Stay informed with free updates
Microsoft will pay to restore parts of Brazil’s Amazon and Atlantic forests in exchange for hundreds of millions of dollars worth of carbon credits, finding that nature-based solutions can offset spikes in greenhouse gas emissions driven by artificial intelligence Emissions becomes the latest big tech company to bet.
The $3.2 trillion US company told the Financial Times it had struck a deal to buy 3.5 million credits over 25 years from Re.green, a Brazilian start-up that buys agricultural and cattle land. The project, funded by carbon credits and timber sales, restores land by planting native tree species.
Neither company disclosed the purchase price, but recent market analysis suggests the deal could be worth around $200 million. Microsoft’s recent deal makes it one of the world’s largest purchasers of naturally-based carbon dioxide removal.
The deal comes as groups including Microsoft, Google and Amazon are making significant investments in data centers to handle the huge demand arising from the growth of generative AI. But the construction has spiked energy use, complicating promises to investors to curb emissions.
President-elect Donald Trump’s administration will deprioritize climate change mitigation and instead declare an “energy emergency” to increase U.S. fossil fuel production, citing challenges faced by data centers to meet energy demand. did.
But for now, the US-based tech company remains the “largest buyer” of carbon credits associated with rewilding projects through agreements to buy credits over the next few decades, according to Re.green. said Thiago Picolo, Managing Director. “They are not alone, but they are on the cutting edge.”
Increasingly energy-intensive data centers are still powered by the grid, which burns oil, coal, and gas. This means that technology companies looking to meet their environmental commitments rely on purchasing credits equivalent to the removal or reduction of one ton of greenhouse gases.
The tech group also buys renewable energy credits, which represent investments in wind and solar at home and abroad. Amazon, Google, and Microsoft are also investing in nuclear energy.
Microsoft’s carbon footprint in 2023 was more than 17 million tons of CO₂ and other greenhouse gases, an increase of 40% compared to approximately 12 million tons in 2020.
We reached this number by using renewable energy investments and credits to offset some of the emissions from our energy use. The company aims to become “carbon negative” by the end of the decade by reducing emissions and investing in carbon removal credits.
Microsoft has led tech companies’ attention in recent years to technologies that store CO₂ underground for hundreds or thousands of years, and last year signed a deal with U.S. oil producer Occidental to buy 500,000 such credits. tied.
Recommended
These technologies are likely to store CO₂ longer than trees, benefiting local communities and ecosystems, but are vulnerable to fires and droughts that will accelerate as climate change intensifies. However, technology-based removal is expensive, at hundreds of dollars per ton, and the industry has been slow to scale up.
Major purchasers of carbon removal credits have sought nature-based credits that are cheaper than technology-based removal. Google, Meta, Microsoft and Salesforce announced last year that they planned to purchase 20 million tons of these by the end of 2010.
The global carbon credit market has been plagued by scandals involving how each tonne of CO₂ is verified.
Microsoft and Re.green signed a similar deal last May for 3 million credits. Microsoft announced last year that it would purchase 8 million credits from BTG Pactual Timberland Investment Group.
Pachama, a climate change technology startup that helps map carbon projects, estimates that the cost of such credits issued in 2023 could be up to $82 per tonne. Some regenerative credits sold for $20 a tonne last year, and prices could rise in the coming years, according to MSCI Carbon Markets.
People close to the carbon registry say Microsoft is “leading the way” among buyers, paying more than $50 per tonne for recent high-quality natural removal contracts, which is higher than the market. It is said to be considerably more expensive than other companies.
