"While the world will need to reach net zero, those of us who can afford to move faster and go further should do so," Microsoft's president Brad Smith said in a statement.
The company's plan involves cutting its carbon emissions projected to be around 16 million metric tons this year by more than half, both in its own operations and across its supply chain.
The fee, which was instituted in 2012 and nearly doubled last year, will be broadened to include indirect emissions from activities such as manufacturing, business travel and the electricity customers may use on its products.
Measures to reduce its direct emissions include buying enough renewable energy to offset 100% of its electricity consumption by 2025 and using only electric vehicles on its global campuses by 2030. It will also set up a $1 billion "climate innovation fund" to develop carbon reduction technologies.
By 2050, Microsoft (MSFT) said it "will remove from the environment all the carbon the company has emitted either directly or by electrical consumption since it was founded in 1975."
Microsoft's pledge comes as tech companies face mounting pressure from shareholders and even their own employees to do more to address the threat of climate change.
Google (GOOGL) has been carbon neutral since 2007, partly thanks to offset programs that involve purchasing carbon credits. The company's latest environmental report says it put 1.2 million metric tons of carbon emissions into the environment in 2018.
Smith admitted that it "won't be easy" for Microsoft to go carbon negative by 2030.
"This is a bold bet a moonshot for Microsoft," he said. "And it will need to become a moonshot for the world."