Episode 179: Brian Janous, Microsoft
Today's guest is Brian Janous, General Manager of Energy and Renewables at Microsoft.
Brian is responsible for leading the development and execution of Microsoft's global data center energy strategy, including oversight of all energy supply agreements, renewable energy purchasing, distributed generation, and strategic partnerships to ensure a power supply that is reliable and sustainable. Brian joined Microsoft in 2011 after 12 years in the energy industry, where he worked as a Sr. Consultant at Brubaker & Associates, assisting Fortune 500 companies with energy procurement, policy, and sustainability matters. Brian holds an MBA from Webster University, a Bachelor of Science in Finance from the University of Missouri, and a Bachelor of Arts in Philosophy from the University of Missouri.
I was very excited for this episode because Brian is at the forefront of corporate sustainability and the energy transition. Brian walks me through his role at Microsoft, how the tech giant began making climate commitments, and advice he has for those looking to advocate for climate action within their companies. We also dive into the role of policy, the problem with intermittency regarding renewable energy, and the Microsoft carbon tax. This is a fantastic episode, and Brian is a knowledgeable and engaging guest.
Enjoy the show!
You can find me on twitter @jjacobs22 or @mcjpod and email at info@myclimatejourney.co, where I encourage you to share your feedback on episodes and suggestions for future topics or guests.
Episode recorded September 30th, 2021
In Today's episode we cover:
An overview of Microsoft's climate initiatives, Brian's role, and their global energy strategy
Brian's climate journey and how he became interested in energy
Where Microsoft was at when Brian first joined the company and how the energy strategy has evolved since then
Microsoft's climate journey and how the company has grown to make such ambitious climate commitments
Microsoft's initial motivations for making climate initiatives
A discussion on the climate conversations coming from the top down or the bottom up
Advice Brian has for those pushing their companies to create climate initiatives
Carbon accounting and Microsoft's carbon tax
How does Microsoft allocate spending to things like carbon offsets and carbon credits
Advice for companies looking to make climate initiatives and how to assess projects
Whether energy jobs and climate jobs are synonymous
How to balance cost, performance, impact, and reliability when determining the best carbon-free energy sources
How far renewables can get us and to what extent intermittency is a blocker to a clean energy transition
The role policy plays in the clean energy transition
Microsoft's role in driving and accelerating policy decisions and discussions
The role employee activism plays in Microsoft's climate decisions
Links to topics discussed in this episode:
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Jason Jacobs: Hey everyone, Jason here. I am the My Climate Journey show host. Before we get going, I want it to take a minute and tell you about the My Climate Journey or MCJ as we call it, membership option. Membership came to be because there were a bunch of people that were listening to the show that weren't just looking for education but they were longing for a peer group as well. So we set up a Slack community for those people that's now mushroomed into more than 1300 members.
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There's a bunch of great things that have come out of that community, a number of founding teams that have met in there, a number of nonprofits that have been established, a bunch of hiring that's been done, a bunch of companies that have raised capital in there, a bunch of funds that have gotten limited partners or investors for their funds in there as well as a bunch of events and programming by members and for members and some open source projects that are getting actively worked on that hatched in there as well.
At any rate, if you want to learn more, you can go to myclimatejourney.co, the website and click the become a member tab at the top. Enjoy the show. Hello everyone. This is Jason Jacobs and welcome to My Climate Journey. This show follows my journey to interview a wide range of guests to better understand and make sense of the formidable problem of climate change and try to figure out how people like you and I can help. Today's guest is Brian Janous, general manager, energy and sustainability at Microsoft.
Brian's responsible for leading the development and execution of Microsoft's global data center, energy, sustainability and land acquisition strategy. These data centers provide the foundation for Microsoft's cloud services for consumers and businesses worldwide. His direct responsibilities include oversight of all energy strategy, renewable energy, distributed energy and strategic partnerships to ensure a power supply that is reliable and sustainable.
I was excited for this one as Microsoft has emerged as such a leader in terms of setting the trend, not only with ambitious net zero and carbon negative commitments but also a detailed and transparent plan for how to get there. We cover a lot in this episode, including Brian's journey and what led him to do the kind of work that he's doing today. We talk about when he entered the organization many years ago and what the state of the state was at that time.
We talk about some of the twists and turns along the way, what motivated Microsoft to act on climate then and now. Brian also has some advice for others who are sitting in similar roles at other organizations for how they can mobilize and have as much success as Microsoft's been having in moving things in the right direction. I enjoyed this one and I think you will as well. Brian, welcome to the show.
Brian Janous: Thank you, Jason. I appreciate you having me.
Jason Jacobs: Thanks so much for coming on. I must admit I slid into your DMs and you're a pretty important guy and well-placed and have a super interesting perspective around climate. And I was- I was lucky enough that you have listened to some episodes and were familiar with MCJ and that you agreed to come on the show with no warm intro, so thank you.
Brian Janous: Yeah, absolutely. I'm excited to be here.
Jason Jacobs: Well, to kick things off, maybe just talk a little bit about your current station, what you're up to at Microsoft and- and where you sit within the organization.
Brian Janous: Sure. So I'm responsible for our global energy strategy for our cloud infrastructure for our data centers, which for Microsoft is really all of our energy consumption. It represents about 95% of our energy consumption. And I- I've been in this role for 10 years. I started, um, I was actually the first person to come to Microsoft to work on energy. At the time, it wasn't even clear to me why a company like Microsoft needed someone like me. In fact, I told the person that was recruiting me into the role that it sounded like a dead end job to be a energy guy at a tech company. I just didn't understand.
Jason Jacobs: Why did you think that at the time?
Brian Janous: Well, this was very early in the cloud, right? This was when I mean, Microsoft had, I guess technically launched its cloud in about 2008, this was in 2011. The cloud was very, very small in terms of you know, the overall business for Microsoft. I think by that time, most people hadn't even heard of the cloud, what it was. And so when I was looking at this, I'm like, "Well, why would a company like Microsoft even care that much about energy? Why is this going to be something that is strategically important for the company?"
And as I started digging in more and- and starting to understand more of where this business was going and really understood, just asked some fundamental questions about what a data center is and realizing the data center is nothing more than a big building that converts electricity into light and then distributes its- its data around the world. In fact, it's quite similar to the utility industry which is where I was coming from in that when you think about what a utility does is they take a raw form of energy, whether it's sunlight or water flowing down the stream or a lump of coal and they turn that into something more universal and useful to the majority of humanity in the form of electricity and then they distribute that across electricity grid.
Well, we then tap into that electricity grid, take that product, that sort of raw form of energy and then we further refine it into light and we distribute in the form of useful work and things that you can pop up on your phones and pop up on your PCs. And so as I started to think about what the cloud industry actually was and where it was going, I was like, "Oh, I can do that job." Because that's a whole lot like a world that I already understand, which is how utilities and how the power grids and how the power systems work.
Jason Jacobs: So how and when, and why did you get to be an energy guy in the first place?
Brian Janous: I started right out of undergrad working at a energy consulting firm, and I was not necessarily looking to get into the energy sector. I was always interested in- in systems. I was an undergrad in- in finance, economics and philosophy. And so both of those appealed to me because they focused on understanding complex systems, whether it's financial markets and how they work and human behavior within those markets or our mind and how it works, how we think, how we formulate ideas. And so energy was a pretty interesting space to me as I was you know, thinking about places I might go into. And you know I started around 2000 and then immediately after that was the California crisis and then Enron and then I realized, whoa, this is actually a pretty fascinating industry. And then ever since then, there's never been a dull moment.
Jason Jacobs: So what aspects of energy were you focused on initially when you started your career?
Brian Janous: The very first things that I was working on were rate cases and regulatory proceedings, which can be pretty dry, pretty dull reading through a utilities rate filing, understanding their rate base, how they do cost of service, how they're thinking about cost allocation. But when I talked to people about this industry and what does it take to be successful, the thing that I always tried to instill on pump people is that if you think about the electricity industry, every dollar in this industry ends up on someone's bill.
And so if you can understand how those costs actually float through the system, how those bills get created and what the incentives and the drivers are in that process, it gives you much better insight to the decision making that utilities do, that consumers do and then almost everything else that we touch starts to make more sense because y- you understand some of that fundamental driver behind what's happening,
Jason Jacobs: What's more complicated, the energy industry or healthcare?
Brian Janous: [Laughs]. Well, I would certainly say that I understand the energy industry more, [laughs] but it's hard to say. I guess I would say I'm- I'm comfortable sitting where I am because I've been in this- this seat long enough to feel like I've got at least a rudimentary understanding of what's happening in this space.
Jason Jacobs: And so when you came into Microsoft so many years ago, what was the landscape at that time? So you talked about how the cloud business was nascent and growing. What was motivating them to create this energy role and what was the charter of the role and of the organization then it sat in at the time?
Brian Janous: Yeah. So at the time it was pretty pragmatic. It was, hey, we're starting to build these data centers and someone said, "Hey, I think we're going to have to spend some money on electricity. I think we're going to have to, you know, figure out how to enter into a contract with a utility, how to acquire the infrastructure, how to think about how we manage the rates." There wasn't a whole lot that was super strategic behind at the time. It was- it was just very pragmatic.
But as time went on, I think it became clear that energy actually, in fact, I've heard Satya say, is an existential issue for the company. As we've transitioned to being a company where when I joined cloud was low single digit percentage of our revenue and today it's approaching you know 50% of the company's revenue, it's become a lot more clear that, and again, all of that is runs on electricity. The energy is critically important to us, both for growing our business because we are a very large energy consumer, data centers represent about 1 to 2% of the world's electricity consumption and the big cloud players are in the hyper scale companies are a pretty big percentage of that.
And as we look through this next decade, I think the cloud companies will be the sort of single largest commercial consumers of electricity in the world. So that's kind of a big deal. But the other issue of course is then how we think about the source of that electricity. And over that time, over the last decade, sustainability has increasingly come a more important issue for the company and therefore the focus quickly goes to, well, what are the biggest sources of carbon emissions for the company?
And of course, electricity rises to the top pretty quickly. And so that was the other issue that- that happened over the last several years, is that has sort of risen, increased the importance, I guess, of energy and how we consume energy and what the source of that energy comes from and when- why it's become so important for Microsoft.
Jason Jacobs: So as it sounds like you know, since you've listened to some episodes of my show before, I've been on this "climate journey" for the last few years, I've been so impressed by some of the recent moves that Microsoft's been making in terms of not only the boldness of your goals, but also the detailed and structured thinking that's gone into the plan and the transparency to make all of that public. What's been Microsoft's climate journey, if you will? Did that all come from nowhere or was that kind of quietly brewing under the hood or... From your seat, and I know you haven't been there probably for the whole story or for all parts of it, but can you talk a little bit about what you've seen from the company when you came in to today in terms of that evolution?
Brian Janous: Absolutely. And I've been there for most of it 'cause I was actually doing some consulting for Microsoft dating back to 2008. And so I've been at the table for almost every decision that the company has made around commitments around climate. And- and the most significant one initially was in 2012 when we committed to be carbon neutral. And so this was sort of our first foray and at the same time we established an internal carbon tax where we said, "Okay, if we're going to- if we're going to be carbon neutral, we're going to make sure that the businesses that are responsible for carbon emissions actually have to foot the bill." And so we started with a carbon tax that taxed all of the business groups, and that- that money then went into a centralized fund and we used it at that time to largely buy renewable energy credits and carbon offsets.
Jason Jacobs: Can I just stop you right there? So where did that initial motivation come from? What was the business case for it or why did that come about? 'Cause most companies at that time were not doing that.
Brian Janous: Yeah. It started with a small group of people. And at that time we had a- we had a small sustainability team of probably four people maybe. And then, you know, you had me then sitting in the- the cloud business, you know, looking at our energy consumption. And we were already starting to contemplate some renewable energy projects at that time. And so we started looking at and saying, well, you know, we probably should go pursue renewable energy. We're not sure how much it's going to cost, but if we were to establish this- this carbon tax, and frankly originally we proposed it much smaller.
We said we weren't gonna even start at a hundred percent, we were just going to start at something like 25%. And as we get up to some of the key finance folks, they looked at it and said, "Why not just go a hundred percent?" I'm like, "Oh, okay, well, that's cool. Let's do that." And so all of the evolution of these decisions that we made were always some push and pull of there's some grassroots movement that says, "Hey, we need to be thinking about this as a company."
There's that education process of starting to get the executives to understand that this is maybe an important thing, or even if they don't think it's important, maybe it's just not a bad thing to do. And it's just that progression over time. And so the underlying story at Microsoft was it started with the very few people that cared that happened to be able to convince some executives that we should do it, at least something, to, you know, later commitments of committing to you know a hundred percent renewable energy and then ultimately in 2019 to commit to be carbon negative. The big thing that changed between 2012 and 2019 is it was no longer a push from a grassroots. It became much more of a pull from the top. The commitments that we made-
Jason Jacobs: Why was it a pull from the top? I think it's great, but I want to understand it because even today, most organizations are not getting that pull from the top. Like they might get push from employees, they might get push from fear of future regulation that's coming, but they're- they're not excited about it, I don't think.
Brian Janous: No. But I'll- I will answer that with a bit of a story. I was on Twitter yesterday and I saw our former CEO, Steve Ballmer, who was party to many of the early conversations around this when I would have said that sustainability was maybe a nice to have for the company, but it wasn't a priority. So Steve now the owner of the Clippers was discussing the new arena that they're building and he said, "You know, this hasn't always been an important issue for me, but within the last years, I've really come to take this issue seriously."
And he said, "The reason was my kids. My kids finally got to me." And he goes, "We're going to build the most sustainable arena," you know? And he starts going through all the stuff they're going to do about how important it is for their business to really lead on sustainability. And it was because it was a personal value of his. He's the boss, he's the leader, he gets to set the tone. He wasn't talking about, "Oh, because it's going to be more efficient, it's going to save us money or this is..." He was saying, "My values are driving this decision."
So what I observed over that period of time and Steve readily admitted those weren't core values for him back you know in that timeframe. So as the guy who was at the top, he was not pulling us to say, "Go faster, go bigger, do more." But what happened as over time is that I started to see each and every year that sustainability started becoming more and more of a value of our executives such that when we made that commitment, the announcement, the carbon negative commitment, it was Satya, Brad Smith, our president and Amy Hood, our CFO, who were the ones that were onstage announcing that this is our commitment, this is what we're going to go do.
And they're talking about scope one, two, and three emissions and there's like all this stuff that five years before that, there's no way the executives from Microsoft would have been on stage saying something like that. But it shifted to become something that was marginally important or at least, yeah, we'll spend a little bit of time thinking about this too. Something that elevated to becoming a core value of the company and then once it- once it's of value, then you're not debating about, you know, well, what's it going to cost or how many resources? It's like, no, this is what we're going to go do, go figure it out.
Jason Jacobs: So for all the people that are in your shoes at other big companies that have been trying to achieve similar in a similar bottoms up way that have been banging their heads against the wall, what learnings have you observed from Microsoft's journey over the last decade that might be viable for them to hear? And not necessarily if you do this, X will work, but what are the indicators that it's fertile ground and what are the indicators that it's a waste of time and you should find someplace else to work?
Brian Janous: Yeah, I guess my biggest piece of advice is be patient. We did not get to where we are in terms of the commitments that we've made on day one, right? I mean, this has been a multi-year journey of incrementally increasing the level of commitment a company. And with each... even going back, I think the- the best thing we did right out of the gate was you know create this carbon tax because it was somewhat subversive in a way and that the goal was to make it everyone's problem, right? Even if it was just very small.
At times, the carbon tax was very low, it didn't really hit any ones P&L to a significant degree that it changed a lot of behavior, but it got sustainability in the door so that people started to think about it. And it had to be something that was part of the framework where they had to think about the business. And then over time we have used that carbon tax, increasing it. Today, we're at $15 a metric ton. But each time we increase it, it starts to drive more and more business decisions.
Because now you have to start thinking about these trade-offs of, well, you know I was having a conversation with our construction team the other day and we were talking about different materials in the data center and the- the green premium associated with using this type of steel or that type, or this type of cement or that type. And it was very helpful because you can look at it and say, "Look, we're committed to be carbon negative. So either you're going to eliminate carbon from this material, or you're going to continue to pay a higher and higher tax associated with carbon removal. So you have to do something in response to this, you have to because you are on the hook."
And so creating that early on ended up being the platform that allowed us to drive the type of change and behavior that we're seeing now. But we didn't get there day one. Day one, we were buying recs and offsets and it was relatively cheap and wasn't a huge commitment. And so I think it's important to just have patience to know that it is a journey, it is a process, you won't get there on day one. And we're still on our journey.
Our latest commitments, we revise them even recently with, you know, our commitment to be a hundred percent zero carbon, a hundred percent of the time by 2030, which was a- a new add to what we announced in 2019. And there's going to be something else. Like we don't know what we don't know yet about some of the challenges that we have ahead of us. So we're- we're constantly in a state of learning and thinking how do we- how do we continue to make progress and go as fast as we can, but also recognize that we're going to pivot and we're going to learn new things along the way.
Jason Jacobs: What was the state of carbon accounting at the time that you implemented the carbon tax and was understanding and being able to track accurately over time, the carbon footprint a barrier to the tax? How much- how much fudge and estimating was there and then what's the landscape look like today within Microsoft in terms of that visibility?
Brian Janous: Yeah. At that time we were just looking at scope one and two so that was what the carbon tax applied to. So our direct emissions, which for us was predominantly employee travel and it was electricity consumption. So it was actually somewhat easy because those were pretty easy things to track, miles of travel for employees and how much electricity we were consuming. So we had a pretty easy time at least in terms of the accounting early on.
Now there are whole other things about, you know, how do you dealing with things like eGRID and how do you calculate the emissions and all of that stuff. But it was easy to do sort of our internal accounting. Where things have grown exorbitantly more complex is in 2019 when we made our carbon negative commitment, then we- we actually expanded to include scope three and include our supply chain, which for us represents about 75% of our emissions.
So we not only increased the pie considerably versus what we were doing in th- the years prior to 2019, we also increased our ambitions in that we're not talking about being just carbon neutral anymore, we're talking about being carbon negative because we're, the goal is to also pay back our climate debt from the founding of the company in 1975, hence the need to be negative beyond 2030. And we of course, introduced significantly more complexity because now we're talking about supply chain, which is far more complex than thinking about our own direct emissions and our electricity emissions.
And so that has now involved a lot more people in the company. As I mentioned, you know, when I started at Microsoft, there were maybe four or five people that were thinking, you know, I could count on one hand the number of people that were responsible for sustainability. I can't count on one hand the number of teams across the company right now that are thinking about sustainability and are in supply chain working in side of Xbox, working inside of our materials for our ser- what goes into our server supply chain for our data centers, that in the construction materials for our equipment and in our facilities. So the number of people that now have to lean in on this issue is infinitely greater than it was when I started 10 years ago.
Jason Jacobs: One thing that I wonder about is in order for sustainability to really become of value in practice as you were describing, it can't just be a group that is preaching it that sits outside of the business units, it really needs to be infused in each and every decision within the business units. So if you have a group that it's not infused in the business units, but if it's infused in the business units, then everyone owns it and no one owns it. So how have you structured things at Microsoft and what learnings might there be from that journey that you've had internally that people at other companies trying to figure out similar to my benefit from?
Brian Janous: Yeah. And you- you're you're right. I think you kind of alluded to, you know, if it's everyone's job, it's no one's job, right? And so I think there was a period of time where I would have said that about Microsoft, that if you would have asked, for instance, even on our SLT five years ago, who's accountable for sustainability, they would've thought it was a trick question. Like all of us are nobody or what? Like no one knew because there wasn't that clarity of- of priority and of stilling that as a value that we have today.
And so when we actually around the time of making our carbon negative commitment, Satya also tapped Brad Smith our president with being accountable for sustainability. That was the first time that any SLT member had ever been given that accountability. We have since added to that where we actually have a compensation scheme for the executives that is also tied to sustainability. Again, it's going back to, how do you make something of value? Right? You make it important to the executives.
And we actually have a committee that meets on a quarterly basis, a climate council and each SLT member has to-to nominate someone to that council. So there's just a lot of just sort of fundamental things like that where once it's coming from the top and saying, hey, this is a- this is of value for the company, you are going to be you know, as a team member evaluated on the degree to which your part of the organization is driving towards certain sustainability goals and metrics. It becomes a non-negotiable.
And I- I get the question a lot about you know how do you build a business case? 'Cause you know, there's always going to be a price tag associated with these things. And once something becomes of value, people stop talking about the business case. Like for instance, the customer privacy, that is a core value of Microsoft. No one sits around in debates, is it too expensive to keep you know customer data safe? It's like, well, that's a non-negotiable for the company.
There's no price at which we would say no, no it's too expensive to do that. No, that's- that's the reality of doing business in the world that we operate in. And it's gotten to the point within Microsoft where sustainability sort of sits at that same level, that there's not these debates going back and forth of like, well, can we really afford to buy more renewable energy? Can we really afford to buy lower carbon you know materials? Once we made the commitment to say this is what we're going to be as a company, we're going to operate as a carbon negative operation. Now it's just the debate about how.
We knew, going in and as we sat around, you know, with the executives when we're making this decision about coming up with this you know, carbon negative framework, we were very clear we have no idea how we're going to get there. Like there's a lot of stuff that we just don't know. Like we had some pretty clear path on some things like electricity, that was one. I was like, "Why shouldn't we go buy a lot more, a lot faster?"
But there were a whole lot of things in our supply chain where it's like we don't even have perfect visibility into what- what's in there, like what's in that giant bucket of scope three. And so we certainly don't have a roadmap yet or didn't at the time. We have, since, you know, since we made that announcement, I've done a lot of work to develop clear year by year roadmaps of how we're going to get to 2030 but we didn't when we made the announcement. That was really about saying, "Hey, this is just going to be of value. And as leadership we're going to send this message and we expect everyone then to go figure it out."
Jason Jacobs: Can you talk a little bit about the state of the carbon markets and a little color on why I asked the question offsets, for example, get a bad wrap because of additionality, because of lack of transparency, because of the incentives being skewy? And I've heard that you need to make a choice. If you take the same budget that it would take to get you to, let's say carbon neutral, you might actually have a higher impact on the problem buying higher quality projects that don't actually make your dollars go as far towards carbon neutral but have a bigger impact overall on the problem. So as you think about allocating that spend for things like offsets and credits, where does that live within the organization and what's either the Brian view or the Microsoft view on- on how to think about allocating that portfolio of spend?
Brian Janous: Yeah. So I think that- that too has been a journey for us. And I guess what I would say to those who are just trying to get started on this journey, doing something is better than doing nothing. So if you can move towards some sort of commitments, you know, regardless of how consequential they are. And I look back at our journey, right? I mean, the stuff we were doing back in 2012, it's not nearly as consequential as what we're doing today, but at the same time, it was foundational to getting us to where we are today.
We wouldn't be here if we had tried to start here, right? We just would have run into a roadblock and not been able to sort of build that foundation. So I don't want anyone to be discouraged if they feel like the things their companies are committing to or the things they're doing, they feel like maybe aren't as- as material or consequential as some others. It's a place to start and you can always build from there. But I do think it's important to understand that these markets, whether we're talking about offsets or renewable energy credits, they are a continuum of impact.
And I think a lot of times it becomes black and white of like, oh, offsets are crap and extra crap and [inaudible 00:28:16]. It's like, well, no, there's- there's always a continuum of impact. There's a continuum that you can measure and it starts... There was a good article in Canary that Jeff St. John did last week that I thought did a really good job of- of sort of laying this out. And he referred to it as, you know, you have sort of this- this sort of attributional offset or- or wreck, which is, I just bought something that I can then attribute to me, right?
I have no idea of the quality of that thing, but I can say that, "Hey, I bought this renewable energy credit, I'm on the south side so now I can sort of attributionally say I'm carbon neutral or net zero or whatever." The next step is causal, that I actually did something, and this is how we usually think about additionality. I did something that actually caused a net new offset project or a net new renewable energy project. And so that really was, I would say the gold standard over the last several years, is this idea of additionality by doing something that's- that's changing.
But there's one other step beyond that, and this is what I would call a consequential, which is not only did I cause it, but can I also measure the consequence of that action? Can I demonstrate that let's say we're talking about a carbon offset project, that I am permanently, or at least for a very long time, removing that carbon from the atmosphere? Not just paying someone to do something they were going to do anyway, but am I actually doing something that is causing there to be less carbon in the atmosphere.
Or in the case of renewable energy, the way we think about it, am I deploying renewable energy in such a way that I can demonstrate a measurable reduction in carbon emissions associated with electricity production? Because I can put a renewable energy project next to a whole bunch of other renewable energy projects say out in West Texas and the marginal carbon reduction in carbon emissions may be very small. From a causal basis, I can still say, well, I caused 200 megawatts of wind and I can check that box but I may not have actually had as great a consequences I wanted to have.
And this is where we see the industry going towards thinking about issues like locational marginal emissions and where I put these projects actually makes a pretty big difference. And so what are the sort of the downstream effects of my actions? And there's a whole nother layer of that when we think about, so the issue of environmental justice and how do we think about how we're making investments and how not only are we addressing emissions issue, but are we addressing some of the underlying historic inequities in the energy system?
And so getting to that next level of measuring sort of the consequence, that's the hard part and that's where it gets challenging and frankly, really interesting. Because it's- it's really the meaningful work, I think that we have to do over the next decade. And it's not to say that what we did over the last decade was bad, right? We were building again, where it's all about building foundations.
We were able to take, and I say, we as a collective, all of us involved in this space, we were able to drive the cost of wind and solar down 80 and 90% over that 10 year period because we were driving demand and we were driving scale. Had we not done that, we would not be in a position to be talking about some of the goals we're trying to set for 2030 and 2040. Because now we have this foundation of very low cost zero carbon resources that are going to enable massive scale and massive transformation over the next decade.
Jason Jacobs: When it comes to assessing projects for the criteria that you were just going through, has Microsoft actually built out that expertise in house? Do you rely on outside consultants? What advice do you have for other companies whose core business is something totally different, but increasingly are needing to make these decisions in this world that are outside of their areas of expertise? Where should they acquire that expertise and in what form?
Brian Janous: Yeah. So our approach is to as much as possible use outside resources to build tools that are scalable, not just for Microsoft, but for the world. As I mentioned before, I mean, data centers represent maybe 1% of the world's electricity. So if Microsoft and all of our peers go out and we do all this great stuff and we solve all of our own emissions, we've barely put a dent in the problem. So if we're not thinking about this in terms of collectives and in terms of platforms and in terms of scalability, we're not really contributing nearly as much as we could.
So for us, it doesn't... there's no point in really doing this if we're not going to find a way to make it scalable. So for instance, you know, we're talking about this issue of locational marginal emissions. You know, we worked with- with surety to build this platform that will help us gain that insight that we're looking for. But it's an external platform so anyone can go use this, anyone can gain those insights and use that intelligence to start to drive their own decision-making.
Likewise, you know, as we've- we've been really been working on this issue of, you know, how do we get to more of a 24/7 delivery of zero carbon energy, we worked with Vattenfall in Sweden to build a platform on Azure that allows them to be able to offer this type of product to their customers. Again, it wasn't about creating a bespoke solution for Microsoft, but saying, hey, let's- let's create solutions that can be broadly applicable across the industry because our ultimate goal is the decarbonization in electric grid. It's not just the decarbonization of Microsoft's operations, that's sort of a step along the way. And so keeping focused on that goal really pushes us to work externally as much as possible, because that's the only way we're going to truly achieve the desired outcome.
Jason Jacobs: Switching gears to more of your direct purview, a GM of energy and renewables is an interesting title. I wonder, is that an energy job or is that a climate job and are those terms synonymous?
Brian Janous: I do believe they're synonymous today. If you'd asked me 10 years ago, I'd say I don't think they're synonymous, that sustainability and climate would have been sort of a side job, but today they're so intricately intertwined. And again, it goes back to that issue of values. We don't think about energy without thinking about climate, without thinking about carbon, without thinking about the other effects associated with the decisions we're making. So once sustainability becomes a non-negotiable, then every job becomes a climate job.
And so going back to the conversation I was having with our construction folks, and it wasn't... we weren't debating about whether we should use lower carbon materials or not, it was just which lower carbon materials should we pursue and how do we scale those industries and how do we help drive costs down, how do we go faster? And so every job starts to become infused with that thinking once you establish sustainability as a value and as a non-negotiable.
Jason Jacobs: Given that ultimately I would assume that the goal is low cost, highly scalable carbon free energy, so there's kind of a cost lever, there's a- a carbon lever and there's a performance lever. And maybe there's other levers I- I'm not thinking about so feel free to enlighten me. But the question I have is not all of those are gonna come together at once, it's a journey over time. So how do you prioritize along the way?
Brian Janous: That's great. And you hit the nail on the head. I mean, for us, it is, if you ask anyone on my team, what are their priorities, they're going to say it's- it's reliability, right? So we have to be able to keep the lights on to deliver services to our customers. It's cost, we've got to continue to drive costs down so that we can grow the business and you know, provide the services we wanna provide. And it's- it's sustainability. We have that, that is also a... So we basically have three non-negotiables that we have to balance all the time.
And of course, there's going to be trade offs along the way. Of course, there's going to be times where we can't get all three together, you know, in the way that we like. I think, you know, example of that right now for us is, you know, what we're trying to do with our diesel generation fleet. You know, we set a goal to be off of diesel fuel by 2030, once again, a goal that when we set it, we didn't really have a clear vision as to how we were going to get there.
But our thinking behind that was reliability for cloud services is a non-negotiable, therefore you- you always have to have that backup, some form of backup because the electricity grid is- is never going to be perfectly reliable. So that's why data centers are built with generators and UPS, you know, battery based backup. So we were looking at that going, "Wow, that... this whole diesel thing is a perfect issue of thinking about cost and reliability and sustainability because we know we can't keep just building more and more gigawatts of data centers backing them up with diesel plants."
So we set that goal and that's really set us off on a journey to say okay, what can we do to drive down the cost of sustainable fuels for instance? And so we'd done some of our first deliveries. Our first one was in Sweden and we've recently done some more here in the US of- of renewable diesel fuel and HVO fuel in Europe. And there's a cost premium associated with that, and we- we get that, but we're also looking for opportunities you know via our climate innovation fund or our billion-dollar climate fund to start to invest in some of those technologies and some of those companies to help drive those costs down.
But we have to still have the reliability. So we can't sacrifice that and say, "Well, the easiest way to you know lower the cost, improve our sustainability is to get rid of any sort of standby capability." Well, that's a non-negotiable. So we have to go solve that problem some way, we have to be able to provide reliability, but at the same time, achieve those other objectives.
Jason Jacobs: And I- I just took some notes. The levers I can think of in terms of how you go about reducing or achieving those levers that we just talked about around reliability and cost and sustainability would be demand reduction, it would be cleaner choices and it would be offsetting the rest. Are those the right levers and are there any others that I'm missing that you think about on an ongoing basis?
Brian Janous: Well, I think you've pretty much hit the main ones, right? I mean, the first one is yours last, right? Drive efficiency across whatever the system is. Inside the data center, there's sort of two levers of efficiency. There's- there's so only two things that really consume electricity in a data center, it's the servers and then it's everything that's not the servers, right? The servers are especially for a hyper scale operation like ours, the servers are the vast majority of it.
Most of our data centers run on outside air for cooling. We don't have mechanical cooling so we're literally just taking louvers in the side of the building and we're pulling air from the outside and that's adequate to cool most of the year. In warmer climates, we evaporate some water through that airstream for certain periods of the year. But on the whole, it's a pretty efficient operation. The other area where you can obviously drive that efficiency is in the servers, right? Making the servers more energy efficient, making the software more energy efficient.
So all of those are work streams that we drive constantly because one, there's a huge economic benefit to do so because if we can buy less servers and use less energy, there's- that's great benefit. But it's also part of our sustainability commitment. How do we drive efficiency in our operations? The next thing of course is to eliminate as much as possible, the emissions associated with those operations. And so if I take electricity, the way we eliminate emissions is we buy renewable energy.
We buy net new renewable energy and then whatever's left over, you know, again, and the reason why electricity is in some ways the easy example, because like we know how to, or that we can get to zero carbon electricity, like zero carbon electricity system, like that is something we can do. And it's part of the reason why we wanna electrify everything, because we know it's gonna be easier to get to zero carbon electricity to say it's gonna get to zero carbon fuel and so hence the push for home electrification, et cetera.
So electricity is actually kind of the easy one to get to clean. And then hopefully at the end of the day, you have nothing left offset because you've got a hundred percent zero carbon energy, a hundred percent of the time. In those harder to abate sectors, you know, something like cement or steel, that's where offsetting comes in, right? And so what Microsoft has said is that we are going to get to zero on scope one, get to zero on scope two and scope three, our goal by 2030 is to reduce that by 55%, you know and that's 75% of our emissions reduced by 55%.
And then the rest were going to in essence offset or remove via carbon removal projects. And we just completed our first carbon removal RFP and announced a result of that. We acquired 1.3 million metric tons of carbon removal projects. And that is all sort of setting us up... and we're going to have to do a lot more over the next 10 years, but that's all setting us up to get to that point where we actually are able to remove whatever we have and eliminate it.
And I'm optimistic on the reduction part. I- I frankly, I think we're going to exceed that goal of 55%. I've seen a lot of innovative thinking from our supply chain teams and thinking about scope three piece and how do we work with our supply chain? How do we- how do we drive reductions? But- but as you know, I mean, there's still going to be something le- I mean, you're never gonna get to complete zero carbon that doesn't require some amount of carbon removal or offsetting. There's just certain very hard to abate sectors that are going to be hard to abate for decades to come.
Jason Jacobs: One of the knocks I've heard on renewables and it's not really a knock, it's just more of a constraint is that they can only take us so far due to things like intermittency, the sun only shining at certain times of day in certain parts of the world, the wind only blowing at certain times of day in certain times of the world and the importance of storage to help bridge the gap. How far do you think renewables can take us? And to the extent that there are blockers or constraints, what are the ones that are holding back the transition the most?
Brian Janous: Yeah. I mean, I- I'm very bullish on the ability for renewables to take us most of the way there. And that that is clearly a bet on storage technology because that's what we need to make that a reality, right? I mean, we've obviously seen significant cost declines in energy storage over the last decade as well along with wind and solar. But I would say storage is still behind in that when you look at what wind and solar are really competing against, it's clear that wind and solar are the least cost resources on a levelized cost of energy basis of- of anything out there.
And so in essence, you know, zero carbon electricity generation has won. But now we get into this flexibility question and- and right now does- can energy storage solve, you know, say for instance, the backup needs of a data center? Right? If we've got a diesel generator and we've got 48 hours of backup, on a pure cost basis, there's no battery today that can displace that asset on a sort of breakeven basis, right?
So storage today still does not have the ability to supplant all of the things that we use across various systems to provide reliability for the electricity systems, to provide flexibility, fast start gas units and things of that nature. But I do see a lot of promise, both in the continued decline of lithium ion technology which just means each and every year, we get more duration for the same dollar so that just means there's more and more applications that can be displaced if what I would've paid for and gotten, you know, 60 minutes of duration a few years ago is now, you know, 120 minutes or 200 minutes that in a couple of years is gonna be four hours and eight hours and six hours and...
So that just means each and every year, there's more that we can do. And then of course, as we make step changes, either in- in that technology with things like silicon anodes or- or we make step changes in completely new battery technologies to provide us longer duration, which are gonna be absolutely essential because lithium is gonna be great for solving sort of daily cycles, but when we start talking about monthly and seasonal, we need entirely new technologies to do that.
So the answer to the question of how far renewables are going to take us is- is really going to be okay, well, how far is storage gonna get? Because that is going to be the lever that we use to integrate more and more. And so... And I'm... Frankly, I'm- I'm bullish, I think we are gonna make a lot of strides in this decade on what we can do with storage technology. But again, it all remains to be seen.
Jason Jacobs: And switching gears slightly, you talked before about the importance of outside partners whenever you can. I'm curious as you look at the global footprint for Microsoft and different regions have either regulated or deregulated and utilities or retail electricity providers, et cetera, but there's also, it seems and correct me if I'm wrong that there's an increasing trend of companies, DIY actually standing up things like renewable infrastructure in-house and managing it themselves. What's been the Microsoft philosophy to date and how do you think about that looking forwards?
Brian Janous: I mean, today we've largely relied on external parties to do the development. And part of it is, is just because of the massive scale. I mean, we- we procured just over six gigawatts of renewable energy last year. Um, and that's up from probably six years we've done about a little over two gigawatts. And so we need... and we did this across 10 different countries. So frankly we don't have the capability or probably even the desire to stand up the type of- type of organization that would- we'd have to have to be able to develop like that.
And we are moving into new countries all the time and so we actually need to rely on local resources and local development and folks that- that are actually building pipelines in order to keep up with, with our demand. And so we'll probably continue moving down that same road because we, you know, have a lot of great global partnerships with a lot of great companies that have built up the- the muscle and the capabilities to both develop and then ultimately operate these assets for us.
Jason Jacobs: How important is policy in all of this and where does it fit in?
Brian Janous: It's critically important. There's no way that as a society we are gonna achieve the climate outcomes we need without concerted effort of policy makers, regulators and commercial entities driving the types of behaviors and decisions, you know, that we need to see. There's no way we- we can get there. You know, one example of that would be something like transmission. This is something we've obviously debated a lot for a long time.
The US has never had really great policy that would support the large scale transmission build out that we need, you know, of say high voltage DC lines to move power out of the Midwest into, you know, areas that don't have that same type of resource. And as you look at any- any model of how we decarbonize the electric grid, I haven't ever seen a single model that proposed we could do so without significantly more transmission. But that's not something that can happen just by sort of commercial desire alone, right?
As we've seen over the last decade in plenty of stories about folks trying and failing to build out, you know, major transmission lines. And it's just not gonna happen without some role that government's gonna play. And so I look at situations like that and say there's a role for both. There's a role for commercial entities to come in and- and participate in projects like that, but they won't happen without the government leaning in.
So if we don't have the supportive policies that are focused on getting us to this goal of decarbonization, we're not gonna get there or maybe we'll get there, but it's gonna take an extra couple of decades for us to do so. I would say it's- it's equally as important to have corporations at the table as well because if you don't have that demand and if you don't have that voice of industry saying, "This is important to us," we're actually talking to our utilities and talking to our regulators, talking to our policy makers, you know, they're not gonna have the push to go as fast without that voice. So I think- I think you need both. There's really no way to get there without having both at the table.
Jason Jacobs: And what role has Microsoft played to date in trying to drive and accelerate those policy discussions? And looking forwards, what role do you hope that Microsoft and other companies with Microsoft might play in helping accelerate the transition on the policy front?
Brian Janous: Yeah, I mean, there's- there's just no question or ambiguity as to Microsoft's commitment to the steps that we need to take. And that plays out in a lot of different ways. It plays out in participating in any number of proceedings at the FERC. We were very active in the 2222 discussions around distributed energy resources, doing things at the state level, you know, advocating for the new climate bill that passed in Washington state a couple of years ago, very vocal on that.
So, you know, we take a lot of public positions around climate. And again, this goes back to that issue of values. It's- it's a value for the company and so, you know, we're gonna stand up for policies that- that we think are going to be effective in getting us there. And some of that is, you know, big stuff, you know, UN sort of discussions and some of it's really small stuff. Some of it's sitting down and talking with some of our local boards and regulatory bodies and thinking about how do we structure tariffs in such a way that encourage more development of renewable energy and help us get to our goals faster, but then again, create opportunities for others? And so it run the gambit really of where we participate, where we lean in, but it's definitely something that is a- a high priority for us.
Jason Jacobs: And you- you happen to sit in a renewables and energy role, but let's say that you didn't. We've talked about how a small group of people that sit in these specific domains within the organization can make the case and build groundswell and get leadership on board. But what about anyone else in the company that might work in an unrelated function that- that cares about this problem and wants to help? What is the role of internal employee activism? Does it help? Is it a detriment? Should there be more of it? What message do you have for other people, either within Microsoft or other companies like Microsoft that don't work in the renewables function, but that are super concerned?
Brian Janous: I would say it absolutely helps. I mean, it- it helps to know that- that you have a group of employees who are passionate about this. We have a very large community of employees that are part of a sustainability group that, you know, most of whom don't have anything to do with sustainability necessarily in their- their day to day work, but are very passionate about the topic and- and are very vocal. I think for- for most companies and tech companies, maybe even more so than others, we really see this as a- a retention issue as well.
We know that the types of people that come to work at Microsoft tend to care about these issues and they expect Microsoft to care about these issues, and again, live those values as well. And so it is important to communicate why you think these things are important. Going back to my Steve Ballmer story, right? It was- it was his kids telling him, "Hey dad, like we think this issue is important and we think it should be important to you too." And that- that stuff works, right? When you have constituents that you care about and stakeholders that you care about, in this case your employee base telling you that- that they think this should be a value for the company, that's meaningful and it moves to needle with a lot of executives.
Jason Jacobs: When I ask this next question, some people hear it the wrong way and they say... 'Cause the- the question is around the biggest blockers or things that could be changed maybe outside of the scope of your control that would most accelerate progress. And, uh, I did a recent episode where someone said, "Well, there's so many things that need to change. You can't pinpoint. There's no silver bullets." And it- it's not really a silver bullet question, it's more just that, you know, does anything stick out to you as just a real thorn on your side? Like if there's one thing or if there's a handful of things were different then my job would be a whole lot easier in bringing about the kind of progress that- that we aspire for.
Brian Janous: Yeah. I think the biggest problem that we still have today is just the lack of data and transparency about energy systems, about even how the grid operates. And so as we're thinking about this issue of getting to a hundred percent, zero carbon energy a hundred percent of the time, the fact of the matter is we don't have great visibility today into what's happening on the grid in any given hour. And then therefore, it makes it very difficult to know, well, what is the next decision we need to make?
And if I think about that, take that down all the way to the granular level of, you know, just say a household, right? I don't- I don't know what's happening on the grid, the devices that are connected. You know, we talk, there's all this talk for years about smart meters and things, but the fact of the matter is like, if you've got a dumb grid, it doesn't matter how smart your meter is, right? It's only as good as the information that's being fed to it and the insights that is being fed.
And so I think there's a lot of work to do in really creating better software intelligence optimization using AI to start to understand the grid more and understand the grid as a system and what's actually happening and then where are the levers? Where's the low hanging fruit, the opportunities for demand side management and controlling loads more intelligently? And so I- I think we're doing a lot of great work on the- the fundamental technology lowering the cost of wind and solar and storage.
But if you don't at the same time, do work on creating better intelligence on what's actually happening, you're not gonna know what to do with that stuff. Going back to what we were talking about around locational marginal emissions. It's like, cool. I'm just deploying a bunch of wind, but I don't know if I'm doing anything until you actually give me the data that shows that, oh, if I put this wind project here versus if I put it there, it actually materially changes the carbon impact.
So that sort of data driven insight is right now, I think our biggest problem because we know we've done a lot, but we don't fully know if the things that we've done exactly the right things are not. And that's where I think we have to go in the coming years, is get far more intelligent so that we can be a lot more surgical around the investments we're making.
Jason Jacobs: A number of the people who listen of the show are senior technologists, either engineers or product managers or designers or executives or founders and they're trying to figure out how they can take their skills and have the biggest impact on the problem, whether it's joining a company, starting a company or something else. Do you have any rallying cries for them, either specific problems that you wanna call out that you hope someone tackles beyond the one you- you just mentioned or- or other words of wisdom that you think they might benefit from hearing?
Brian Janous: Yeah. I think going back to what I was saying before about, the most important thing to understand is that you really got to dig into how the energy system, how especially electricity grid actually works. How are the decisions made? What is motivating utilities? And I think that going back to my experience of testifying in rate proceedings and- and reading rate cases and things, like getting into the nuts and bolts of how utilities specifically are making decisions because they are incredibly important player.
And if you go back a few years, I think the- the zeitgeist was well, we're just gonna get rid utilities and they're dinosaurs and we're gonna completely replace them. You don't hear that as much anymore. I think everyone has kind of come to the realization that utilities aren't going anywhere, they will be part of the solution. And some of them are gonna come kicking and screaming, but they will. I mean, th- there's no way around it.
And so the more that you can understand how these markets are regulated, how these decisions get made, how utilities make decisions and then think about, okay, what then are the problems and the sticking points that I can go attack within that system? Because that system's not going away. Like we're not disintermediating the utility, like that system will persist. It is a by its very nature of monopoly business. And in- in many ways it needs to stay that.
We need a robust grid. We need the grid to be built out in more intelligent ways. We need more efficiency built into that system. And so, you know, seeing that system and then finding the constraints within it and saying, okay, how can I really lean in and attack this particular constraint? That's the right approach.
Jason Jacobs: Who do you wanna hear from? Where do you and where as Microsoft need help if anywhere?
Brian Janous: Well, I mean, certainly one area and probably the thing that keeps me up at night goes back to what we were talking before around transmission and how are we actually going to be able to build out the grid that we need to get to the ends that we desire? Because it's- it's not just about, you know, long distance transmission, it's also about if we start talking about, you know, I look across my neighborhood and you know, each and every year there's more electric vehicles.
Well, okay. What happens when there's electric vehicle in every driveway? So it's not just the big, long distance stuff, it's also sort of the small ball that happens at the distribution level. And I don't know if you've noticed, but we've not really been great in the last say 50 years or so at least in the United States with building big things. Like we used to be great at that, we used to be really good at building really hard things like hydro plants and stuff that... but it hasn't been our forte the last few decades.
And so how do we get past some of that gridlock to say, hey, building big infrastructure like distribution systems is critical for what it is that we're trying to achieve. And I... frankly I see it every day because we're out building your data centers and we're out trying to acquire more or of that infrastructure, right? To build out more capacity to support our massive growth of our business.
And so I see those constraints day in and day out of where the system is kind of creaky and how do we go faster? And we go in and we have conversations with utilities and they say, yeah, we can get you that in 7 to 10 years. I'm thinking, "Well, that's not gonna work." Right? How can we not go faster? Like how can we not bring more technology to bear on this, bring more intelligence, bring more centralized planning that is thoughtful that again, uses data and insight and then can really build in the benefits associated with that, right?
Because a lot of times this is just... it's hard for utilities to even understand, okay, if I did this, what happens? What happens downstream from that? So infrastructure, you know, transmission, how we build that out, that to me is still probably one of the biggest problems we have that is not gonna be easy. There will be some technology that will help, but it's also gonna be some of this, the small ball of, you know, bringing utilities to the table and bringing regulators and, you know, doing IPRs and doing, you know, integrated resource planning for utilities to figure out, you know, how we actually get the investment necessary to achieve the type of grid that we need to have in 10 years.
Jason Jacobs: Well, we broke the one hour mark. I feel like we could keep talking here, but is there anything I didn't ask that I should have or any parting words for listeners?
Brian Janous: Well, I just... I appreciate the opportunity. I am frankly humbled every day to get to come to work and work on these sort of issues from- from where I get to sit. And I love hearing stories and I appreciate the work you're doing on the pod because it certainly gives me insight and ta- others are thinking about these problems from completely different angles. And I get to sort of address my issues every day, but I love to get to look across this industry and see how many dedicated people that we have that are working to skin to think about the whole system that we have to deal with.
And my focus is largely on electricity and energy systems, but you know, of course we need food and we need people thinking about clothing and- and distribution, all of these systems have to evolve. And to see people that are committed to sustainability across all these different industries is to me is very encouraging and it makes me incredibly optimistic for the next decade.
Jason Jacobs: Well, I feel the same and I think that's a great point to end on. So Brian, thanks so much for coming on the show and for all the work that you and Microsoft as a larger organization are doing to set an example and get this done.
Brian Janous: Thank you for having me, Jason, really appreciate it.
Jason Jacobs: Hey everyone, Jason here. Thanks again for joining me on My Climate Journey. If you'd like to learn more about the journey, you can visit us at myclimatejourney.co. Note, that is .co not .com. Someday we'll get the .com, but right now .co. You can also find me on Twitter at Jjacobs22 where I would encourage share your feedback on the episode or suggestions for future guests you'd like to hear. And before I let you go, if you enjoyed the show, please share an episode with a friend or consider leaving a review on iTunes, the lawyers made me say that. Thank you.
