Overview Carbon Water Waste Ecosystems Appendix 21 Carbon negative (continued) Removing carbon In 2018, the Intergovernmental Panel on Climate Change 1M (IPCC) special report on 1.5°C found that reducing emissions by transitioning to zero-carbon energy, avoiding deforestation, and increasing energy efficiency will be vital, metric but insufficient, to prevent the level of warming rising to unsafe levels. Carbon removal—the process of extracting carbon dioxide from the atmosphere and storing it in tons nature and deep in the Earth—will be crucial to achieving of carbon removal our climate goals. Microsoft’s commitment to become contracted for in 2020. carbon negative will require us to purchase an increasing amount of carbon removal. Meeting our goal will require the market to evolve— offering many more, better-quality carbon removal Our initial portfolio focused on nature-based solutions. services at increasingly affordable rates. We intend to use our procurement of carbon removal to drive demand for Results of the first carbon removal RFP high-quality carbon removal methods through our In July 2020, we issued a request for proposal (RFP) criteria, projects, and market innovations. to source carbon removal from a range of solutions. In 2020, we launched our removal program, with a goal Our initial portfolio focused on nature-based climate to contract for the removal of 1 million metric tons of solutions due to pricing and availability. We will shift to carbon dioxide from the environment. a blend of nature and technology-based solutions as We began with establishing key principles and defining they become more viable. Our portfolio includes: our scope. We also enlisted the support of third-party • Reforestation projects in Peru, Mississippi, Nicaragua, scientific and market advisors, including NGO Winrock and India. International and the advisory firm CarbonDirect, to Carbon removal will be crucial to achieving our climate goals. inform our procurement strategy. • Improved forestry projects in the US. • Soil carbon removal projects in the US and Australia. Carbon removal principles Carbon removal solutions • Biochar projects in Europe and Australia. • Engineered solutions such as direct air capture and bio- Bioenergy oil sequestration. Net Scientific Avoidance Other Afforestation Soil carbon with carbon Direct air Beyond the projects we supported, our RFP process negativity verification of harm considerations* and sequestration capture and capture brought us a new level of insight about quality and reforestation storage* (DAC) volume on the market today. We need far clearer standards for carbon removal durability and reversal * Consideration of scalability, affordability, climate equity, geographic location, and technology innovation. * (BECCS). risk, and we need collective buying and investment to accelerate and scale this nascent market.