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Why Microsoft uses the term ‘net zero’ carefully

Microsoft France headquarters

The French headquarters of Microsoft in Issy Les Moulineaux, France, in October.

HJBC

When Microsoft issued its groundbreaking request for proposals seeking 1 million metric tons in carbon removal projects in July 2020, it was bombarded with potential ideas and offers it could invest in — adding up to more than 1 billion metric tons of supply. A sign for optimism, right?

The company was surprised to discover, however, that the vast majority of those initiatives were focused not on actually removing carbon dioxide through natural or technology solutions. Instead, many proposals prioritized "avoided emissions," schemes or products that offer to reduce or avoid emissions but are notoriously difficult to verify, said Microsoft Chief Environmental Officer Lucas Joppa during an interview at last week’s VERGE Net Zero event. 

Just 1.5 million metric tons were dedicated to what the Microsoft team deemed as true and verifiable removal mechanisms, and the software company purchased a large majority of them, he estimated. 

Microsoft’s dilemma underscores the very real challenge that companies face as they move to deliver on net-zero commitments. It’s not enough anymore for a business to only zero out its own emissions during a given year. The corporate sector needs to move quickly to address its debt. And yet, 90 to 95 percent of the carbon offsets available on the market today are for avoided emissions, "where the purchaser is really paying for an activity that may not happen if they pay that money," Joppa said. 

Because we don't have that shared definition of what net zero means, it means that we have dysfunctional markets as well.

"I would argue that paying somebody to avoid emissions is an important and valuable way that the world is going to reduce its overall emissions," he said. "And from an organizational carbon account balancing, you can see how that balances out, it could balance out your books. You take carbon off of somebody's books, you accredit it to yours and everything's equal. But from a global carbon ledger, there's still carbon going into the atmosphere. That's not net zero. And so we have this logical inconsistency, where we're calling things net zero that are still adding carbon into the atmosphere. And so while it works at an organizational level, it doesn't work at a global level."

As skeptical environmental governments and research organizations have reported, there aren’t enough high-quality offsets in existence to meet the corporate demand generated by the flood of net-zero commitments. And some nature-based solutions aren’t necessarily as durable as the buyers anticipate. 

The potential to get burned is very real, literally. The first project listed in Microsoft’s detailed white paper about its carbon removal processes is for 240,000 metric tons contracted with forest company Green Diamond. The durability of those offsets was estimated at 100 years. But some of that land, known as the Klamath East carbon offsets project, is among the more than 400,000 acres engulfed by the Bootleg wildfire in Oregon raging right now.

Why Joppa didn’t address the fire explicitly during his keynote interview, the incident underscores the fragility of nature-based solutions, such as forestry projects or regenerative agriculture, that are vulnerable to the accelerating effects of climate change.

During his remarks, Joppa outlined what he believes to be three biggest obstacles to achieving a "zero economy" by 2050: The meaning of the term, how it’s measured with traditional accounting tools and the uneven markets available to innovate toward that future.

"Because we don't have that shared definition of what net zero means, it means that we have dysfunctional markets as well," he said, in response to interviewer Akshat Rathi, a reporter with Bloomberg. "You mentioned somebody would go and buy a carbon offset and use that to zero out their carbon ledger of their organization’s carbon books. The thing is that not all offsets are created equal, not all avoided emissions offsets are created equal, and paying somebody to not emit carbon is not the same as removing carbon but they are sold as the same asset."

That’s a problem, Joppa noted, because it’s cheaper to "pay somebody not to do something generally than it is to pay somebody to do something. Because of that, we are not accelerating one aspect of the offset market, the carbon removal aspect, anywhere nearly as quickly as we should because why would an organization, unless they were extremely committed … go out and pay more for an identical outcome?"

Why indeed.

[Learn more about new strategies and technologies to draw down climate pollution while creating innovative products and services at VERGE Carbon, part of the VERGE 21 online event.]

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