Microsoft has signed an agreement with Indian startup Varaha to acquire more than 100,000 tons of carbon dioxide removal credits over the next three years, through 2029. 

The initiative expands the tech giant’s carbon removal portfolio as its AI and cloud operations continue to grow.

The project will convert cotton crop waste, typically burned post-harvest, into biochar — a charcoal-like material that can be applied to soil to store carbon over extended periods and reduce air pollution from open-field burning. Initially, the programme will focus on Maharashtra and engage 40,000 to 45,000 smallholder farmers.

The project forms part of Microsoft’s broader carbon-negative strategy, which aims to make the company carbon-negative by 2030. However, the company’s total greenhouse gas emissions increased 23.4% in fiscal year 2024 compared with a 2020 baseline, primarily due to emissions from its expanding AI and cloud business.

Varaha will develop 18 industrial reactors over the next 15 years, with a projected total carbon removal volume exceeding 2 million tons. Co-founder and CEO Madhur Jain highlighted that Varaha’s ability to reliably deliver credits at scale made it the world’s second-largest provider of durable carbon removals and attracted Microsoft’s investment.

Jain explained that Microsoft’s digital monitoring, reporting, and verification requirements required Varaha to build bespoke systems. Engaging tens of thousands of smallholder farmers in India created additional logistical complexity compared with concentrated biomass projects in the U.S. or Europe.

The project also aims to improve soil quality and reduce reliance on chemical fertilisers, while mitigating open-field burning. Microsoft CDR programme director Phil Goodman said, “This offtake agreement broadens the diversity of Microsoft’s carbon removal portfolio with Varaha’s biochar project design that is both scalable and durable.”

Read the full insights on Microsoft and Varaha’s carbon removal partnership in the complete story.

(Photo credits to Varaha’s official website)