress.

 However, when we looked at our progress in the face of the alarming scientific data on climate change and the urgent need for society to move to cleaner, reliable and more secure energy sources, we realized that there was more that we could do.

 I am fortunate that I work for a company which understands climate change is a serious challenge requiring a comprehensive and global response from all sectors of society. Today, we are announcing that we are making the commitment to become carbon neutral beginning with our Fiscal Year 2013 (which begins July 1st). This commitment will apply to our internal operations across more than 100 countries associated with our data centers, software development labs, offices and air travel.  Our strategy is based on driving company-wide accountability resulting in greater efficiencies, increasing our purchase of renewable energy, improving data collection with IT, and a continued acceleration of our R&D and datacenter operations efficiency investments.


The model of accountability is based on an internal carbon fee administered through our corporate finance department and cascaded globally to our business groups.   This charge-back model will place a price on carbon and make the company’s business divisions responsible for the cost of offsetting the carbon emissions associated with their electricity use and air travel. 

 The goal is simple; to make the company’s business divisions financially responsible for the cost of their carbon emissions and drive even more focus on efficiency and environmental sustainability across Microsoft.  Even as we developed our strategy, the initial discussions within our company have already served as a catalyst for driving deeper dialogue and analyses that should result in improved efficiencies and more sustainable practices. 

For emissions not eliminated through efficiency measures, Microsoft will purchase renewable energy and carbon offsets in order to achieve the carbon neutrality goal.

The measures that we will put in place to achieve carbon neutrality will lessen our environmental footprint while also helping us to manage risk, increase efficiency, and support the growth of our business. Our basic approach moving forward has three strategic pillars:

  •  Be lean. We will set efficiency targets to help reduce the amount of energy we consume for data center operations, labs, and offices as well as our use of air travel. Technology will play an important role in both how we achieve those targets and how we measure our progress along the way.
  • Be green. We will make more environmentally responsible choices by purchasing renewable energy and investigating investment options in renewable energy projects. We will also establish goals to reduce our waste and water use.
  • Be accountable. We will quantify the carbon impact of our operations and drive responsible business decisions around energy use and air travel by setting an internal price on carbon, measuring our actual emissions, and then charging the teams responsible for those emissions. We will also work to reduce the carbon impact of our supply chain.

 Here is our current plan:   

  • Beginning in fiscal 2013 (July 1, 2012), all business groups will build in the price of carbon into their budgets.
  • These groups will be able to limit their “carbon liability” by using less energy—either through efficiency or by directly sourcing renewable energy and reducing air travel.
  • The groups will pay a carbon fee for each metric ton of carbon emissions associated with the operation of data centers, software development labs, office buildings and employee air travel.
  • The carbon fee will be paid into a central fund at Microsoft that will be used to purchase renewable energy and carbon offsets in order to achieve net carbon neutrality.


We will all be evolving our approach together as we learn which strategies and practices are most effective and we look forward to sharing regular updates along the way. We’ve seen broad buy-in for the carbon price among business leaders at Microsoft, especially among groups whose cloud-based businesses are powered by energy-intensive datacenters.

 We believe that our carbon neutral commitment with a cascaded carbon fee is consistent with the culture of innovation at Microsoft which will help increase our focus on efficiency and clean energy.  We also recognize that there is much more work to be done and that we will need to evaluate and adjust our approach on an ongoing basis.   As we learn from this effort, we will share our lessons and our results with the industry.

 A summary of our carbon neutral strategy can be found in our whitepaper “Becoming Carbon Neutral: How Microsoft is Becoming Lean, Green, and Accountable”.

 I welcome people’s feedback on this and look forward to sharing our learning from this project.





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  • Guys,

    I left a comment here but it hasn't appeared - something up, or comment moderator still asleep?

  • Earlier comment never appeared - strange, I'll try again.

    Well done on this initiative guys - impressive stuff.

    Now, how about telling Azure users their energy and emissions footprint for their reporting purposes i.e. if I'm using Azure and I want to include the emissions of my Azure usage in my reporting, I can't because currently Microsoft don't tell me. You are not alone in this, almost no Cloud infrastructure provider does. However, with the CarbonSystems implementation, Microsoft should now be in a position to do this. It could be a nice differentiator for Azure.

    I posted on a related matter at greenmonk.net/use-open-source-platforms-to-find-cloud-computings-energy-and-emissions-footprint

  • Hey Tom,

    thanks for your comments. We don't filter (except spam), so not sure what happened with your earlier comment.

    We're in the midst of our CarbonSystem deployment and are excited about the opportunities to integrate powerful analytics and intelligence to our existing systems to give us a more robust reporting. Given where we are with our deployment, we don't have any plans at this time to share emissions from Azure usage with customers.  I'm passing along your feedback to our Azure team and appreciate your input.



  • Make sure you mention how many of you bike to work -- every pedal cleans the air. Seriously there's tens of thousands of you doing that.

  • just picked up this news on my site, solarfeeds!


  • For such a major post, very little interest.  The whitepapers and thinking around all this are typically vague and point towards MSFT doing nothing, again, to actually REDUCE carbon output.

    A nice foxtrot into carbon neutrality points to nothing - all your buildings are pretty modern or retro-fitted, but I would say represent a tiny element of your carbon production (akin to an airline in energy terms).

    Poor narrative.

  • Rob,

    What will be the process for project submittals to Microsoft for consideration under this program?  Our company has a portfolio of Registered offset projects that have successfully delivered verified emission reductions to similar entities such as yourself.  We would like the opportunity to learn who will manage the offset procurement process and what Registries and project types will be considered.

    Best Regards,

    Jason Tournillon

    Trinity Carbon Management

  • My notes on how to estimate and reduce ICT carbon emissions may be of interest. These are used for graduate university courses in Australia and North America: "ICT Sustainability: Assessment and Strategies for a Low Carbon Future": www.tomw.net.au/.../introduction.shtml

  • Well done. Any carbon reduction initiative that can be measured in Money is a good thing.

  • Now I will begin my search for a entrepreneur that is willing to build an operating system that is not tied to a globalist global warming lie. Good bye Microsoft. Enjoy your ENRON-style accounting program.

  • Great work Robert.

    We have developed a web application for the Centre for Low Carbon Futures (CLCF) which helps businesses map out their existing supply chains.

    The tool analysis the chain and produces a carbon 'heat-map' displaying where the most carbon is being used. Users are then given recommendations for reducing their carbon footprint based upon their own research initiatives and real world case studies.


  • What is the internal carbon price in $/ton?  Is it tied to some external data source?  Is it applied to carbon from manufacturing parts in the supply chain?  Thanks.

  • What is your total carbon usage in tons across the organization? What is your GHG price in $/ton? It is 'nice' that your organization is trying out carbon credits (RECs), but what class of credits will you be purchasing? 1, 2, 3? This program could be completely meaningless if you are purchasing #3 credits. It would be much more meaningful to set a goal of buying zero carbon energy from a renewable source; wind, solar, geothermal, tides, or hydrogen. It would also be nice if Bill Gates would stop pouring avalanches of money into next generation nuclear plants, and focus instead on clean, zero carbon hydrogen gas production from solar or other renewable energy source.  

    The Paper Fantasy And Real  Dangers Of New Generation Nuclear Reactors; via @AGreenRoad


    Where is your Baseline Emissions Data Profile: Source of Emissions, Tons CO2e, % Total, for each location, for each project?

    Where is your GHG Funding Summary: Incremental Costs, Annualized CO2 Reduction, Average $/ton CO2, for each location, for each project?

    All 'real' GHG reduction programs provide this information in a transparent manner. It may also help to benchmark Microsoft with other firms in industry doing a GHG reduction and reporting program. How do you compare?

    The following article may provide your organization with a bit more pressure and urgency.. There might not be a Microsoft or anyone else around in another ten years.

    Methane Gas Levels Rising Catastrophically Fast, Abrupt Climate Change Now Initiating; via @AGreenRoad


    It is time for a global clean, zero carbon Marshal style Energy Plan, on an emergency basis. We need to switch to hydrogen, and FAST...

  • Bottom line, the emergency global response required by all large corporations and nations to address the methane gas production avalanche is compounded by the following issue.. Both need to be addressed at the same time, in an emergency manner. Otherwise, the global village that makes up humanity is just playing around and pretending, while sticking heads in the sand like ostriches.

    This is a much bigger issue, but it explains why no new nuclear plants should be built, and all existing ones should be shut down and dismantled now.

    Super Solar Storm To Hit Earth; 'Carrington Effect'; 400 Nuke Plants Will Melt Down/Explode; via @AGreenRoad


    A high quality GHG reduction plan should address both risks and what the organization is doing about them, such as buying no nuclear power, divesting all investment holdings of nuclear anything, and pressuring Congress.

    Will Microsoft lead the way?

  • I'd appreciate an contact from the author and anyone else interested in sustainability at Microsoft. My company, www.flowerturbines.com, makes a kind of small wind turbine that is perfect for rooftops of flat roofed data centers and similar buildings--so you can reduce your carbon footprint locally. The turbines start at lower speeds, and they have the characteristic that when placed close together, they improve their neighbor's performance. That means a better ROI per square meter. They also look beautiful and can sport a Microsoft logo on the exterior. Please contact me at flowerturbines@gmail.com.

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