• Microsoft has signed a 25-year deal to purchase over 7 million tons of carbon credits from reforestation startup Chestnut Carbon, enabling the restoration of 60,000 acres across Arkansas, Louisiana, and Texas.
  • Microsoft’s emissions have surged 29% since 2020 due to AI and cloud computing growth, making it difficult to meet its 2030 carbon-negative goal.
  • In 2023, the company reported 17.1 million tons of greenhouse gas emissions before offsets.

Microsoft has signed a major carbon credit agreement with reforestation startup Chestnut Carbon, purchasing over 7 million tons of carbon credits in a 25-year deal. The agreement will enable the startup to reforest 60,000 acres of land across Arkansas, Louisiana, and Texas, according to Axios.

This move comes as Microsoft grapples with rising carbon emissions fueled by the AI boom and increased data center operations. The tech giant previously reported a 29% surge in emissions since 2020, jeopardizing its 2030 goal of becoming carbon-negative. In 2023, Microsoft generated 17.1 million tons of greenhouse gas emissions before offsets.

Chestnut Carbon specializes in reforestation, and restoring land that was previously used for agriculture. The company currently operates eight projects across the southeastern U.S., ensuring that newly planted forests grow as intended and remain protected from deforestation. Since trees naturally absorb carbon, reforestation credits are considered a valuable tool for offsetting emissions. However, their quality varies depending on the type of trees planted. Non-native, fast-growing species generally yield lower-value credits, while projects using diverse, native plantings fetch a premium due to their long-term ecological benefits.

Despite the cost disparity, Microsoft has also invested in direct air capture, a technology that removes CO2 from the atmosphere using chemical processes. While Chestnut Carbon sold credits for $34 per ton last year, direct air capture costs range between $600 and $1,000 per ton.

Nature-based carbon credits have faced scrutiny in recent years. In 2023, Verra, the world’s largest certifier, was accused of overstating the climate impact of its projects. Chestnut Carbon previously used Verra but now certifies its credits under Gold Standard, a widely recognized verification system.

Edited by Harshajit Sarmah