Microsoft’s pursuit of climate goals faces headwinds

Microsoft has an ambitious plan to reduce its carbon emissions. But on Thursday, the company reported a sharp rise in greenhouse gases emanating from its operations and products, a reminder of the challenges companies face as they try to clean up their businesses.

Microsoft’s carbon emissions increased 21.5% in the 12 months to June 2021, following slight declines in 2020 and 2019. The increase was almost entirely due to emissions from energy used to build data centers and make devices – like the Xbox and the Surface tablet – and how much power Microsoft estimates its products consume when people use them.

Microsoft sought to show that with committed leaders and sufficient funding, companies can effectively reduce their emissions to net zero in the years to come, bolstering international efforts to limit rising global temperatures. But the increase in Microsoft emissions suggests that Microsoft and other companies may struggle to meet their targets. And since the increase is the result of strong product demand, it reminds us that robust business growth can often mean releasing more greenhouse gases into the atmosphere.

Yet Microsoft executives say they can be “carbon negative” by the end of the decade, cutting emissions and using a variety of measures to remove carbon from the atmosphere. “We remain absolutely committed to delivering on – and absolutely confident in our ability to deliver on – our 2030 commitment,” said Lucas Joppa, Microsoft’s chief environmental officer.

Many large companies have some sort of plan to reduce their emissions, and they face pressure from shareholders to do more. Investors have also pressed oil and gas companies to switch from fossil fuels to renewables.

Microsoft is the first major tech company to report progress on its sustainability efforts this year. Apple, Google and Facebook’s parent company Meta all aim to bring their carbon emissions to net zero by 2030. Amazon, which has an extensive delivery network and much longer supply chains, has aims to do the same in 2040.

“None of this will be easy for any company — decarbonization is a challenge,” said Laura Draucker, director of Ceres, a nonprofit group that works with investors and businesses to address environmental challenges. But when big tech companies like Microsoft report rollbacks on their emissions, she added, that should spur them to jointly push for policies that promote “affordable and equitable access to clean energy.”

“It has no impact on their competitive advantage,” she added.

In a new move, Microsoft said Thursday it will no longer do specialized work for energy companies involved in fossil fuel extraction unless they have a “net zero” goal. The term means having zero carbon emissions overall, a goal that companies generally hope to achieve through a combination of reducing emissions and eliminating carbon.

And Dr Joppa said recent disruptions in oil and gas markets had not convinced him of the need to slow the move towards renewable energy sources. “I would say I haven’t seen anything that convinces me that we should do anything other than keep going faster,” he said.

Microsoft is also actively working to advance its climate agenda beyond its own operations. When the Securities and Exchange Commission asked the public for their thoughts on how corporate climate change disclosures could be standardized, Microsoft said it would support the commission’s development of such disclosure rules.

Government moves to push companies to adopt climate policies could meet with some resistance in Washington, especially as soaring energy prices caused by Russia’s invasion of Ukraine have led to calls to the intensification of oil and gas production.

“Private companies are free to pursue net zero policies regardless of their meaning – as long as they follow the law, it’s not a matter of public policy,” said Katie Tubb, senior policy analyst for the energy and the environment at the Heritage Foundation, a conservative political group, in an email. “More concerning are policymakers who attempt to use government force to pressure or even demand such efforts in the private sector.”

In theory, Microsoft’s huge profits give it the means to achieve its goals. And the company has been successful in reducing emissions from its own operations and the electricity that powers those operations, known as scope 1 and scope 2 emissions in industry jargon. These have fallen 17% in the 12 months to June, and with larger purchases of clean energy and efficiency measures, the company aims to reduce these emissions to near zero by 2025. , a goal Dr. Joppa said Microsoft still expects to achieve.

It is much more difficult to reduce Scope 3 emissions – those from a company’s supply chains and its customers. Microsoft’s Scope 3 emissions are nearly 50 times greater than Scope 1 and 2 emissions combined, and they increased 23% in the year to June, after slight declines in previous years. The jump came from three main sources: the energy used to build data centers; power consumed by suppliers; and the energy expended when customers used Microsoft devices, which exploded as the pandemic boosted Xbox usage.

Even so, Microsoft is aiming to more than halve its Scope 3 emissions by 2030. The company said Thursday it is working to reduce carbon emissions from construction and make its devices more energy efficient. .

And by removing millions of tons of carbon per year from the air, Microsoft hopes to reduce its total emissions to zero or less on a net basis by the end of the decade.

An important factor will be the rapid development of carbon removal technologies, which operate on a small scale and are expensive. Reforestation is currently Microsoft’s primary carbon removal method. The company said it has contracts for 2.5 million metric tons of carbon removal, but that’s only 18% of its carbon emissions in the year through June. Dr. Joppa said Microsoft could achieve its goals even if technology that removes carbon directly from the air doesn’t work.

But Dr Draucker of Ceres said that even if carbon removal were used more, companies would have to reduce the emissions they generate.

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