Carbon fees to fund a low carbon future

Microsoft's model to offset its carbon footprint is simple. Very simple. So simple, in fact, that the company has even published the Carbon Fee Playbook, a guide to encourage other businesses to easily implement the same system.

At Microsoft, each tonne of CO2 released into the atmosphere from its data centers, labs, offices, manufacturing plants and air travel has a corresponding fee, which ranges between US$6 - 7 [1], depending on the internal carbon price set each year as part of the company’s total investment strategy to reduce carbon emissions. The carbon fee is a self-imposed tax that is revolutionizing behavior across the company, tying accountability to the actions of every employee at Microsoft. The carbon fee is charged quarterly to each organizational division within the company, who then pay it from their own budgets. [2]

The fees collected through this model are then invested in a variety of initiatives, such as purchasing renewable energy from the 110 megawatt Keechi Wind Project in Texas, analyzing data to further develop internal energy efficiency, or strengthening biodiversity in Madagascar to offset carbon pollution while improving the living conditions of local communities and contributing to the preservation of threatened ecosystems. [3]

Thanks in large part to this model, Microsoft has been making good progress toward its carbon neutral goal launched in 2013.[4] At the same time, the company has been able to strategically prepare for future costs from potential governmental regulation of emissions. Such regulation, according to Rob Bernard, Microsoft's chief environmental strategist, will come and preparation for them should start now.


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