Microsoft Carbon Fee

The Microsoft carbon fee is a voluntary carbon tax model that aims to accelerate the development of a global low-carbon economy. This first internal carbon fee model of its kind incentives businesses to reduce energy use and related carbon emissions, while creating a fund to directly invest in climate change mitigation within Microsoft. If the model can be successfully propagated across industries and organizations globally, its impact in reducing carbon emissions could be exponential.

Fast facts:

More than 1 million tonnes of carbon dioxide equivalent offset since 2012;
Investment in carbon projects to offset 600,000 tonnes of carbon dioxide equivalent;
15 energy efficiency programs funded around the world;
Renewable Energy Certificates for more than 3,700,000 megwatt-hours of green power purchased;
130,000 Microsoft employees involved.

The problem

In the last few years, Microsoft has transitioned to a cloud-based business model. As the scale of its cloud services grows, so too does the need for data centers and associated energy demand. Climate change presents significant risks to society, the environment, and to business. Access to low-carbon energy sources and investment into energy efficiency at data centers is more critical than ever.

The solution

Microsoft has implemented a carbon fee model that charges business units for their carbon emissions from travel and energy use, then reinvests the proceeds into energy efficiency, clean energy, and carbon offset projects. The program is designed to raise internal awareness of the environmental impact of business activities, and establish discipline at scale in support of a carbon-neutral commitment across the business.

Through the carbon fee model, business groups are charged a fee based on the emissions associated with their use of data centers, software development labs, offices, and business air travel. Emissions in more than 700 buildings covering 70 million square feet in more than 100 countries are tracked. The fees collected through the model go into a central fund used to support efficiency projects and reduce net emissions. The carbon fee model helps organizations quantify the carbon impact of their operations, and makes the individual business divisions that are responsible for producing emissions also accountable for the financial cost to offset them.

Helping the planet

Carbon savings are a quantifiable benefit of investments in carbon offset projects, and these investments directly help achieve targeted global reductions in greenhouse gas emissions. Not only does the model offset emissions, but it also supports the development of renewable energy sources, addressing the broader environmental footprint. In addition, ecosystem protection associated with carbon offset has supported planted trees in regions with endangered flora and fauna, contributing to their conservation.

Helping people

The Microsoft carbon offset project portfolio spans 15 countries and reaches more than 299,000 people, who benefit from a range of initiatives including health and immunization programs, more sustainable agriculture, new income streams, educational programs, and energy initiatives such as solar lighting.

Spillover effect

Microsoft designed the carbon fee model to be simple and replicable, so that experiences could ultimately be shared to help private and public organizations around the world to adopt similar models. Publishing of several white papers helps toward that end. Awareness will expand both through the ripple effect that naturally occurs with awareness building within the organization, and through further adoption of this model by other organizations. By funding investments in carbon offset projects, the model has even broader reach. In addition, Microsoft is currently building a technology solution to help track and report on greenhouse gas emissions and manage our carbon fee model; once this solution is successfully in place, it will also be shared.