As global technology companies expand AI and cloud infrastructure, Microsoft is deepening its focus on durable carbon removal through a new agreement with Indian climate startup Varaha.
Microsoft has signed a deal to purchase more than 100,000 tons of carbon dioxide removal credits from Varaha over the next 3 years, through 2029. The move strengthens Microsoft’s carbon removal portfolio as its energy use and emissions rise alongside rapid AI and cloud expansion.
Under the project, cotton crop waste that is typically burned after harvest will be converted into biochar, a charcoal-like material that locks carbon into soil for long periods. This approach also helps reduce air pollution caused by open-field burning. The initiative will initially focus on Maharashtra and involve around 40,000–45,000 smallholder farmers.
The agreement comes as large corporations increase spending on carbon removal projects designed to physically remove carbon dioxide from the atmosphere. Microsoft is working toward becoming carbon-negative by 2030. However, its total greenhouse gas emissions rose 23.4% in fiscal year 2024 compared with a 2020 baseline, largely due to value-chain emissions linked to cloud and AI growth. The company has not yet disclosed its carbon data for 2025.
India is emerging as a key destination for carbon removal projects because of its large volumes of agricultural waste and the scale of its farming sector. Varaha plans to build 18 industrial biochar reactors that will operate for 15 years, with a total projected removal volume of over 2 million tons of carbon dioxide during their lifetime.
Varaha’s co-founder and CEO Madhur Jain said the company’s ability to deliver credits at scale helped it stand out globally. He noted that Microsoft’s strict digital monitoring, reporting, and verification requirements pushed Varaha to build custom systems in-house, adding complexity due to its work with tens of thousands of farmers across multiple locations.
“More than 30% of our team has worked in agriculture,” Jain said, highlighting the company’s on-ground expertise.
The first reactor will be set up near Varaha’s 52-acre cotton research farm in Maharashtra. In 2025, Varaha processed about 240,000 tons of biomass, producing around 55,000–56,000 tons of biochar and issuing roughly 115,000 credits, up sharply from the previous year. The company aims to double throughput in 2026.
Currently, Varaha runs 20 projects across India, Nepal, and Bangladesh, working with about 150,000 farmers. These projects could collectively sequester nearly 1 billion tons of carbon dioxide over 15–40 years.
“This offtake agreement broadens the diversity of Microsoft’s carbon removal portfolio with Varaha’s biochar project design that is both scalable and durable,” said Phil Goodman, Microsoft’s CDR program director.
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