Microsoft has signed a deal with Indian startup Varaha to buy more than 100,000 tons of carbon dioxide removal credits over the next three years, through 2029, expanding its portfolio of carbon removal projects as the tech giant scales up AI and cloud operations.
The project will turn cotton crop waste, which is often burned after harvest, into biochar — a charcoal-like material that can be added to soil, storing carbon for long periods while also helping reduce air pollution from open-field burning. It will initially focus on the western Indian state of Maharashtra and involve around 40,000–45,000 smallholder farmers.
The agreement comes as large corporations, including Microsoft, ramp up spending on carbon removal — projects designed to physically remove carbon dioxide from the air. The Redmond-based software maker is working toward its goal of becoming carbon-negative by 2030. However, Microsoft’s total greenhouse gas emissions rose 23.4% in fiscal year 2024 from a 2020 baseline, primarily driven by value-chain emissions linked to its growing cloud and AI business. Microsoft has not yet reported on its carbon progress for 2025.
With the rapid expansion of AI operations, energy use and emissions are rising, pushing companies to look beyond the U.S. for carbon removal projects that can take carbon dioxide out of the atmosphere. India has increasingly emerged as an attractive market for such projects because of its large volumes of agricultural waste and the scale of its farming economy.
Varaha will develop 18 industrial reactors that will operate for 15 years, with a total projected removal volume exceeding 2 million tons of carbon dioxide over the project’s lifetime, the companies said in a statement on Thursday.
One of the biggest gaps in carbon removal markets is not just installing equipment to produce biochar, but running projects reliably and navigating a stringent process to issue credits. Varaha’s ability to deliver credits at scale helped it emerge as the world’s second-large …