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Microsoft CSO: We can’t do this alone

Melanie Nakagawa reveals how the software giant is stepping up its support of policies, partnerships and innovations to clean up the electric grid — in the U.S. and abroad.

Helion Polaris coil

The Polaris coil from Helion's fusion system. Courtesy of Helion Energy 

Microsoft CSO Melanie Nakagawa has only been on the job a few months, but she’s clear on her top priority for 2023: confronting roadblocks that stand in the way of clean grids.

"Microsoft is in company with so many other companies … where we have set ambitious goals, we have a 2030 goal, some have later goals," Nakagawa told me when I spoke with her about the company’s updates. "And this middle moment that we’re in, which is really about implementation, is really focused on what we could be doing together with other partners. Because as you focus in on what we could be doing on Scope 1 and Scope 2, the chips fall on Scope 3."

In a blog published Wednesday alongside the company’s latest environmental sustainability report, Nakagawa noted that while its overall business grew 18 percent year over year, the company reduced its greenhouse gas emissions by a much smaller amount: 0.5 percent. That percentage includes Scope 3; for Scope 1 and 2, Microsoft managed a 22.7 percent reduction. Still, that’s an improvement over last year’s analysis, when the company reported an increase in overall emissions.

Melanie Nakagawa

Melanie Nakagawa

"Meeting our company’s carbon negative commitment is intricately interdependent on the world transition to clean energy infrastructure," Nakagawa wrote. "Our paths will be similar, and progress will appear slow until the foundations are set in place. Like training for a marathon, it will take focus, planning and perseverance to reach the finish line."

That means we can expect more unique collaborations in fiscal 2023, such as Microsoft’s three-month-old relationship with solar company Qcells, and more bold bets on new sources of zero-carbon power — exemplified by Microsoft’s new contract disclosed Wednesday to buy power from Helion Energy’s first fusion power plant when it comes online in 2028. The plant would eventually offer at least 50 megawatts of generation capacity.

Saying yes to fusion energy

Microsoft announced its carbon negative commitment three years ago, and it has used a vast combination of initiatives, strategies and investments to jog its way forward. Like the other large cloud computing companies, it has been a voracious buyer of clean energy through power purchase agreements — in fiscal year 2022, the company signed contracts that bring its total procurement to 13.5 gigawatts. According to BloombergNEF, Microsoft was the third largest corporate buyer of renewable energy in 2022, after Amazon and Meta.

Microsoft has been relatively power-agnostic, so long as the source can contribute to its aspiration of running on local, zero-carbon power sources on a 24/7/365 basis. Fusion power, one of the most active areas of nuclear power experimentation, is created when two atoms collide — it’s the process by which the sun’s energy is created. Helion, based in Everett, Washington, is building its seventh prototype system. It last raised money (publicly at least) in November 2021, a $500 million in Series E backing along with $1.7 billion in additional commitments for reaching certain development milestones.

While the specifics of its deal with Helion weren’t disclosed, Baltimore-based Constellation Energy will manage the relationship, and a Microsoft spokeswoman said the electricity will power certain Microsoft data center facilities. Microsoft announced a five-year-long strategic collaboration with Constellation in March 2022. The energy company uses a combination of renewable, clean energy, battery storage, fuel cells and hydrogen to provide zero emissions electricity. Microsoft and Constellation are working on a carbon accounting system that helps provide a verified, real-time view of emissions data.

Given its stature as an enterprise software company, Microsoft is leaning into initiatives and alliances that can improve carbon accounting practices, Nakagawa told me. Alongside its environmental report, the company this week published a white paper detailing how its own teams handle this task. 

Speaking up for clean grids

Another priority in the year to come: investments and engagements — with utilities, governments and power authorities — to encourage acceleration of the transition to cleaner electric grids.

Nakagawa, who was special assistant to the president and senior director for climate and energy on the National Security Council at the White House before coming to Microsoft, said the company’s policy team will work closely with regulators and utilities to encourage upgrades to transmission infrastructure and updates to permitting policies that are needed to connect more zero-emissions generation sources with the electricity grid.

It’s important to understand what the roadblocks are, what are the challenges that companies are facing, where these associations are leveraging their voice and using their voice.

One region receiving particular attention is Southeast Asia. Microsoft’s Climate Innovation Fund, which will invest up to $1 billion in climate technologies, is a backer of the Southeast Asia Clean Energy Facility (SEACEF). The program is working on early-stage "high-impact" clean energy projects.

You can also expect to see Microsoft engage more actively in India and other "places that we really want to see cleaner grids moving and that we are excited about and that might have the start of a commitment or a project in place that we might want to harness," Nakagawa said.

Microsoft is among the most vocal corporations when it comes to supporting clean energy policy, and it was one of the few climate-forward companies to publicly support the Inflation Reduction Act. But its affiliation with the U.S. Chamber of Commerce and its longtime oil and gas practice often raise eyebrows among the climate community. When I asked Nagakawa for her position, she said Microsoft has a responsibility to listen to all voices on the clean energy transition.

"It’s important to be part of the conversation with many of these coalitions," Nakagawa told me. "It’s important to understand what the roadblocks are, what are the challenges that companies are facing, where these associations are leveraging their voice and using their voice. … It’s an active conversation within Microsoft on assuring that we are using the voice for our customers, ourselves and our business, and make sure we are representing that in the truest way possible."

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