 Good morning, good afternoon, and good evening to all our viewers from around the world. Thank you all for joining us today for the Stanford Global Energy Dialogue. Sally Benson and I will co-host this dialogue. So let me start by framing the discussion. One of the most striking features of today's energy and climate landscape is how the corporate world is making climate commitments and thereby using its role, the influential role in society to address climate change. According to a study by the natural capital partners, as of September 2019, roughly 25% of Fortune 500 global companies had made some kind of commitment with 2030 or 2050 goals. Of the $32 trillion of total revenues of Fortune 500 companies, companies once that have made the climate commitments add up to about $10 trillion, roughly half the US GDP, and these companies employ 18 million people. By all means, this is a massive movement which is likely to grow in the next decade. What impact will this have on the world? Will these corporate actions have a positive or negative effect on social equity, labor, and other social aspects of this energy transition? And will it move the needle on the global carbon footprint? Sally? So thank you Arun and hello to everyone here. To address these issues, we are so fortunate to have a very special guest, Dr. Lukas Jopa, the first chief environmental officer of Microsoft. Lukas received a PhD in ecology from Duke University in 2009 and joined Microsoft where he started AI for the Earth program in 2017, a five-year $50 million cross-company effort dedicated to delivering technology-enabled solutions to global environmental challenges. Under his leadership and that of his CEO Sachin Adela, Microsoft announced that by 2030, it would be carbon negative on an annual basis, and it would be carbon negative on an annual basis by 2050. I'm sorry, it would by 2050 remove all the carbon that it had ever emitted into the atmosphere since 1975 when it was founded. Microsoft also started a $1 billion climate innovation fund to accelerate global development of carbon reduction, capture, and removal technologies. Now to warm everybody up, we'd like to start with our first poll. So if you could pull that up, that would be great. Okay, so according to Microsoft, how many millions of tons of carbon does it expect to emit this year? Four million tons, eight million tons, 16 million, or 32 million? Okay, we'll give you a little bit of time. Okay, all right. Oh my goodness, you're all too smart. That is in fact the right answer. 16 million tons. I'm kind of guessing some people might have googled that actually. Anyway, these emissions fall into three different categories. Scope one emissions are the direct emissions you emit, for example, when you drive a car, a gasoline car. Scope two emissions are those indirect emissions that come from the production of electricity and heat that you use. And scope three emissions are the indirect emissions that come from all of the other activities that you're engaged in, including emissions associated with producing the food you eat and manufacturing the products you buy. So that's going to set up our next quiz. Okay, if you could pull that. So again, according to Microsoft, roughly what fraction of Microsoft's emissions are scope three emissions? 26%, 49%, 67%, or 75%. Wow, okay, we had a real divergence of opinions. The largest was 49%, it looks like, followed by 75%. So the real answer is 75%. And I think this is something that surprises everyone because if you look at your own emissions, at least for me, my scope three emissions are certainly the largest single source of emissions. And what's tricky is, is they're hidden from us really. So now let's move on with the dialogue. I just also like to say that Rebecca Grekin, graduate student at Stanford University, will also be joining us in this dialogue soon, and Arun, back over to you. Well, thank you, Sally. Lucas, welcome and thanks for joining us. We will go into the details of scope one, scope two and scope three emissions, but before we do that, maybe you could explain to all of us the principles that you developed to in underlying the Microsoft commitment, the rationale behind its timing and its outlook. And maybe you could also connect the dots between your energy, climate, water and waste goals that you have comprehensively put together. Yeah, I'd be happy to. Thanks for having me on the conversation. It's an important one. I tried to participate in the poll, but I found out that panelists weren't allowed to participate. Otherwise, I would have hoped we would have scored higher on that second question because this is something that we pay a lot of attention to Microsoft. So just to set the scene, I think a little bit from our perspective in Microsoft on sustainability, we'll get into all of this, I'm sure, in the conversation at the highest level, though, we ask ourselves or we think about our business through a simple need, which is that if Microsoft's going to do well, we need the world to do well. And so then we go out and we look at things that might stop the world from doing well. And as soon as you start looking through that lens, you immediately identify, even if you're in the private sector, even if you're just a company making stuff and selling stuff, you immediately identify that climate change is one of, if not the single top issue that will stop the world from doing well moving forward, economically, socioeconomically, and from the perspective of growing the overall human experience. And so that's why we're focusing on sustainability because the world needs it and we need it. When we stepped back about a year ago, we've been looking at investing in sustainability for quite a while, but we stepped back about a year ago and we asked ourselves, are we doing enough? Are we up to date with the best available science, etc? And what do we truly need to do to do our part to ensure that the world does well so that Microsoft can do well? And what we came back with was, we were quite proud of what we'd achieved, but it was pretty clear, like anybody who's introspective about sustainability and climate challenges that we weren't doing enough, we decided to really double down on the issue. We put together a new strategy focusing on what I think of as kind of the four pillars of environmental sustainability and climate moving forward, carbon, water, waste and ecosystems and the biodiversity that those ecosystems are comprised of. And over the past year, we've worked to set ambitious commitments in each of those four areas. We can talk about them and I will talk a lot about carbon, but those four, the commitments that Microsoft has set are that by 2030 we will operate as a carbon negative, water positive, zero waste company that's building the foundations, the technology foundations of what we're calling a planetary computer platform, so that we can better monitor model and then ultimately manage those natural systems because that's at the root of the problems that we're facing today. So that's the broad sweep of what we're looking to do on sustainability at Microsoft and carbon, we led with carbon and our carbon negative commitment because it really is that first order consideration that we all have to focus on if we are going to do what we need to do, which is stabilize our climate systems. Sally? Okay, thank you. So let's dig in a little deeper on some of your plans. So to reduce your scope one and scope two emissions, Microsoft will transition to 100% renewable energy by 2025. And the question is, is this 100% renewable every second of every day, of every year, sort of measured on a gigawatt basis, or is it 100% renewable energy on an energy basis where you allow yourself to take credit for offsets as an example? Sure. It's a great question. And so scope one, I'll get to scope two in a second. Scope one is, you know, by over the 16 million, we're at about 100,000 is our scope one. And one of the things that we're doing is, even though that's small for us, investing quite a lot to drive that down as close to zero as we can. So one of the commitments that we made as part of our carbon negative commitment is to actually completely electrify our campus vehicle fleet, for instance. And that ties into this broader idea of electrification and the procurement of that electricity or that energy through low to no carbon sources, or often what people would think of as renewables more broadly. And as part of that, as you mentioned, we have set this commitment to move to 100% renewable energy powering our entire global business by 2025. So what does that actually mean? And am I satisfied with it? Should the world be satisfied with it? I would say that I am satisfied with it as much as I can given where the world is today, but it's not, you know, what the world should be satisfied with moving forward. And that's because independent of, you know, how people, different people's strategies on how they procure renewable energy, what we need to be moving towards is ensuring that 100% of the electrons that enter our facilities come from zero carbon energy sources 100% of the time. And to be super clear, that's not what's happening at Microsoft. And that's not what's happening anywhere. Because for that to happen, you need one of two things to happen. Either you need to be directly connected to renewable energy generation, solar, wind, hydro, that's, you know, piped or cable directly into your operations. And you need backup energy storage to be able to ensure that you're able to still store and then utilize that energy as you, as the renewable energy generation flows. Or you need 100% renewable powered grids. And there's not much, there are no 100% renewable powered grids. And nobody with 100% renewable energy goals is doing that entirely through directly connecting to renewable power generation. And so what happens is you go and you, you do these deals, these direct power purchase agreements, where you agree to purchase an additional, additional amount of energy, or you agree to match the amount of energy that you are consuming every year, you commit to purchasing that same amount of energy and bringing that onto the grid, where it's then mixed, right, with all the other electrons. So it's not like the 100% renewable energy that you bought is 100% of the time coming into your facilities. But it's an important path on the route to what I think is the most sustainable resilient of those two options that I presented, which is greening the grid, ensuring that you have a zero carbon grid. And so that's what we do. That's what we're working on. The question then is annual versus, you know, out daily hourly minutes. What we've been working on is trying to move towards a world where you're able to use technology to match energy consumption with renewables on the grids, you know, minute by minute, we had a pilot that we, that we rolled out with Bot and Fall, doing that where you could call 24 seven matching tool that allows consumers or your users to do that themselves. But it's, but it's tricky business because you have to, you know, of course, know when all that energy is coming on, be able to secure those contracts, right, those contracts complete the, you know, close those contracts all on the spot market. But, but it's all work that's underway. Yeah. Well, that's terrific. That's a great, great discussion of the issue. And, and I agree, it's really hard to second by second have, you know, 100% clean energy. But, but I think raising awareness of these issues is really constructive. And, you know, we all know where we're heading. So thanks for that. So everyone back over to you. You're Lucas. So as we know, building energy efficiency is a big deal, because you want to reduce the overall consumption of building so that your renewables are actually catch up or keep up. So Microsoft announced as part of your goal is that your Silicon Valley imputed sound campuses will have buildings that will follow the lead platinum rating certification and zero carbon certification from the International Living Future Institute. So as you may be aware, lead ratings are really only for design. And there are lots of data out there that when you actually go and measure the performance of lead rated buildings with lead platinum lead gold, they have very little correlation with the actual rating. And so the question is, will you be measuring the performance of these buildings? Will you be disclosing? Will you be, you know, reporting that it actually meets the lead standards? Yeah. So first, you know, we will be ensuring that they meet the lead standards, I think, but that doesn't get to your, your ultimate concern. You know, that's, that's not your ultimate concern. Um, look, I'll give you a longer answer. But the short answer is that I think that these certifications like lead have played and will play an important role in providing the directional signal in which we need to go and some of the design standards that can help accelerate us on that path. But if we are going to properly stabilize our climate systems, it's going to require a true accounting of our carbon emissions and removal. And to do that, we are going to have to move away from estimates and towards actuals. What you're saying is these lead standards are really an estimate and they're not a good estimate, right? Um, I'm not going to, you know, defend or deny the lead standards. It's not going to be my hill to, uh, to die on, but I do think that the design standards make play an important role. But that, to your point, cannot be where things stop. You need them to actually measure the outcome because that's what the, you know, the intent of the whole thing was in the, in the first place. And then you need to both manage against it to improve the outcome and report against it so that people can understand your progress on both of those issues and, you know, you ask, will we? And the answer is yes and yes. So on the reporting side, we do include all of our building-based emissions and you're right, buildings account for something like 40% of global emissions. Um, there are huge wedge in the, in the emissions, uh, in the emissions pie that we need to work on. And we need to be transparent about the progress that we're making there. So as part of our reporting, um, longstanding reporting, we disclose all of our scope on two and three emissions and, and then the categories of those emissions, um, as part of the CDP platform, which is many of you are, are well familiar with kind of an industry standard, private sector standard reporting platform for disclosing carbon emissions. But we're also working to digitize and then, um, and then better manage the, the buildings that we operate. So we have like 33 million square feet or something like that of real estate around the world, 600 locations, 112 countries. Here in Puget Sound alone, we're doing a two and a half million square foot, uh, construction project. And so when we think about how we manage all of that, we really you, we, we have some principles, some design standards, and we also have some tools that can help us meet our objectives. So the design, the, the, the principles really kind of come in three tiers, which is if you have a project less than 75,000, uh, square feet, we have about 34 design principles that are intended to put you on path to a low carbon, um, outcome. If you're above 75,000 feet of a remodel or something like that, you're required to achieve, um, uh, lead gold and many more internal design standards. And if you're doing any new construction, then you need to build to lead platinum, something like close to 50 internal design standards and ensure that you're aligned with our overall carbon negative goals. And you can do that with some of the tools that we've, that we've developed. And so, you know, we have a, um, we have a smart buildings platform that we use ourselves. We, you know, we put into the market, but we're a customer of it ourselves. It's, it's reduced using that tools reduced our building, uh, energy consumption 25%, um, over the past couple of years already. We also have a tool called the EC three tool that was, um, developed in partnership with a construction partner, Skanska and the University of Washington here, uh, locally at our headquarters. And what the EC three tool is for is for estimating the embedded carbon in all of the construction materials that you're using so that not just you, but all of your, your general contractors and everyone else can truly understand not just the financial cost of the materials that you're selecting as part of your procurement process, but the environmental and the carbon costs of those choices as well, because that opacity, that carbon opacity in the markets is really what has stopped well intentioned people, I think, from being able to achieve the, the, the aspirations that these lead certifications represent. Well, this is fabulous because I think as, as you know, the building industry, the construction industry is highly fragmented and it needs a building owner and enterprise to really drive the integration across all this fragmented segments. And I think what you're doing is absolutely fabulous. I mean, don't, don't get me wrong. I'm, you know, this is really applying your efforts, but also raising the bar, frankly, because as I said, I mean, the lead rating as, as you said also the lead ratings are necessary, but not sufficient. And I think if you could raise the bar for enterprises of reporting, which is only required by the way in New York City and a few other places, most of the places you don't even know what the buildings consume. So I think that setting the bar for enterprises really would send a signal to a lot. And I don't know if you plan to open up your codes and, you know, your, your tool box to, you know, for smart buildings, et cetera, for as openly, if you, I don't know if you plan to do that, but if you do that, I mean, that really enables a lot of other people to do so as well. Yeah. And that, I mean, so that, that tool is obviously out there and kind of the commercial market. The EC three tool is open and shared widely. I think this gets to something that is really important to me because I spend a lot of time thinking about the practical logistics of how you take, you know, these sorts of conversations are, how do you take an aspiration like carbon negative and implement it on the ground? And it all sounds kind of easy and straightforward. And I love myself a whiteboard as much as anybody. But the issue then is, okay, how do you actually, I mean, we've all at least driven by, if not been on, you know, construction sites, if you've ever, you know, been more deeply involved, and this is far from my area of expertise, but you see how complicated it is. You see the many, the contractors, the subcontractors, the general contractor, then ultimately the owner, you know, that is, that is driving the whole thing. And everybody can be well intentioned. But if the systems and the processes aren't in place, it makes it really difficult for people to make the right choices all the way down the line. And so it's really important that we integrate that into, of course, the upfront mandate of a project. But it's also important that we implement it in the processes through which the project will be implemented. I think that, you know, we often kind of forget that second step, and then we become discontented with the outcome, which, you know, you're representing on the kind of the lack of correlation. And I would, I guess all I'm saying is I would highlight that I think, I don't think that scatter plot that you sometimes see between, you know, lead certification and energy efficiency is a result of people not wanting to see the full outcome. I think it's oftentimes a scarcity of tools and an underinvestment in the process, not the ambition. Thanks, Sally. Okay, let's move on to one of my favorite topics these days, scope three emissions. And, you know, you've said that this is the majority of your emissions. But the reality is, is these are really difficult to estimate. And at Stanford University, we've now undertaken an effort to do this. And I was just curious, what framework are you using for calculating scope three emissions? And, you know, is that something that you're willing to share? Because again, that would be immensely valuable. Yeah. And let's, let's get into this. I would just say the scope three bit about people being surprised that scope three is often makes up the majority of any organization or individuals emissions. You know, for me, it's, it's, it's not a surprise. Like, you know, I come from, I studied wildlife ecology and then ecology. And so, and you know, besides Aldo Leopold being kind of the first environmental luminary that I, that I read it was Rachel Carson, right? And what do you learn in when you, when you read about the concerns that Rachel Carson brought to light, it's about bio accumulation, right? It's about accumulation of the trophic chain. And as a consumer, as an individual, you sit at the top of the trophic or the consumption chain. And so it should not be a surprise that you are accumulating emissions all the way up to you, because you sit at the top of the food pyramid. And many organizations do as well, those that don't are those that produce the raw materials, right? So there are organizations where scope one is significantly greater than scope two, but those are at the base of the pyramid. Consumers and most service organizations or tech companies, they sit at the top. And so you have that accumulation. You are taking on the embedded carbon in all of the goods and the services that you procure to then ultimately, you know, produce your, your good or service. How to calculate carbon emissions is such an interesting and complicated topic. Scope one, okay, it's your emissions, you should figure it out, right? You can do that from sensors, you can do that from sitting there, watching, you can do whatever you want. I don't care. Scope two, we've got a pretty good idea of the energy sources and the generation you know, et cetera on the grid at any particular time. So you can kind of start figuring that out. Scope three is quite literally everything else. And, you know, the 15 categories of scope three that the international greenhouse gas accounting protocols classify are literally everything, basically everything, business air travel, procurement supply chain issues, end of life management of products that you may, that you may sell, all of that. And so if you look at the industry right now, I would say the most common conversation by far that I'm involved in is, how do you accurately measure scope three emissions? One way that you do it is that ultimately there's somebody's scope one emissions. And so if we can drive reporting and if we can drive recording and then reporting down through the supply chain, then you have a system of record that you can start to manage against. And that's one of the things that we're doing. Um, so we recently announced a change to our supplier code of conduct, because our supplier contract, sorry, which is basically the base supplier contract that applies to all of our procurement choices. And the change that we made is requiring emissions reporting, recording, and then on path to reporting. Because we made a commitment as part of our carbon negative commitment, we said that we would achieve that by reducing our emissions by half or more and removing the rest. We'll talk about carbon removal, I'm sure, but it's far from easy and it's far from cheap. The easiest lever that you have at your disposal is reduction. But 75% of our emissions sit in this wild west of difficult carbon accounting. So we've got to get better at getting that all kind of into a carbon ledger so that we can start putting incentive programs like our internal carbon fee, which we charge across all of our full scope one, two, and three emissions and start letting that do its kind of do its job. Okay, thank you. So to follow up on that, so, okay, once you have an accounting of these scope three emissions, what kind of strategies are you pursuing to begin to reduce those in a significant way? Well, so there's basically the two things that I mentioned. I think the first is we require reporting so that everybody knows. And then we put a cost, we put a price on carbon. So that every bid that comes in will be weighted by the additional cost of the emissions associated with that procurement decision. That's how we do it. We have a internal carbon fee. It historically was not applied against our scope three emissions. That was one of the big things about our carbon announcement and our carbon commitments that we issued back in January was that for the first time, we included scope three in our ambitions. And what you'll see is if you look at a lot of corporate commitments, you hear things about carbon net zero, you hear things about carbon negative, you hear things about carbon neutral. But the majority of those commitments to date cover scopes one and two, which can be relatively small. And historically, that's what Microsoft did as well. That was one of the things that we really realized about what we needed to do better is we needed to put scope three in there. And then once you do that, you just have to manage against it in the same way that you manage against any constraints inside the private sector, which is you just need to put a corporate target and then you need to put the most powerful incentive, which is a financial cost savings incentive inside the company and let things play out. And if the incentive's not working, then you just need to raise it. Okay. All right. Well, thank you. Really interesting. Rune back to you. Yeah. Good. So by the way, to all the people in the audience, there's some great questions coming in. So feel free to type in your questions and we will be asking those shortly. So let's get into negative emissions because Microsoft wants to be negative emission on an animal basis by 2030 so as to meet the 2050 goal, which makes a lot of sense. And you have stated in your public announcements that you'll first want to start with natural climate solutions, which also makes a lot of sense. And this, of course, goes back to your roots in ecology. So we recently had a workshop on natural climate solutions and the September 30th dialogue of the global energy dialogue was dedicated to atmospheric carbon removal. As you know, I mean approaches such as reforestation, afforestation or soil carbon sequestration, these are really fraught with uncertainties of how much carbon you actually sequestered. So how do you plan to address that issue to be sure you've actually met your goals? Yeah, it's a great question. It's the question. There's two ways to remove carbon from the atmosphere. Nature-based solutions and technology-based solutions and they each have an existential question that they have to address. Nature-based solutions has to address how you know how much carbon has been sequestered and how you ensure its permanence for the durability of its sequestration. Engineering-based solutions have to answer the question of how do you drive the price down and how do you drive the volume up? So we look at both of those areas and thus we look at those four questions that we think that we have to answer. As we said in January, nature-based solutions need to play an important role in our carbon removal efforts but so do technology-based solutions and you have to operate in this space in a way that's kind of cognizant of the reality on the ground but with your eye on the prize for what the market really needs to look like 10 years from now. And I just want to circle back really quick and talk about why Microsoft is talking about carbon removal and because again when many companies are talking about net zero etc, what they're really talking about is the use of avoided emissions offset or other types of investment. And that's actually something that Microsoft did for a long time. We were one of the earliest largest corporate buyers of avoided emissions offsets over the past decade and we really helped drive and grow that market significantly. What's really interesting about removal markets is just how kind of immature they are, how low the volume is and how now particularly since we made our commitment and others have followed, how oversubscribed they are and how opaque they are. So one of the things that Microsoft did is on our path to 2030 and having to procure if you take kind of the letter of the commitments 50% or more so that would mean we'd have to remove say we reduce our emissions 50% that means we'd have to remove you know somewhere like six million metric tons or so by 2030 annually. That means that we got to get started now so we issued an RFP for a million metric tons it was the largest procurement RFP for carbon removal ever and we said hey we're going to actually publish all the non-competential parts of the proposals that we get. The world needs to know what this market looks like. We don't even know what this market looks like and we're trying to buy out of it right and what you learn is that a couple really interesting things for those that are interested in economics and whether or not you know markets can solve some of our problems is that we know for instance nature-based solutions. We know the potential wildly outstrips the current availability and we know that the market wildly outstrips the current availability. That is an exciting time if you're interested in the economics of these situations. If you're interested in the technical details it's a worrying time because we don't yet have all of the certification systems at scale. We don't have the technology monitoring at scale to ensure that these programs are are going to remove the carbon that they say they are going to and that they're going to sequester it on time periods that we need it sequestered here on the west coast. I mean Stanford folks local Stanford folks you know this better than than meant not all but most which is that you know trees can burn and as climates change more trees can burn in more places and if those trees are being used or traded in climate stabilization then we have to be able to count for that we have to be able to ensure the risk of that and we still have a long way of long way to go to do that. So what you're saying is really that notwithstanding the uncertainties we need to move forward and which is what Microsoft is doing we need to move forward and creating and explaining and being transparent about this market and yes we have to figure out the uncertainty and and and that there needs to be focus on that. Did I get that right? There's no other choice I mean what what what academic is running experiments that they know will work right like I mean if you know it's good like it's not an experiment like why you know I mean you've got to try and you've got to see what's wrong with your original hypothesis and you need to debug it. Yeah right like it's delightful to hear that you know Microsoft is willing to do some experiments which is great absolutely great. Well it's interesting I mean this is what people I think are like oh I can't believe you're doing experiments I'm like we write all we do at Microsoft is write code all writing code is this is an experiment now you're following principles right and you're following best practice but this is why there's an entire profession of software debugging this is why there's a massive toolkit out there to do that because nobody writes perfect code all the time every time and so you write the code you run it does it compile no why not okay let's figure it out and then you keep going and ultimately you build something just like we built windows a long time ago but it's not like we built windows a long time ago and then stopped right we're still building windows and and so anyway we're bringing that same perspective to this issue and I just think everybody needs to do that I think yeah it's just for us when people are like well we don't know it'll work so we shouldn't do it and I'm like well okay like how are we going to find out that it works then and they're like well we won't but we need to do it and I'm like all right I don't like I don't know how to get to that ticket Sally okay yeah so so we talked a little bit about natural climate solutions for negative emissions let's talk about some of the engineered solutions that that you're also planning to pursue so one of them is bioenergy plus carbon capture and storage and while there's not a lot of that deployed today you know we know how to produce power by burning biomass and and we know how to capture carbon and so forth so that's relatively mature but but the second of these that you know there are really high hopes on direct air capture and you know direct air capture is a very energy intensive process you know you're trying to take a molecule out of the atmosphere that's present in a very very low low concentration so so to what extent do you think that that this you know that's a risk to pursue this you know put so much stake in something like direct air capture which is really quite immature and you know will it really end up being cost competitive and what's our plan be if it if it's not well I think you know this answer is my answer here is a is a nice transition I think from the from the conversation Arun and I were just having which is is there a risk of course right and we know it's too expensive we know it's I mean partly because it's so inefficient even if we can get that efficiency down the energy that it's consuming we need to be able to ensure comes from zero carbon sources otherwise you're just kind of compounding the problem and you know we the basic physics of it make it hard I mean who gets excited about you know having to scale up a process that has to find 400 parts per million I mean that's not that fun it's not that easy and that's kind of that like the irony of CO2 is that for our climate 400 parts per million is catastrophically high but for chemistry and removal 400 parts per million is catastrophically low right so look that's the that's the dilemma that we've got to find our way through but look why why are we also pursuing nature based solutions because evolution has already figured out a scalable process to find 400 parts per million and to put it to use right it's called photosynthesis so we need to take the tools that evolution has provided and we need to bring our tools to bear to make sure that we can properly manage biology that it's you know performing the way that we want it to and then we have to take our tools and hopefully what we've learned from biology and be able to you know artificially replicate it over on a peer engineering side am I confident that direct air capture is this you know the silver bullet the solution to our challenges no am I confident that aforestation and reforestation is the answer to our challenges absolutely not that's why I think you will see our portfolio have a mix of those types of solutions you will see us look to grow the scale and the assurance of nature based solutions and you will look to see us drive down the cost and the efficiency of of direct air capture I I one of the things that worries me is we we know this is a complex system we know there's many interdependent parts but we often insist on having a singular one-dimensional conversation you know a conversation about one dimension at a time and that's a really difficult way to approach this I mean for all of you in the audience that maybe have more of an optimization background you know that's not how you kind of go about solving this for society it's one of the one of the things that I've been talking about a lot is you know what is what is the human species objective function for life on earth what are we trying to achieve like can you mathematically quantify that because if you could put that into an objective function then I could optimize for it and I could take into account all of these considerations you mentioned bex bex is a great bex is a great example of how to combine technology and biology right biology is hyper efficient at capturing carbon technology of removing carbon and technology can be hyper efficient at extracting energy from that from that biomass and then capturing the carbon sequestering it okay great but bex or any other land use system is in direct competition with other critical societal needs food production human housing and and other things and so as soon as you start talking about that people say well what about land use expansion and that's not going to work and my point is we have to have the whole conversation all at once and we have to have an objective function that we are trying to achieve and then we can put the constraints on the problem financial geometric moral and ethical whatever you want and then we could actually optimize for it but but trying to do this in a you know one at a time way is just gonna crush us well great that's a grand challenge laid out for many many a phd I think is to do that so so maybe you could just say a little bit about your your recently formed partnership with gas nova I was speaking to Trudea Sunset last week the CEO there and and she mentioned that you'd join formed important partnership with them for carbon sequestration could you say a little bit about more about that would you capture the carbon and and they would store it or you know what what's your thinking along those lines yeah so one of the things that's interesting that we announced last week two weeks ago something like that is a project up in Norway partnership with project up in Norway called northern lights and northern lights the is is this really interesting project that has the potential to really position that region as the sequestration reservoir really for you captured emissions across across Europe and and that region of the world and it's a you know it's about using the the infrastructure that's been developed for so long to to sequester to extract hydrocarbons to to kind of reverse that process and put captured carbon back into geological sequestration that is you know basically the holy grail of carbon sequestration you know if you wanted the the you know at the limit theoretical kind of holy grail it's that we somehow figure out a hyper efficient way to capture carbon through the atmosphere from the atmosphere using purely technological sources and that's powered as efficiently as possible with zero carbon energy and that captured carbon is then immediately injected into geological formations and sequestered on you know 10 000 plus year time horizons that's that's the you know the the holy grail we're a long way from each component of that we already talked about the risk etc but the opportunity to sequester carbon at those geological time scales with that level of assurance that's what's super exciting about what's going on up there in in Norway and then you know from a technology perspective we're really interested from a platform perspective if we're good i i said this at the beginning if we're going to stabilize our climate we're going to have to record and report our the entire kind of carbon ecosystem and then we're going to have to manage it i have been a belief that that represents not just a significant technology challenge for a company like microsoft but a huge opportunity for our business and for society great thank thank you really interesting everyone back to you sure um so uh lucas microsoft announced a billion dollar fund uh amazon announced two billion dollars fund google apple facebook i'm sure are announcing making announcements which is great this is terrific um and then bill gates has um you know breakthrough energy enterprise venture being the for-profit and there are probably more money in the non-profit on the other side you know matching sort of getting to millen millen gates foundation so this is if you look at around across the whole corporate world and the philanthropic world this is big so my question to you is how much coordination is there between microsoft apple facebook google etc to make the whole of that bigger than the sum of the parts because in this case you may be competing on the tech side but you're not competing on climate change so what is it that you're doing to bring everyone together yeah we're absolutely not competing on the climate side we absolutely are competing on the on the tech side and as you should and may the yeah i may the may the best corporation win right um but and i i firmly believe there's room for all of us and many many more to to come as well but um on the climate side no we're not competing at all i i you know i think as a community we're all pretty close uh from the sustainabilities i mean well just as companies we all know each other very well uh but on the sustainability side we all know each other and we're we're pretty close i think that uh this actually you know the need for for deeper uh collaboration is why this past july microsoft announced a new um coalition called the transform to net zero coalition and it's this coalition of nine companies the the companies that have kind of the most ambitious um climate uh climate goals um you know nike starbucks unilever that kind of group of of organizations that are putting together kind of the playbooks for any company to be able to follow in our footsteps and not saying you know well not just following our footsteps uh and know when to veer from the path that we took um so that they don't have to you know pay the price of the mistakes that we've made in in our past um so look there's a lot of work uh in in um that one individual company can play by bringing many other uh companies together you mentioned the fund um there is a lot of different types of investment strategies you know microsoft has its climate investment fund amazon has its climate pledge fund google just you know announced some really interesting um sustainability bond strategies that they're deploying and and we work together on on a lot of those i think you know some of our recent climate innovation funds um we invested in uh areas that that that amazon led on uh led the investment on and and we followed in vice versa so you know we don't all have the same needs that the others do um if you look at uh amazon in some ways you can think of us as having similar businesses but in other ways we're completely different organizations um if you look at their supply chain issues their retail businesses you know the the um the commitments that they've made have have replicated that for instance the the um electric vehicle delivery vehicle commitments that they you know are they operated a different business in a different scale in that space than we do so and when we think about our fund we look at first and foremost we look at uh climate impact but we also look at where capital is needed because we are trying to be additional in this space right i think you're not seeing us go and pour our billion dollars in renewable energy projects that are already oversubscribed anyway we're looking to close that kind of um valley of death that investment valley of death and the i hate this term but the queen tax space apologies for those of you who like that term but um but you know we need to we see ourselves as a corporate fund is sitting in a relatively unique area because we can be both a customer and an investor and we don't have super risk tolerant capital but we are capable of tolerating risk because of our size and success so we don't need guaranteed outcomes like a lot of the late stage investment funds need and so we just see ourselves operating in a fairly unique space but when and where we can collaborate uh with the rest of of the both private and public sector that's investing of course we do thanks lucas i think we should move on to the student section sally you want to introduce rebecca sure yeah um so i'd like to introduce rebecca greckin she's uh pursuing her master's degree here at stanford in the department of energy resources engineering and happens to be part of my research lab and for her um she got her bachelor's degree in chemical engineering from mit and so she's currently working very closely with our office of sustainability to to quantify and develop strategies to reduce our scope three emissions so i'd like to turn this over to rebecca who has some student questions for you thank you sally in a room hello lucas thank you for taking the time to join us today our first student question is actually related to a lot of the attendee questions that we've gotten in the chat so far um so how did microsoft come up with the $15 per ton value for the internal carbon fee uh it seems to be a little bit low on the uh on the low end looking at other estimates for what a carbon tax should be um and what have been some of the difficulties and successes that have come with implementing this internal carbon fee yeah well i could go on all day about our carbon fee and the successes and failures of it i think that um i'll give people a little bit of color uh into why it's set um where it is and um and uh and opportunities for improvement so but before i do that i really want to highlight the way that we think about a carbon fee um we don't compare uh you know what our carbon fee should be with what a projection for what for instance a governmental fee might need to be why for two and we don't benchmark against that uh there's two real reasons for that one um we have very different levers to pull than a government does right and the more direct the lever that you have to pull generally the lower the financial um uh signal that you have to send and so in some ways i mean it's kind of weird that a company has a carbon fee because we could just tell people what to do in a way that governments struggle to do a little bit more um so we don't benchmark against you know what a government fee should be because a private internal fee versus a government fee are exists in completely different systems the second thing is that we are actually we want to be lower than projected future fees that's why we have a fee in some respects that's in some ways why we're trying to get our carbon to zero or at least to zero because we want to avoid having to pay what will likely be significantly higher costs of carbon moving forward i mean this is what a business does right you try to get out ahead of what you see future costs being and you try to avoid those costs by incurring lower costs today and so i just hope i want ever i i feel like that's always kind of like a something that people don't haven't considered about our internal carbon fee is um you know i'm actually oftentimes you know i'm trying to drive to keep that as low as possible because i'm trying to keep costs as low as possible while achieving the carbon outcome that we're trying to drive um and and basically you want that carbon fee to be enough to drive the carbon outcome and no more and so when you think about our $15 fee it was um set when we were accelerating to um 100% renewable energy and it is um you know in some ways you can think about that as an important baseline uh for what the fee needs to be to incentivize businesses to pursue that outcome and then you know moving forward you have to keep track with the cost of carbon removal both nature-based and and and technology-based so that you're blended so that you know your carbon fee can ultimately cover your blended cost of carbon removal uh and um yeah i think that's that's the perspective i hope everybody has on it thanks yeah i had definitely not thought about all the all the stuff behind it in terms of a difference between a government and a corporation so that was that was very helpful i mean one of the things you know is i get a lot of like well the ipcc says that you know the price on carbon may have to rise to $5,500 you know a ton and um and there's a couple things about that well yeah if we do nothing today then eventually the price is going to have to be so high that you may achieve you know you may extend yourself into outer space costs of $5,500 a ton right we don't want that to happen that's why we have a fee today right um so i just think that people like i don't know i often have these like apples and oranges conversations i'm like yes that is why i have a $15 fee and maybe it will raise or maybe it'll lower but i'm going to try to track the carbon outcome so that the world doesn't have to institute a $5,500 fee and my business is going to take some massive hit right um that's the perspective that we think about a fee it's not we're not trying to we're not trying to you know virtue signal through a carbon fee we're trying to achieve an outcome that makes a lot of sense um another student question is technology is not enough the right policies need to be in place on the nationwide and global level to get all players actively working on sustainability if the world wants to meet the Paris Agreement how is Microsoft planning on leveraging its power to help enact these types of policies well we spend a lot of time um engaging with governments around the world on this uh here in the US in the EU and well beyond um as well as bringing our voice um you know singularly fantastic but as part of coalitions of companies advocating for the right policy actions and that's on the right policy actions to manage carbon that's on removing regulatory barriers and and incentivizing innovation and carbon um removal and uh you know ensuring that consumers for instance have transparency in the carbon uh embedded carbon of the products that they're um that they're purchasing and we strongly support uh market and pricing mechanisms to get a lot of this done uh you know we've been we've been part of all sorts of coalitions on on getting carbon and supported lots of different bills on getting a price of carbon um enacted both at the state level for instance uh a couple years ago washington had washington initiative 1631 that would have put this in place we're one of the only companies to sign on the only large technology company to sign on we're actively at lobbying on the hill for this stuff we're part of um you know uh quote unquote bipartisan you know coalitions of companies try that all agree that there needs to be uh pricing and other market mechanisms to get this done um you know we're trying to make our voice heard on on this issue it's obviously you know it's a really it's a really thorny thorny issue um and while we can all argue that the policy should be enacted and we should uh that that that new policy should be enacted we should all make that argument we should also do the hard work of making it as easy as possible for robust policies to not just get passed but to be implemented and um you know putting a price on carbon requires that you know how much carbon there is and that you can fairly price it and fairly charge you know fairly uh charge for it we just had a long conversation about scope three for instance and how difficult that still is and so um you know I think we need to be very cognizant of the logistics that need to go underneath any sort of meaningful market or pricing mechanism that would help um you know states or countries uh you know manage manage carbon emissions through a policy framework thanks for that I think now we're gonna uh transition to a couple audience questions so Arun um okay I think I'm gonna take the first one there so uh so so you just mentioned earlier that you're building another you know set of large buildings up in Washington and and you know given your interest in carbon neutrality or net negative you know to what extent are you trying to incorporate building materials that could actually be carbon negative uh into into your new buildings and and the the the person who wrote this question put forward graphene and CO2 concrete as as some possible things that may be uh net negative yeah those are those are um those are obvious ones uh that that we're pursuing low low um uh or or CO2 embedded concrete um is is really interesting where you can actually inject um CO2 into into concrete and it provides a lighter uh stronger concrete solution that you know embeds captured CO2 in it and stores it for you know a long time uh another way to do that is kind of the construction equivalent of BEX which is uh cross laminated timber and ensuring that you are um building with cross laminated timber I think we've we've invested a lot in this space uh actually our Silicon Valley campus which is nearing the tail end of construction is uh will be the largest um cross laminated timber building by by volume in the entire United States and so you know we happen to believe that um it creates kind of beautiful buildings beautiful spaces but it also allows you to use again biology and its efficiency to capture carbon and then technology and construction to sequester that carbon into infrastructure that will um last maybe not on geological time scales but at least on climate socio-climate uh relevant time scales um given that we have 50 years or you know fewer to really get out ahead of these challenges we're taking a cross laminated timber approach um here in our Puget Sound uh rebuild as well uh and that's part of our our overall um ambition to reduce the embedded carbon in our in our buildings by up to 30 percent so um you know those are all things that you have to think about again you've got to think about the full life cycle cycle story you know here in the Pacific Northwest we're a significant part of our construction is going on we're blessed with you know a lot of forests um unfortunately we're also in close proximity to you know one of the more biologically devastating events that's been taking place in the United States which is the pine um bark beetle infestation that is caused you know unprecedented mortality events for for forests across the west which um you know also have been contributing to the severity of our wildfires but um at the least in the spirit of you know if handed lemons uh make lemonade you know one of the things that we're trying really hard to do is to ensure that you know the the lumber that goes into this cross lamp made of timber that we used to build with is sourced from um those those dead and diseased forests so that we can take forests that otherwise you know would have been considered a loss both environmentally and economically and integrate those into our buildings so you know all this stuff takes time it takes a lot of work but if you think about it hard enough and just keep chipping away at it you can start doing all these things and it's not just Microsoft that can do these things any organization can do these things no thank you uh everyone back to you actually we'll go to Rebecca um for your third question sure um so it's great to see a company working on sustainability while simultaneously accounting for environmental justice can you talk a little bit about how has integrating environmental justice changed how decisions get made and what steps Microsoft makes that's a great question I think um we talk a lot about the energy and carbon and economic transition that the world is going to have to go through if we're going to achieve a net zero carbon economy by 2050 and I am firmly convinced that that transition will only occur if it's a just transition if we bring along the people and the communities that have been either traditionally left behind or disenfranchised by the construction and operation of our energy and carbon systems of of today and so when we think about climate justice we've what we've and climate equity and environmental justice we've tried to really embed it as a key principle in all the things that that we do for the climate fund you know what did I say I said we seek climate impact we seek underfunded or at least we seek um capital needs we seek an integration with our own business needs and we seek an environmental justice and climate equity outcome those are the four you know for our billion dollar fund those are the things that we look about when we look at when we think about the um the other strategies that we're deploying we think about um we think about our renewable energy procurement one of the things that I was the most excited about and this is you know all credit goes to our energy procurement team uh on this because they really took the ball and ran with it is to up until this summer we had procured about 1.9 gigawatts of um uh renewable energy uh over over over our past and the big deal that we signed was a 500 megawatt deal the biggest deal that we'd ever signed with an organization called Soul Systems and that entire deal is for Soul Systems to deliver direct power purchase agreement renewable energy projects to Microsoft 500 megawatts of them in communities around the United States that have been traditionally underserved or or lack have achieved lack not achieved appropriate representation kind of in the economic opportunities that that the energy sector affords when we announced a recent partnership actually with Alaska Airlines and Sky Energy to fuel our three most popular routes out of um Puget Sound to San Jose San Francisco and Los Angeles with sustainable aviation fuel well we do you know we have a carbon commitment that we have to meet but the communities around large municipal airports are severely impacted by the particulate matter pollutants that come from traditional aviation fuel that sustainable aviation fuel you know drives down and so we think about these things and we prioritize them um but we cannot be the only ones I think uh you know the world has got to think about how everybody gets brought along otherwise nobody's going anywhere yeah I definitely agree with all that oops go ahead Arun no thanks Lucas so there have been wonderful questions from the audience and thank you to the audience for um for sending these questions we'll try to what we'll do is we're packaging those into kind of themes and we'll try to get through as as many as possible so this the the second audience question is uh is Microsoft educating employees regarding its efforts and how does each employee can be how do they how can they be personally responsible for their own footprint at work and in their personal life how are you helping them do that and is there a demand for that from the employees oh man I don't think there's a demand for anything more than that uh from employees I think you see how um look Microsoft has a young workforce you know uh and and there's no issue at the top of their minds like climate and and sustainability both personally and professionally um we have a uh we have this this program inside Microsoft worldwide communities and it's basically um you know what's a formal mechanism for bringing all of our global employee workforce together on particular issues and people self identify and choose you know we have an AI community for instance um we have a sustainability community and it was both it became the most rapidly growing and is now close to the largest community inside the entire company and we did that in just a few in like two years on and I I'm the executive sponsor but but the the it's all volunteers who started by a few dedicated individuals um and they've done they basically have two jobs they have the real jobs and then they run you know basically the shadow workforce um and so there's a lot of demand we are always yes we are educating our our employees we through that community through our you know corporate all hands our president our our CEO CFO are all speaking about these things consistently as are the rest of our executive vice presidents we try to provide opportunities we have for instance um uh initiative inside Microsoft called one week which is basically where everybody takes the week off of work and works on projects that they think will lead to new products or social impact or whatever gets them excited uh sustainability was one of our top featured um areas to work on and one of the most frequently participated in we actually just launched a um a Microsoft uh sustainability eco challenge uh for our employees I actually sent that email out yesterday it went live and where you know we're creating teams across the company to for people to kind of uh you know compete on their both personal and professional resource use reduction so we we try I would all I would say is that there's no way I can I or Microsoft can keep up with employee demand in this space I mean and that's great by the way that's not a complaint um that's just the the level of enthusiasm and demand is is one that um one that just can't be can't be satisfied so Lucas a quick follow-up and maybe if you if you could give us a quick answer you are dealing not only with employees you're dealing with your supply chain you're dealing with customers and you're dealing with your shareholders and you have made um you know your carbon things public in your sec filing and congratulations and all the earnings report yesterday that was terrific so if you look at the whole ecosystem are you sharing providing tools to your customers your supply chain your shareholders to drive the broader you know decarbonization or sustainability efforts yeah definitely look I think that there's three um areas that um that we can focus on and and products and services one of the things I didn't talk about was the way that we run our sustainability strategy at Microsoft I talked about carbon uh water waste and ecosystems but those each those four pillar areas are each uh supported or four priority areas are each supported by five pillars our operations our products and services customers and partners policy and and employee engagement so we've covered basically all of those things in our conversation but um the products and services thing the way that I break this down is really um is really in three ways that we can help folks we can you know ensure it's what I kind of um illiterate a lot because I can't really uh because I can't really remember anything if I don't so I call it kind of the three D's by default by by desire and by design right and so I think the way that I think about it is that we should be building our products and services so that every customer regardless of how much they care about sustainability or even know that sustainability is a thing get the sustainability benefits of a Microsoft uh investments and sustainability out of the box by default so and I think you think about things like 100 renewable energy of our of our um of our data center fleet you know is one of those just things like that's just you get it you don't have to want it but you're gonna get it anyway um by desire that's really things like our Microsoft sustainability calculator where we're providing azure based tools for people to be able to understand the carbon impacts of their use of our technologies and then optimize or manage to reduce them and then by design a lot of this stuff is the you know the go-to-market partnerships that that we're creating to get new tools out into the into the hands of of folks all around the world things like the EC three tool for embedded carbon for construction and and others so we do kind of have a plan we're at the very early stages of it so thanks and we have 10 minutes left so we'll go through some quickfire questions Rebecca sure so um Microsoft has definitely set itself apart from other companies in terms of being a thought leader for sustainability how can we as students encourage companies that we intend with or have just started working with to kind of follow in similar footsteps well as soon as you join a company look for its sustainability community and join and become a vocal part of it second prioritize those companies that you choose to offer your talent and skills to prioritize those companies that are leading on climate issues that you're passionate about and three as students think hard about the type of profession and career that you're going into the skills that you're gaining and ensure that you have a plan for how that is going to be relevant to solving our climate challenges I do not mean go and become an environmental scientist I mean look at whatever it is that you want to do whatever you want to be and ensure that you have a plan that that makes the world a more environmentally sustainable place and help stabilize our climate okay moving on to the next question um so can the tools you're using for scope three emissions help quantify the embedded um emissions with imports can we track the you know international supply chain with where the carbon is coming from yeah I mean I think that that kind of gets put part and parcel in how you do scope three the bigger question then becomes you know how you handle cross border carbon adjustments and all sorts of things and that's that goes back to the logistics about policy is those are the types of policy conversations that people are having but until that we have until we have the tools to be able to do that it's going to get a lot more difficult or it's going to be a lot more difficult maybe one final question and this is from one of the audience members recently Republican Senator Murkowski and Democratic Senator Whitehouse agreed that tech companies have been notably quiet on policy front and this was a discussion actually on Stanford platform and and they're not providing a counterbalance to the climate position of the US Chamber of Commerce do you think that this will change and if so when do you think this will change well you know I guess I appreciate the their position on this I don't think we're being quiet um at all I mean you know we I can't go into all the details of the outreach in the communications that we have with our publicly elected officials but we are not quiet about these issues we let everybody know how we feel about them when we make announcements we ensure that we set up time to do deep dives with our elected officials to ensure that they understand not just what we're doing but why we're doing it and the policy issues that that they would like to see so you know to the extent that we're in the tech sector and that's a general comment I think that that's I don't know if that's true or false I guess that's an opinion of theirs but for Microsoft you know this is something that we're constantly talking with folks about whether or not our voice is enough of a counterbalance to you know other institutions um in in the minds of those who are being lobbied uh you know I I don't know but but the only thing that we can concentrate on is is is being as loud and also as sincere as possible um and bringing solutions not just stating our desire but proposing solutions on how that desire could be fulfilled in a way that's you know fair and equitable for all Lucas thank you so I mean this has been we really applaud the efforts of Microsoft in in in doing what it you know in really planning this out carefully thoughtfully and laying out the roadmap for the next in really 30 years and you know this is this is wonderful to see that happen and and I hope that you know sets a benchmark for others as well to join because this is a real issue I mean this will affect everyone every human being it is the defining issue of the 21st century would you like to just offer some closing remarks well I would just say that I hope it does not just become a benchmark but draw others in because the ambition that we have is way too difficult to do it alone we need a rising tide to kind of lift all boats we don't need the tide to rise because of uh you know um unnaturally high because of climate change but we need everybody to get lifted up by a growing by the growing momentum across the private sector we we approach this extremely humbly we are just looking at the science trying to put in place the corporate programs that will best align us with that science and then work with all organizations private sector and beyond to help us achieve our goals and help everybody achieve the similar goals and as you know stanford has announced a school of sustainability that it'll launch and so we look forward to working with you and and microsoft and many others and and thank you again for joining us today and to thank you for all of the people around the world we hope you found this dialogue informative and relevant during these unprecedented times please join us two weeks from now for a conversation with fakir birol the executive director of international energy agency on the implications of energy and climate on the world us policy uh energy and climate policy on the world again please register on our website gef.stanford.edu and note the date and time as of now it's november 11th 8 30 to 10 a.m california time but we are trying to figure out whether that's the right date or not so please stay tuned and check gef.stanford.edu we we will now conclude our broadcast of today's program on on behalf of the entire stanford prequel institute for energy we thank you for joining us and we will see you next time