Building New Markets to Advance Sustainability

Meeting the urgency of the climate crisis demands bold ambition and collective action. At Microsoft, we are committed to becoming carbon negative by 2030—a goal that calls for ingenuity and innovation. Reaching this target means continuously improving how we operate, investing in breakthrough sustainability solutions, and building markets for construction materials to support a more sustainable future.

Microsoft is helping to build markets for low-carbon construction materials in three ways. Our first priority is to buy and use low-carbon materials. When this option isn’t feasible because it’s either not available in the location we need or at the volumes we require to build, we look to purchase environmental attribute certificates (EACs) to drive demand for and investment in nascent technologies that we cannot physically install. We also invest in companies developing innovative low-carbon materials through our Climate Innovation Fund, to accelerate the development and deployment of first-of-their-kind technologies, helping introduce and hopefully scale companies’ innovative solutions into the market.

>> In Other News: Carbon Direct and Microsoft Release Criteria for High-Quality Environmental Attribute Certificates to Accelerate Decarbonization of the Built Environment

Building with low-carbon materials

In Northern Virginia, we recently built our first datacenters made from a hybrid of cross-laminated timber, steel, and concrete. Together, concrete and steel account for approximately 13% of global CO2 emissions. By introducing cross-laminated timber into the mix, we’re able to reduce the embodied carbon footprint of these two new datacenters by an estimated 35% compared to conventional steel construction and 65% compared to typical precast concrete.

Fortunately, there’s been a growing demand for cross-laminated timber over the past decade, particularly in the United States and Europe, which enabled us to secure enough material to build our Northern Virginia datacenter. But that’s not always the case—we often see gaps in markets for innovative and low-carbon solutions that we’re relying on to meet our carbon negative goal. One strategy we use when low-carbon building materials aren’t available is purchasing EACs.

Buying environmental attribute certificates

For example, let’s say we’re planning to build a new datacenter in Washington when we find a low-carbon cement solution in Florida. Rather than shipping this cement across the country, incurring both monetary costs and carbon emissions, we can use traditional cement purchased locally while obtaining an EAC from Florida. That low-carbon cement is still sold, and likely at a cost more competitive with traditional cement.

While EACs have been used for years for other products like electricity and sustainable aviation fuels, their use for building materials is relatively new. Given the nascency of the EAC market for low-carbon building materials, Microsoft collaborated with Carbon Direct to publish "Criteria for High-Quality Environmental Attribute Certificates in the Concrete and Steel Sector". Microsoft will use the criteria to guide our high-quality EAC purchases, accelerating decarbonization and catalyzing market expansion for decarbonized materials across supply chains. The criteria cover seven key areas: qualifying conditions, social harms and benefits, environmental harms and benefits, additionality and baselines, catalytic impact, verifiability, and leakage.

Additionally, Microsoft has joined RMI (formerly known as the Rocky Mountain Institute) and the Center for Green Market Activation’s cement and concrete Working Group in developing a book and claim system—which provides a chain of custody model that allows environmental attributes to be decoupled from the physical product—in partnership with other leaders in cement and concrete technologies.

Buying EACs over several years signals demand in a sector that often operates on an as-needed basis. Demonstrating that customers are willing to pay for the environmental attributes can help unlock the capital necessary to build plants that will operate for decades, helping to reduce carbon in the sector and build markets.

While EACs are an important strategy for us today, we see them as a temporary strategy for catalyzing construction of new low-carbon building material manufacturing facilities. Our first priority is to buy and use low-carbon materials. The third prong of our strategy to build new markets is investing to signal market demand.

Investing to signal market demand

Through our $1 billion Climate Innovation Fund (CIF), we accelerate the development and deployment of first-of-their-kind technologies, helping introduce and hopefully scale companies’ innovative solutions into the market. We’ve used this market-building approach to accelerate progress in sectors like carbon dioxide removal, advanced energy systems, building materials, and sustainable fuels.

How do we look at these standardized systems and make changes, using newer technology that is more efficient and less carbon intensive, to deliver an improved, optimized product?

CIF invests alongside a diverse network of over 250 co-investors, including both financial venture capital firms and corporations. CIF’s $793 million in investment allocations has so far catalyzed nearly $12 billion in follow-on funding – a 15x multiplier effect from our initial investment.

Case study: Growing the market for lower carbon cement

Every datacenter and campus around the world uses cement, which serves as the binder in concrete. Cement reacts with water to harden and hold the mixture together, giving concrete its strength and durability. It’s also the most carbon-intensive component of concrete. Reducing the amount of cement in concrete and reducing the carbon intensity of cement are both key pathways to decarbonization.

Using the criteria for high-quality building material EACs developed by Carbon Direct, we pursued our first-ever opportunity in this sector and are excited to announce that we’ve signed a first-of-a-kind purchase agreement with Sublime Systems.

Microsoft is purchasing EACs from Sublime, deploying up to 622,500 metric tons of Sublime Cement® over a six- to nine-year period. Deliveries will come from Sublime’s first commercial facility in Holyoke, MA, and its subsequent full-scale production facility.

Sublime Systems invented a breakthrough electrochemical process to produce a cement that achieves significant emissions reductions relative to Ordinary Portland Cement. The significant emissions reductions associated with this cement have tremendous implications for building projects globally, especially considering concrete is the second most used material after water.

Microsoft is purchasing EACs from Sublime, deploying up to 622,500 metric tons of Sublime Cement® over a six- to nine-year period. Deliveries will come from Sublime’s first commercial facility in Holyoke, MA, and its subsequent full-scale production facility.

Through our purchase agreement with Sublime, Microsoft also secured a priority option to buy and use Sublime Cement® in our construction projects when geographically feasible. For projects that are proximate to Sublime’s facilities, we intend to buy and use the cement material in ready-mix concrete that will be poured and placed at our datacenters, office buildings, and other built infrastructure.

Buying and using existing low-carbon materials builds the market for existing solutions, while unlocking financing through EACs and CIF ensures new production capacity for low-carbon materials. Together, this approach to building new markets creates a flywheel effect to signal demand, grow supply, and drive down costs and risk over time.

Learn more about our approach to becoming carbon negative.