Microsoft secures largest ever soil carbon credit agreement amid data centres expansion

Microsoft has agreed with Indigo Carbon to buy a record 2.85 million soil carbon credits linked to sustainable agriculture in the United States, as the tech giant strives to become “ carbon negative” by 2030 despite surging emissions linked to AI.

The world’s biggest buyer of carbon removal removal credits did not reveal the cost of the 12-year tie-up.

Meanwhile, the deal reportedly falls within the timeline of $60 to $80 a ton for Indigo’s credits, which would value the deal between $171 million and $228 million.

What factors can improve soil carbon sequestration?

Regenerative farming encompasses a variety of actions such as reducing tilling, using cover crops and integrating livestock grazing. These practices improve the soil’s ability to sequester climate-damaging carbon emissions and increase water retention.

However, market data from the firm Sylvera showed a surge 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 collaboration deal.

In this regard, Indigo’s senior director for policy, partnerships and impact told Reuters in an interview: “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.”

Farmers will get financial benefits while receiving 75% of the average sale price of each credit generated and sold.

The primary notion behind “carbon negative" means that Microsoft plans to remove carbon than it emits, prioritizing high-quality removals to counteract its global operational emissions.

According to the voluntary carbon market, projects can be awarded credits for each ton of carbon they remove from the atmosphere, allowing companies to buy these credits to offset the footprint of their business operations.

Indigo helps identify areas where carbon can be removed, and then works with the farmers to develop the projects and sell the credits.

In line with the scientists’ viewpoint, carbon-removal projects are crucial for the world to slow global warming by offsetting emissions from industries such as power generation that continue to use fossil fuels.

Nonetheless, the skeptics say that the broader implications revolve around the measurement and durability of removal credits, arguing that removal technologies can distract from emission reductions.

Additionally, the record-breaking deal will represent a critical strategic pivot as Microsoft struggles with the environmental costs of the AI revolution.