Microsoft’s Big Bet on Carbon Removal: A Deal with India-Based Varaha
In a move to accelerate its carbon-negative journey by 2030, Microsoft has just signed a whopping deal with Indian startup Varaha to buy over 100,000 tons of carbon dioxide removal credits over the next three years. This massive agreement is part of the tech giant’s efforts to scale up its AI and cloud operations while reducing its carbon footprint.
So, what’s the deal all about? Varaha will convert cotton crop waste into biochar, a charcoal-like material that can be added to soil to store carbon for long periods while also reducing air pollution from open-field burning. The project will initially focus on the western Indian state of Maharashtra and involve around 40,000-45,000 smallholder farmers.
As you might know, large companies like Microsoft are increasingly investing in carbon removal initiatives to physically remove carbon dioxide from the air. Microsoft’s total greenhouse gas emissions rose 23.4% in fiscal year 2024, primarily driven by emissions linked to its growing cloud and AI business. To combat this, Microsoft is looking beyond the US for carbon removal initiatives that can take carbon dioxide out of the environment. India has emerged as a popular market for such initiatives, thanks to its large volumes of agricultural waste and the size of its farming economy.
Varaha’s ability to deliver credits at scale has made it the world’s second-largest player in carbon deliveries, drawing Microsoft’s attention. The startup’s CEO, Madhur Jain, told TechCrunch that the company had to build bespoke systems in-house to meet Microsoft’s requirements for digital monitoring, reporting, and verification. Working with tens of thousands of smallholder farmers in India makes monitoring and logistics much more complicated than biochar projects in the US or Europe that rely on biomass concentrated at a single industrial site.
Varaha has quickly scaled its biochar operations over the past year, processing about 240,000 tons of biomass, producing roughly 55,000-56,000 tons of biochar, and generating around 115,000 credits. The startup expects volumes to rise further as new contracts kick in, with Jain aiming to at least double its 2025 throughput in 2026.
This is not the first time Microsoft has invested in carbon removal initiatives. The company has signed a string of large carbon removal agreements, including backing AtmosClear’s Louisiana project to remove 6.75 million metric tons of carbon dioxide over 15 years, and agreeing to purchase 3.6 million carbon removal credits from a biofuels plant in Louisiana owned by C2X.
Google has also been signing carbon removal deals as AI developments push up energy use and emissions. Google agreed to purchase 100,000 tons of carbon removal credits from Varaha in January 2025, making it Varaha’s largest biochar deal.
Since its inception in 2022, Varaha has raised around $50 million across various rounds. The startup counts RTP World, Omnivore, Orios Venture Partners, IMC Pan Asia Alliance Group’s Octave Wellbeing Economic Fund, and Japan’s Norinchukin Bank among its backers.
In November, Mirova, a French climate-focused investment agency backed by Kering and other corporate investors, invested $30.5 million in Varaha to expand its regenerative farming program.
There you have it – Microsoft’s big bet on carbon removal, and its partnership with Varaha to scale up its AI and cloud operations while becoming carbon-negative by 2030.
