Microsoft buys carbon credits from BioCirc to continue program

Microsoft has announced a purchase agreement to buy 650,000 metric tons of carbon-removal credits from BioCirc, a carbon-removal startup. Carbon-removal credits are environmental financial instruments representing the verified extraction and storage of carbon dioxide from the atmosphere. The deal, which BioCirc confirmed was signed in May, directly counters reports from last month claiming that the technology giant was pausing its carbon-removal purchases. The agreement indicates that Microsoft is recalibrating its sustainability procurement rather than halting it entirely.

The company’s internal direction was clarified by Melanie Nakagawa, the chief sustainability officer at Microsoft. Nakagawa confirmed that the initiative remains active, stating, “Our carbon removal program has not ended.” She added that the company may adjust the pace or volume of its carbon-removal procurement as it continues to refine its approach toward its sustainability goals. The credits in this specific deal will be generated from five BioCirc biogas projects. These are energy production facilities that use biomass waste, frequently from agriculture, to produce methane and capture carbon dioxide for underground storage.

This transaction highlights Microsoft’s dominant position in the sector, as the company is reportedly responsible for more than 90% of the carbon-removal credit market. This massive market share means Microsoft’s purchasing decisions heavily influence the survival of early-stage companies in the industry. At the same time, Microsoft is balancing these environmental initiatives with its growing energy demands. In Texas, the company is working with energy firm Chevron and investment firm Engine No. 1 to build a natural gas power plant that could eventually generate 5 gigawatts of electricity.

The natural gas project in Texas underscores the tension between Microsoft’s expanding infrastructure needs and its environmental commitments. If Microsoft continues to pursue fossil fuel power plants to support its operations, it will need to significantly increase its carbon-removal purchases to meet its 2030 target of becoming a carbon-negative company, which requires removing more greenhouse gases than it generates. The BioCirc agreement suggests that while the company is adjusting its procurement strategies, its broader carbon-removal efforts remain a core component of its long-term climate strategy.

Why it matters

Microsoft’s massive market share—reportedly over 90%—means its procurement decisions are the primary driver for the survival of early-stage carbon-removal startups.