Microsoft has significantly expanded its carbon removal activity, disclosing that it signed agreements in 2025 to remove 45 million metric tonnes of carbon dioxide. The volume represents a doubling of the company’s contracted removals compared with 2024 and a ninefold increase relative to 2023, underscoring the pace at which Microsoft is scaling its role in the emerging carbon removal market.

The company said the agreements were signed with 21 carbon removal providers during the year, covering a wide range of geographies and technologies. The combined impact of the projects is equivalent to removing nearly 10 million internal combustion vehicles from the road for one year, providing a tangible benchmark for the scale of the commitments.

Carbon Removal Within a Reduction-First Strategy

Microsoft’s carbon removal purchases form part of its broader climate commitments to become carbon negative by 2030 and to remove all of the carbon it has historically emitted by 2050. The company emphasized that its approach prioritizes emissions reduction wherever possible, with carbon removal used to address residual and historical emissions that cannot be eliminated through operational or supply chain decarbonisation alone.

According to Microsoft, the sharp increase in contracted removals reflects both growing confidence in the carbon removal ecosystem and the company’s intention to help build demand signals that enable projects to move from concept to deployment.

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Supporting a Market Still in Early Development

Despite what Microsoft described as rapid progress, the company acknowledged that global carbon removal capacity remains far below what climate models suggest is required. Estimates indicate that between seven and nine billion tonnes of carbon dioxide removal may be needed annually by 2050 to meet global climate goals, placing current efforts at an early stage of market development.

Microsoft said its strategy is designed not only to meet internal targets, but also to help accelerate the maturation of the broader market. This includes engaging with project developers at early stages, often before projects are listed on formal carbon credit registries, and providing forward demand commitments that can unlock financing and operational capacity.

Due Diligence and Portfolio Diversification

A central feature of Microsoft’s approach is extensive due diligence. Potential suppliers are required to submit detailed documentation covering project design, implementation plans, methodologies, and validation processes. Projects must meet Microsoft’s published criteria for high-quality carbon dioxide removal before contracts are signed.

The company also highlighted its use of a diversified portfolio that spans both nature-based and engineered removal solutions. Microsoft said this mix is essential to catalyse market development, reduce risk, and support innovation across different pathways to durable carbon removal.

Phil Goodman, Director of the carbon removal portfolio at Microsoft, explained that early purchasing commitments play a critical role in enabling projects to move forward. By securing a portion of a project’s future credits, he said, suppliers can raise capital, hire staff, and build infrastructure. He added that Microsoft typically purchases only a share of a project’s total output, with the intention of encouraging broader corporate participation once due diligence has been completed.

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Building Confidence Beyond a Single Buyer

Microsoft’s leadership framed the expansion of its carbon removal activity as a contribution to market confidence rather than a standalone corporate initiative. Melanie Nakagawa, the company’s Chief Sustainability Officer, said that scaling high-quality carbon dioxide removal is essential not only for Microsoft’s own strategy, but for establishing a market that other organizations are willing to trust and join.

By supporting a diverse range of credible removal approaches, Microsoft aims to help create a foundation for a carbon removal market that can grow beyond individual corporate buyers and play a meaningful role in global efforts toward net zero and climate resilience.

The scale of Microsoft’s 2025 commitments highlights both the accelerating interest in carbon removal and the challenges ahead. While the volumes contracted remain small relative to projected global needs, the company’s approach illustrates how large buyers can influence market formation by combining long-term demand, rigorous quality standards, and early-stage engagement with project developers.

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