Microsoft has raised the bar for corporate clean energy by requiring their suppliers to transition to 100% carbon-free electricity (CFE) for their Microsoft delivered goods and services by 2030 as part of their FY25 Supplier Code of Conduct. This requirement will help significantly reduce Microsoft's Scope 3 emissions, and is a major step toward their goal to be carbon negative by 2030.
The most important change is that spot purchases of unbundled Environmental Attribute Certificates (EACs) is not a permitted procurement type to meet the 2030 standard.
What does the requirement include?
By 2030, suppliers must be able to claim one megawatt-hour (MWh) of CFE generation for each MWh of electricity consumption related to their goods and services delivered to Microsoft. Microsoft's Carbon-Free Electricity Guidance for suppliers includes additional requirements:
Geographic Boundary: CFE must be generated in the same market as the consumption with which it is matched.
CFE Vintage: CFE generation must take place within the 21-month vintage eligibility window (July 1 of prior year to vintage through March 31 of the subsequent year) and match the reporting year in which consumption occurs.
Allowed Technologies: CFE must be sourced from wind, solar, geothermal, sustainable biomass, hydropower, nuclear, fossil fuels with 100% carbon capture and sequestration, or storage charged with 100% CFE generation.
Procurement Types: CFE must be procured from self-generation, power purchase agreements (PPAs), long-term project-specific contracts in which the supplier is the original off-taker, or default delivered CFE from the grid.
The allowed procurement types are a result of Microsoft’s preference for suppliers to source clean energy that is additional - i.e. from procurement methods which directly contribute to the development of new clean energy generation. This is significant to Microsoft Suppliers for two reasons:
Spot purchasing unbundled EACs is often used for CFE procurement to meet other requirements and internal goals; and
All other procurement methods require planning and taking action in advance of electricity consumption, rather than mitigating emissions retroactively
What does this mean for suppliers?
To report 100% CFE in 2030, Suppliers will need to transition to 100% CFE for their Microsoft-related consumption in calendar year 2029. Because the requirement can't be met by purchasing spot RECs retroactively, Suppliers will need to allow ample time for planning, budgeting, contracting, and project construction. This means that most suppliers will need to take action in 2025 to meet the 2030 requirement.
How can Zettawatts help?
Zettawatts’ Supplier CFE Program is designed so that Suppliers meet Microsoft's 2030 CFE requirement. Participants attend three one-hour sessions, during which we explore CFE procurement options, develop a personalized plan to meet the 2030 requirement, and facilitate procurement. Enrollment in the program is free. Suppliers can enroll by filling out a short application form at apply.suppliercfe.com.
Microsoft suppliers with questions about the CFE requirement can email compsupp@microsoft.com for guidance.
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