Microsoft tries to clear the air with mountains of CO2 credits

'Supply chains still powered by coal and gas' scoffs Greenpeace

Microsoft has inked a contract with Occidental Petroleum to buy 500,000 metric tons of carbon dioxide removal (CDR) "credits" over six years to support its overall carbon strategy. The move follows a dramatic rise in Microsoft's CO2 emissions due to datacenter construction.

This latest agreement is with 1PointFive, Occidental's carbon capture and sequestration business, and claimed by the Financial Times to be "worth hundreds of millions of dollars," although the exact value of the transaction has yet to be disclosed.

Carbon credits are a way of buying a verifiable emissions reduction from a third party in other to "offset" one's own emissions, and the concept has come in for some controversy over the years. Nonetheless, Direct Air Capture (DAC), directly extracting carbon dioxide from the atmosphere, has its supporters, with the IPCC stating [PDF] that, while not enough, some form of carbon removal is part of "all modelled scenarios that limit global warming to 2°or lower by 2100."

1PointFive describes the agreement as the largest single purchase of CDR credits making use of DAC, and says it highlights the increasing adoption of this tech as a solution to help organizations meet their net-zero emission targets.

Microsoft's CDR credits will be sunk into STRATOS, an industrial-scale DAC facility under construction in Texas. Here, the captured CO2 the credits are paying for will be stored through subsurface saline sequestration, according to 1PointFive.

"A commitment of this magnitude demonstrates how one of the world's largest corporations is integrating scalable Direct Air Capture into its net zero strategy," says 1PointFive President and General Manager Michael Avery.

"Energy demand across the technology industry is increasing and we believe Direct Air Capture is uniquely suited to remove residual emissions and further climate goals."

That six-year period over which the CDR credits will extend fits neatly with the 2030 deadline Microsoft set itself several years back to become "carbon-negative".

However, the company's CO2 emissions have since increased by nearly 30 percent, according to Microsoft's 2024 Environmental Sustainability Report. This was blamed largely on indirect (Scope 3) emissions from the construction and outfitting of more datacenters – a highly carbon-intensive process – to meet customer demand for cloud services.

It seems likely that this latest agreement may be intended to counteract this. We asked Microsoft for the reasons behind it and will update if we get answers.

In a statement accompanying the announcement, Brian Marrs, Microsoft's Senior Director for Carbon Removal and Energy, said that DAC plays an important role in Microsoft's carbon removal portfolio to support its broader goal of becoming carbon-negative by 2030.

One of the major causes of Microsoft's feverish datacenter build-out has been AI, with the company ramping up support following the explosion of interest in OpenAI and ChatGPT over the past couple of years.

Microsoft isn't the only tech giant finding itself in this position. Google admitted earlier this month that its CO2 emissions are up by 48 percent since 2019, despite having its own 2030 "net-zero" climate commitment - Google also pointed the finger of blame at AI.

The use of credits to offset emissions, however, is causing concern. According to a report by McKinsey, some critics of offsetting – including the use of CDR solutions – cite worries that it provides emitters with a "licence to pollute" and represents "a dangerous distraction" from decarbonization efforts.

Environmental campaign group Greenpeace also weighed in last year on the use of methods such as renewable energy certificates (RECs) by tech companies to claim they are meeting their carbon targets.

RECs in particular do not necessarily encourage the production of new wind or solar farms, and the energy supplied through them may still come from fossil fuels on days when there is low wind or solar energy generation.

"Brands like Apple and Microsoft should not promote their products as 'green,' when their supply chains are still powered by coal and gas," a Greenpeace campaigner said at the time. ®

More about


Send us news

Other stories you might like