Microsoft Sets Record with Soil Carbon Credits Deal Amid Data Center Boom

• The deal represents the largest soil carbon credits purchase to date, surpassing Microsoft's previous 2.6 million credit agreement with Agoro Carbon
• Credits are priced at $60-80 per ton, with participating farmers receiving 75% of the average weighted cost from each issuance or crop year
• Microsoft is the world's biggest buyer of carbon removal credits as it aims to remove more carbon than it emits globally by 2030

Microsoft Sets Record Soil Carbon Credits Purchase

Microsoft has signed a landmark agreement with Indigo Carbon to purchase 2.85 million soil carbon credits over 12 years, marking the largest deal of its kind. According to a source familiar with the transaction, the deal is valued between $171 million and $228 million, based on Indigo Carbon's historic pricing range of $60-$80 per ton.

Key Strategic Context

The purchase supports Microsoft's commitment to become "carbon negative" by 2030, even as the company faces surging emissions from AI-related data center expansion. Microsoft is currently the world's largest buyer of carbon removal credits. This deal surpasses the tech giant's previous record of 2.6 million credits purchased from Agoro Carbon.

Deal Structure and Mechanism

The credits are linked to regenerative agriculture practices in the United States, including reduced tilling, cover crops, and livestock grazing designed to enhance soil's carbon capture capacity. Farmers receive 75% of the average weighted cost per credit from each issuance or crop year, providing direct financial incentives for sustainable practices.

Market Implications

Market data firm Sylvera reported increased demand for soil carbon credits in recent years, signaling growing corporate interest in agriculture-based carbon removal solutions. Indigo Carbon's role involves identifying emission reduction opportunities, collaborating with farmers on project development, and facilitating credit sales.

Broader Context

The voluntary carbon market allows projects to earn credits for each ton of CO2 removed, which companies purchase to offset operational emissions. While scientists view such programs as essential for climate mitigation, critics raise concerns about measurement accuracy, permanence of removal, and potential distraction from direct emissions reduction efforts.