Microsoft taps India’s Varaha for carbon removal credits

Microsoft has signed an offtake agreement—a contract to purchase a future product—with Indian startup Varaha to purchase more than 100,000 tons of carbon dioxide removal credits through 2029. The partnership supports Microsoft’s goal to become carbon-negative, meaning it aims to remove more carbon dioxide than it emits, by 2030. This target has been challenged by a 23.4% rise in Microsoft’s greenhouse gas emissions in fiscal year 2024 compared to a 2020 baseline, bringing its total emissions to 15.5 million metric tons. This increase was primarily driven by the growth of its cloud and AI operations.

Under the agreement, Varaha will develop 18 industrial reactors to process biomass into biochar, a charcoal-like material added to soil to store carbon. The project will focus on western India, involving around 40,000-45,000 smallholder farmers. Varaha’s co-founder and CEO, Madhur Jain, noted that working with tens of thousands of smallholder farmers in India makes tracking and logistics complex compared to biochar projects in the U.S. or Europe. “More than 30% of our team has worked in agriculture,” Jain said, explaining how this experience helped design their systems.

The operational and financial scale of Varaha’s activities includes:

• Projected lifetime removal: Exceeding 2 million tons of carbon dioxide over the project’s lifetime.
• 2025 processing: About 240,000 tons of biomass processed, producing roughly 55,000-56,000 tons of biochar.
• Credit generation: Around 115,000 credits generated in 2025, up from around 15,000-18,000 credits the previous year.
• 2026 targets: Around half a million tons of biomass throughput and close to 250,000 tons of carbon sequestered.
• Total pipeline: Projects across India, Nepal, and Bangladesh with a potential carbon sequestration of about 1 billion tons.
• Funding: Around $50 million raised since its inception in 2022, including a $30.5 million investment from France-based climate-focused firm Mirova.

The agreement helps diversify Microsoft’s carbon removal efforts. Phil Goodman, Microsoft’s CDR program director, stated, “This offtake agreement broadens the diversity of Microsoft’s carbon removal portfolio with Varaha’s biochar project design that is both scalable and durable,”. In fiscal year 2024, Microsoft contracted for about 22 million metric tons of carbon removals. Its other recent agreements include backing AtmosClear’s project in Louisiana to remove 6.75 million metric tons of carbon dioxide, and purchasing 3.6 million carbon removal credits from C2X. Competitors are also active; Google purchased 100,000 tons of carbon removal credits from Varaha in January 2025.

Why it matters

The deal expands Microsoft’s carbon removal portfolio as the company scales AI and cloud operations, while helping Varaha scale its biochar operations in India.