Microsoft Buys 100K Tons of Carbon Credits from India’s Varaha

• Carbon Credits Purchased: Over 100,000 tons of carbon dioxide removal credits from Varaha, to be delivered over the next three years, through 2029.
• Microsoft’s Emission Increase: Microsoft’s overall greenhouse gas emissions increased 23.4% in fiscal year 2024 compared to its 2020 baseline. Microsoft’s aggregated Scope 1-3 emissions rose 29.1% from its 2020 baseline in FY23, driven primarily by Scope 3 emissions from datacenter construction.
• Varaha’s Project Scope: Initially focuses on Maharashtra, India, involving 40,000–45,000 smallholder farmers, and plans to scale to 18 reactors across India’s cotton-growing belt.
• Varaha’s 2025 Biochar Production: Processed approximately 240,000 tons of biomass, producing roughly 55,000–56,000 tons of biochar and generating around 115,000 credits.
• Varaha’s Total Projects: 20 projects across India, Nepal, and Bangladesh, with 14 in advanced stages and 6 in early stages, working with around 150,000 farmers. These projects have the potential to sequester about 1 billion tons of carbon dioxide over 15 to 40 years.

This deal underscores Microsoft’s escalating commitment to carbon removal, a necessity given the significant increase in its greenhouse gas emissions — particularly Scope 3 — tied to the rapid expansion of its AI and cloud infrastructure. By partnering with Varaha, Microsoft is not just acquiring credits; it’s investing in a scalable biochar solution that offers multiple co-benefits. The process of converting cotton crop waste into biochar not only sequesters carbon for centuries but also addresses local environmental issues like air pollution from open-field burning and improves soil health for smallholder farmers. This aligns with Microsoft’s stated goal of becoming carbon negative by 2030 and neutralising all historical emissions by 2050. Phil Goodman, Microsoft’s CDR program director, notes that this “broadens the diversity of Microsoft’s carbon removal portfolio with Varaha’s biochar project design that is both scalable and durable”.

While the Varaha deal is a positive step, it’s crucial to contextualize its scale against Microsoft’s overall carbon footprint. The 100,000 tons of removal credits, though substantial for a single project, represent a small fraction of the company’s total emissions, which reached 25,238,878 metric tons of CO₂ equivalent in 2024. Microsoft has made other large carbon removal purchases, such as 7 million credits with Chestnut Carbon and 2.85 million credits from Indigo Ag, demonstrating a broad strategy. However, the persistent challenge lies in addressing the rapid growth of Scope 3 emissions, which largely offset reductions in Scope 1 and 2. Scaling biochar projects, while promising, also involves logistical complexities in biomass collection, processing, and distribution across potentially tens of thousands of farmers.

I’ll be closely monitoring Varaha’s scaling efforts, particularly their aim to double 2025 throughput in 2026 to around half a million tons of biomass and sequester 250,000 tons of carbon. The success of their 18 planned reactors will be a key indicator of the scalability of biochar in diverse agricultural settings. Furthermore, observe how Microsoft integrates these biochar credits into its broader carbon removal strategy and whether these nature-based solutions can meaningfully dent the growth of its Scope 3 emissions. The efficacy of payments to farmers for crop residue management and biochar application as an economic incentive for sustainable practices will also be critical to watch for long-term project viability.