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Microsoft Outlines Progress on Internal Carbon Price

Microsoft has used funds collected over the past six months from its internal carbon offset fee to invest in renewable energy projects, including wind, hydro and biomass, as well as provide grants to help drive efficiency measures throughout its operations, according to the software company.

Microsoft began charging an internal fee for carbon associated with the use of electricity and business air travel July 1, at the start of the 2012-2013 fiscal year. The company launched the carbon offset fee as part of a strategy to achieve net-zero emissions in its data centers, software development labs, offices and employee air travel, outlined in a white paper published last year (strategy logo pictured).

The offset fee has changed the accountability model and integrates carbon into the financial structure of the company, said TJ DiCaprio, senior director of environmental sustainability at Microsoft. As a result, departments planning future business growth have to consider the carbon fee associated with operations.

For example, the total cost to support a cloud service now also includes the carbon fee associated with its lifetime energy consumption, similar to how the company might plan for energy, support and management costs of the server, said DiCaprio.

The carbon price, which began low, was based on the blended costs of Microsoft’s current investments in clean energy, efficiency projects and carbon offset projects, said DiCaprio. The company’s governance council can allow the carbon price to increase over time to meet specific investment goals.

In an effort to reduce carbon and mitigate the incremental fee, Microsoft purchased Green-e certified renewable energy credits to offset its projected emissions for the first half of its fiscal year, said DiCapiro. The company also invested in select carbon offset projects in the US and internationally.

The company also has allowed its internal business groups to submit proposals for projects that support carbon reduction and increased efficiency. The grants were added after the carbon offset fee program began. Examples of grants might include metering, lighting retrofits, energy management programs and travel reduction initiatives, DiCaprio said.

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