Microsoft taps India’s Varaha for durable carbon removal offtake

In a significant move to enhance its carbon reduction efforts, Microsoft has partnered with Indian startup Varaha to acquire over 100,000 tons of carbon dioxide removal credits by 2029. This agreement marks a strategic expansion of Microsoft’s carbon removal initiatives, aligning with the company’s ambitious goal to become carbon-negative by 2030. The project aims to convert agricultural waste from cotton crops, which is often incinerated post-harvest, into biochar. This charcoal-like substance not only helps sequester carbon in the soil for extended periods but also mitigates air pollution caused by open burning. Initially, the focus will be on Maharashtra, involving approximately 40,000 to 45,000 smallholder farmers. As major corporations increase investments in carbon removal projects, this partnership highlights Microsoft’s commitment to addressing its carbon footprint. Despite this initiative, Microsoft reported a 23.4% rise in total greenhouse gas emissions for fiscal year 2024, primarily driven by emissions associated with its expanding cloud and AI sectors. Varaha plans to establish 18 industrial reactors over the next 15 years, with an anticipated carbon removal capacity exceeding 2 million tons throughout the project’s lifespan. One challenge in the carbon removal market is not just the installation of biochar production equipment but ensuring the reliability of project operations and navigating the complex process of credit issuance. Madhur Jain, co-founder and CEO of Varaha, emphasized the startup's experience in agriculture as a key asset in managing relationships with farmers and executing the project effectively. The first reactor will be situated next to Varaha’s cotton research farm, where the effectiveness of biochar in enhancing soil health is being tested. In 2025, Varaha successfully processed around 240,000 tons of biomass, producing approximately 55,000 tons of biochar, which generated around 115,000 carbon credits—an increase from the previous year. The startup is optimistic about future growth, aiming to double its processing volume and further its impact on carbon sequestration. Beyond the immediate benefits of carbon credit generation, this initiative also seeks to reduce the burning of cotton stalks, a major contributor to seasonal air pollution in India. Phil Goodman, Microsoft’s CDR program director, noted that this partnership not only diversifies Microsoft’s carbon removal strategy but also demonstrates a scalable and sustainable approach. Despite the significance of the Varaha deal, the volumes of carbon credits remain relatively small compared to Microsoft’s total emissions, which were reported at 15.5 million metric tons in FY2024. The tech giant has recently entered into multiple large-scale carbon removal agreements, including one with AtmosClear and another with C2X, as part of its comprehensive carbon-negative strategy. Since its launch in 2022, Varaha has secured around $50 million in funding, with notable investors such as RTP Global and French investment firm Mirova, which recently contributed $30.5 million to support the startup’s regenerative farming endeavors.