Microsoft Climate Fund Backs Climeworks Effort to Suck Up Carbon

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Microsoft Corp. said its climate fund will invest in Swiss carbon-removal startup Climeworks AG, and that the company will base executive pay partially on meeting sustainability goals. 

Microsoft will back Climeworks’ current project in Iceland to increase the scale of that company’s ability to suck carbon out of the air and pump it deep into the earth, as well as the company’s next project at the same site. Climeworks uses giant fans to capture CO₂ from the air. In some cases it sells the concentrated gas, marketing it to beverage companies and plastic makers.

“We like the fact that they are not only thinking about capturing it from the air but how to use the carbon dioxide that is recovered,” said Brad Smith, Microsoft’s president and chief legal officer, in an interview. “If we get this going in Europe it may be able to move faster because we see more customers and businesses there wanting to purchase these kinds of services.”

Starting in July with the new fiscal year, Microsoft will make the change to executive pay criteria, joining companies like Apple Inc. 

One year ago, Microsoft pledged to be “carbon negative,” meaning it will remove more carbon than it emits, by 2030 and to remove all the carbon the company has ever emitted by 2050, one of the most aggressive corporate climate goals. To get there, the software maker set up a $1 billion fund to back climate innovations and is paying companies that run CO₂ sucking projects to remove millions of metric tons of carbon using a system of credits. 

The fund also made an investment in South East Asia Clean Energy Facility,  a partnership between foundations like Sea Change and the David and Lucile Packard Foundation, in order to promote projects in emerging markets. It’s also backing Congruent Ventures, an early-stage firm that invests in removing carbon from sectors like energy, transport and agriculture. 

Microsoft said it worked with 15 different suppliers during this fiscal year—including Climeworks—to purchase carbon offset credits equivalent to 1.3 million metric tons of CO₂, which it says helped fund 26 projects around the world. Microsoft received proposals for 55 million tons worth of credits and will publish those in order to boost transparency in the market. But Smith flagged the lack of a uniform way to measure carbon removal — Microsoft thinks it used a conservative method. 

“We made good progress, but until we have standardized measurements there's this risk progress will look better than it is,” Smith said.  

In considering what projects to support, the company looked at both natural options, things like forests, and technological ones, like Climeworks’ Direct Air Capture, but there are more of the former available at present. Company officials in April told a consulting group advising Microsoft that it prefers options that are lasting and verifiable. Because of what was available, Smith said, Microsoft picked mostly natural options with short-term impacts, which he identified as a weak point in the company’s work so far. 

Some programs that plant trees or preserve existing forests have drawn criticism. One project Microsoft has backed in the past in Peru has run into conflict with local indigenous populations. The projects selected this year include one in Washington State’s coastal rainforests run by The Nature Conservancy, and a Bloomberg Green article last month raised questions about other projects that group sold that related to land that was never threatened.

Another project Microsoft selected this year looks to restore wetlands in the southern U.S. and is managed by GreenTrees, an outfit that Bloomberg found last month is taking credit for trees that were already planted by farmers as part of government conservation programs. 

Microsoft’s Smith said the company is trying to make sure it funds projects that add new trees or new protections for ones that could be cut down, and that it plans to audit and track the programs it backs. 

“We have focused hard on trying to make sure things are additive — additive should principally consist of planting trees that would not otherwise be planted, but we’ve added this dimension of securing a contractual commitment and providing technical assistance so that a tree won’t be cut down for a longer period of time, and then having reporting requirements and compliance regimes,” Smith said. 

“This was like a both a giant leap and a small step,” he said. “This is a giant leap to do something no one has done before, it is an incredibly small step compared to what needs to be done.”

©2021 Bloomberg L.P.

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