Microsoft has signed a landmark agreement with Indian startup Varaha to purchase over 100,000 carbon dioxide removal credits over the next three years, extending through 2029. The deal expands Microsoft’s portfolio of carbon removal projects as the tech giant scales up its AI and cloud operations. This partnership underscores the growing emphasis on durable carbon removal solutions to offset rising emissions from technology infrastructure.
Scaling Biochar Production in India
Under the agreement, Microsoft will support part of the funding required to establish 18 industrial reactors across India’s cotton belt, each costing roughly Rs 9.2 crore. These reactors will form the backbone of Varaha’s biochar carbon removal project, which converts cotton crop waste into biochar through pyrolysis. The initiative aims to remove over 100,000 tonnes of carbon dioxide over three years while generating long-term environmental and economic benefits.
Biochar: A Sustainable Solution
Varaha sources cotton stalks from smallholder farms in Maharashtra, which would otherwise be burned in open fields, contributing to air pollution. Through low-oxygen heating in biomass gasification facilities, the crop residue is transformed into biochar, a stable, charcoal-like material that locks carbon away for centuries. Beyond carbon sequestration, biochar can improve soil fertility, creating a dual benefit for both climate and agriculture.
A Boost for Farmers and Communities
Varaha has already engaged around 40,000 farmers across Gujarat, Rajasthan, and Maharashtra, integrating them into its biochar operations. Microsoft highlighted that the project not only broadens the diversity of its carbon removal portfolio but also promotes cleaner air, improved soils, and shared economic opportunity for farmers. Phil Goodman, Microsoft’s Program Director for Carbon Dioxide Removal, described the collaboration as a scalable and durable step forward for carbon removal in Asia.
Expanding Varaha’s Carbon Projects
In addition to biochar, Varaha implements other carbon removal strategies, including enhanced rock weathering, afforestation, and regenerative farming projects across India. The company plans to deliver its first batch of carbon credits to Microsoft by late 2026 or early 2027. This positions Varaha as one of the largest players globally in durable carbon delivery, leveraging its ability to operate projects reliably at scale.
Tech Giants and Carbon Commitments
Microsoft’s partnership with Varaha follows a similar agreement with Google, under which the tech company committed to purchasing 100,000 tonnes of biochar credits. The deals come as major technology firms confront rising emissions driven by the expansion of AI and cloud infrastructure. Despite efforts to become carbon-negative by 2030, Microsoft reported a 23.4% increase in total greenhouse gas emissions in fiscal year 2024 compared to its 2020 baseline.
India as a Carbon Removal Hub
India has emerged as a key market for carbon removal due to its abundant agricultural waste and large-scale farming economy. The country offers significant potential for projects like biochar that can both sequester carbon and reduce air pollution from crop burning. By developing 18 reactors that will operate for 15 years, Varaha projects a total removal of over 2 million tonnes of carbon dioxide throughout the project’s lifetime.
The Microsoft-Varaha agreement highlights the critical role of durable carbon removal in meeting corporate climate targets. By combining technology, sustainable agriculture, and innovative carbon sequestration methods, the partnership provides measurable environmental and social benefits. As AI and cloud operations continue to expand globally, collaborations like this signal a strategic shift toward scalable, long-term solutions for reducing atmospheric carbon.