Microsoft’s renewable energy plan laid bare

Microsoft has signed a global renewable energy framework with asset management giant Brookfield. The deal, estimated to be worth $10 billion and believed to be the largest Power Purchase Agreement (PPA) ever signed, gives Microsoft a potential 10.5 gigawatts of renewable energy capacity.

So why has it racked up such a huge bill? Here, we explain how it fits into the company’s long-term vision.

Microsoft’s transparent plan to decarbonize

Microsoft has ambitious plans to reduce its carbon footprint. By 2030, it aims to be carbon negative; by 2050, it hopes to have removed all the carbon it has ever emitted (or electrically consumed) since its foundation in 1975. 

Its three tools: carbon dioxide removal (CDR), carbon capture and renewable electricity.

CDR is the process of removing CO₂ that’s already present in the air. And the methods employed have wildly different levels of success. Some CDR is trapped directly from the air whilst more “traditional” methods involve forest restoration to store the carbon in tree biomass.

Microsoft publishes an annual report of CDR observations that give a strikingly honest reflection of its initiatives. The document even makes suggestions regarding the funding, reporting and methods of CDR strategy as a whole.

The company’s second objective is to reduce carbon emissions, either by emitting less carbon or using the many methods that fall under the umbrella of CCUS – Carbon Capture Utilisation and Sequestration.

If you’ll allow me to oversimplify this fantastically complicated process to flippant levels, then all Microsoft has to do is grab hold of any carbon emitted before it reaches the outside world and then store it somewhere where it won’t escape until we work out what to do with it. It won’t take you long to realise that CCUS is both phenomenally complex and controversial.

Related: A greener supply chain is possible, but it will take cooperation

We need to talk about Carbon Capture

Let’s start with the controversy. A 2022 report from the Institute for Energy Economics and Financial Analysis stated that captured carbon has mostly been used to enhance oil production. Worse, that exceptions in CCUS regulation serve the fossil fuel industry, leading to further emissions.

Then came a 2023 report from the World Resources Institute. This revealed that most CCUS systems don’t capture 100% of emissions, the powering of other CCUS systems emit more carbon than is captured, and that often CCUS systems used can’t be mass produced because they’re bespoke to the facility where the CO₂ is captured.

You will perhaps understand why many people don’t consider Carbon Capture Utilisation and Sequestration to be the silver bullet.

Microsoft states that we’re quickly approaching the crunch-moment where action is required if the 2050 carbon reduction targets have any hope of being met. In its independent 2023 report, The State of Carbon Dioxide Removal, Carbon Gap estimated that our current CDR capacity is only 2,000 million tonnes. This is a long way short of the estimated 6 billion metric tonnes per year that Microsoft is targeting to limit global warming anywhere close to 2°C by 2050. 

Whichever way Microsoft jumps in terms of CDR or CCUS – or that any other company jumps – the outcome is uncertain and the planet’s clock is ticking.

Microsoft’s third objective is renewable energy. If you’ve got this far, thanks for holding on.

Why is Microsoft investing in renewable electricity?

Renewable energy sources are key to Microsoft’s decarbonisation strategy. It has stated a desire that 100% of its electricity consumption is “matched” 100% of the time by zero-carbon energy purchases.

One driver behind Microsoft’s investment with Brookfield is that the global current capacity (or capacity for current… I’m here all week) for renewables does not allow Microsoft to reach its targets, and it needs more. Much, much more.

Running alongside all its environmental exploits is Microsoft’s strategy to be a cloud-first business. The energy required to power the data-driven future which Microsoft wants to sell to us is increasing rapidly, in part thanks to AI technologies like Copilot.

The World Economic Forum has also noted “with heavy reliance on data centres and high energy use, AI can also leave a high carbon footprint”. As much as Microsoft wants to be part of the decarbonisation solution, the energy and resources required for it to become a global tech leader have had, and continue to have, a detrimental effect on the health of our planet.

Related: How will Dell address sustainability challenges?

Will renewable energy power Microsoft Copilot?

Certainly not yet. Microsoft’s deal with Brookfield is about investment in creating renewables, not an instant on-tap for solar power. By securing a multi-year PPA, however, it should be able to bring the additional energy capacity into use at a fixed price.

Until then, Microsoft is using Renewable Energy Certificates (RECs). These are yet another controversial offsetting strategy that allows the use of non-renewable energy sources. Critics of REC say that they do nothing to add to the pool of available renewable energy. 

Once Microsoft’s PPA deal with Brookfield generates power, however, its reliance on RECs should diminish.

And let’s not be too harsh. Microsoft’s deal shows that it is willing to invest in renewables to reduce its carbon emissions – and it shows a frank openness about its bigger challenge.