Microsoft signs record multi-million dollar deal to buy soil carbon credit in push to reach 2030 green goal

Microsoft has signed an agreement with Indigo Carbon to purchase a record 2.85 million soil carbon credits, which are associated with regenerative agriculture practices in the United States. The move comes at a time when the Satya Nadella-led company aims to become “carbon negative” by 2030, despite its emissions surging due to the adoption of AI.

The deal is expected to be valued between $171 million and $228 million, according to a report by Reuters, which quoted a person familiar with the deal saying that it falls within the historic range of $60 to $80 a ton for Indigo Carbon's credits.

Microsoft has not released any financial details about the deal.

What is regenerative farming?

Regenerative farming covers a range of actions such as reducing tilling, using cover crops and letting livestock graze to improve the ability of the soil to capture climate-damaging carbon emissions and retain water.

Market data firm Sylvera said it had seen an increase in demand for such credits last year, including a deal by Microsoft for 2.6 million credits from Agoro Carbon, which previously held the record for the biggest deal.

“It's bringing the importance of soil carbon removal into corporate climate action, and really for Indigo, solidifying our reputation and leadership on high-integrity carbon credits,” Meredith Reisfield, Indigo's senior director for policy, partnerships and impact, told Reuters in an interview.

Farmers also benefit financially, receiving 75% of the average weighted cost of a credit from any given issuance or crop year, she added.

What does Microsoft gain from the deal?

"Microsoft is excited by Indigo’s approach to regenerative agriculture that delivers measurable results through verified credits and payments to growers," Phillip Goodman, Director of Carbon Removal at Microsoft, said in a press release.

Being carbon negative means Microsoft plans to ensure it facilitates more removals of carbon than the amount its operations globally emit.

In the voluntary carbon market, projects can be awarded credits for each ton of carbon dioxide they remove from the atmosphere, and companies can buy these credits to offset emissions from their business operations.

Indigo helps identify areas where emissions can be reduced or eliminated, and then works with farmers to develop projects and sell the resulting credits.

Many scientists argue that carbon-removal projects are crucial for the world to slow global warming by offsetting emissions from industries, such as power generation, that continue to rely on fossil fuels.

Sceptics argue that there are broader concerns about the measurement and permanence of removal credits, and suggest that removal technologies can divert attention from emissions reductions.