Microsoft has signed a 10-year carbon removal agreement with Arca, a Canadian startup that turns mine waste into carbon storage. The partnership backs Microsoft’s goal to be carbon negative by 2030. It also helps Arca grow its natural mineralization technology.
The deal came just before Microsoft reported $77.7 billion in revenue for the first quarter of fiscal 2026, an 18% increase from a year earlier. Operating income also rose 24% and net income increased by 12%.
Despite the strong results, Microsoft’s stock fell about 3% after the earnings release. Investors are becoming cautious about spending more on data centers, AI infrastructure, and OpenAI costs.
Yet, Microsoft’s financial strength allows it to support big climate and energy projects, like the Arca deal. This shows how the company connects AI growth with long-term sustainability goals.
Turning Mine Waste into Carbon Storage
Arca uses a process called mineralization, which captures CO₂ by reacting it with magnesium-rich mine waste. This reaction forms stable carbonates, permanently locking carbon in solid rock.
The company works with mining firms that produce waste materials such as nickel, cobalt, and platinum tailings. These minerals naturally react with CO₂, but Arca speeds up the process using technology developed in Canada.
The captured carbon can stay stored for thousands of years, making it one of the most durable forms of carbon removal. The process also helps mining sites lower emissions and improve environmental performance.
Arca’s CEO, Paul Needham, said the Microsoft deal gives the company long-term stability to grow and reach more industrial partners. It also strengthens Arca’s position as a global leader in geology-based carbon storage, noting:
“This agreement with Microsoft validates Industrial Mineralization as a viable pathway for durable carbon removal with the potential to scale and meaningfully contribute to global climate goals.”
Microsoft’s Path to Carbon Negativity
Microsoft first pledged in 2020 to become carbon negative by 2030, meaning it will remove more carbon from the air than it emits. By 2050, it aims to erase all historical emissions since its founding in 1975.
The company is one of the largest corporate buyers of carbon removal. It has signed contracts with companies like Heirloom, Climeworks, and Running Tide. They use a mix of direct air capture (DAC), biomass, and ocean-based methods.
As of 2024, Microsoft reported cutting its Scope 1 and 2 emissions by 22% from 2020 levels. However, Scope 3 emissions — those from supply chains and product use — still make up over 95% of its total footprint.
To meet its targets, Microsoft is combining renewable energy investments with durable carbon removal projects such as Arca’s. Following this deal, the tech giant reported its Q1 2026 financial results.
Microsoft’s Latest Earnings: Strong Results, But Shares Slip
Microsoft reported strong first-quarter fiscal 2026 results. Revenue rose 18% to $77.7 billion. Operating income grew 24% to $38.0 billion. Net income was $27.7 billion, up 12%. Profit also climbed to $30.8 billion, up 22%.
Microsoft Cloud revenue hit $49.1 billion, up 26%, and Azure and other cloud services grew 40%. The company returned $10.7 billion to shareholders through buybacks and dividends.
Despite the beats, Microsoft’s shares dropped roughly 3% in extended trading. Traders flagged three main worries.
- First, Microsoft raised its investment profile — management signalled higher capital spending to build more data centers and AI infrastructure.
- Second, the company disclosed a $3.1 billion hit related to its OpenAI investments that lowered reported earnings.
- Third, investors flagged margin pressure and possible capacity limits as cloud demand keeps rising.
These factors tempered the market’s initial enthusiasm, even as core business metrics beat expectations.
Meeting AI’s Growing Energy Demands
Microsoft’s AI and cloud services require large amounts of energy. As its Azure platform and data centers expand, electricity demand keeps climbing.
Global data centers used about 415 terawatt-hours (TWh) of power in 2024, equal to roughly 1.5% of total global use. By 2030, that number could rise to 945 TWh, more than double current levels. AI computing will likely drive much of that growth.
To balance this, Microsoft is investing in clean and firm power sources such as nuclear, wind, solar, and geothermal. The company is also studying small modular reactors (SMRs) to power future data centers.
The deal with Arca adds another tool to help offset emissions from AI expansion. Microsoft is expanding its climate strategy. It’s now focusing on permanent carbon removal, not just renewables. It remains the top buyer of durable carbon removal in the second quarter of this year.
SEE MORE: Microsoft (MSFT Stock) Tops Q2 2025 Record-Breaking Surge in Durable Carbon Removal Credit Purchases
Arca’s Role in the Growing Carbon Removal Market
The global carbon removal market remains small but is growing fast. Experts say that by 2030, companies will need to remove at least 1 billion tonnes of CO₂ each year to meet climate goals. Today, only about 5 million tonnes of verified removals exist globally — meaning the market must expand hundreds of times.
Arca’s mineralization process is highly scalable. It uses abundant mining waste instead of new raw materials. Pilot projects in British Columbia and Ontario have shown good results. So, new facilities are planned all over North America.
The Microsoft deal gives Arca both credibility and financial backing to grow faster. Funds will help build larger operations, improve carbon measurement, and expand partnerships with mining companies globally.
Economic and Environmental Impact
For Arca, this deal marks a major step in scaling a once experimental process. It proves that natural mineralization can attract big corporate buyers and investors. It also highlights Canada’s leadership in carbon management and clean mining innovation.
The Honourable Tim Hodgson, Minister of Energy and Natural Resources, commented:
“The next generation of clean growth will be built by Canada’s first-class innovation ecosystem – companies like Arca, which are turning Canadian ingenuity into global leadership. Carbon removal technologies are not only strategic tools we can use to tackle climate change, they create good jobs and position Canada at the forefront of the global opportunity of a low-carbon economy.”
The deal helps Microsoft balance the environmental costs of its AI and cloud growth. It also supports its carbon removal efforts. Every tonne of CO₂ removed will be verified and stored permanently. This follows the Science Based Targets initiative (SBTi) standards.
A Broader Shift Toward Permanent Carbon Removal
Tech giants like Google, Meta, and Shopify have signed similar long-term deals with carbon removal startups. These contracts give small companies predictable income, helping them scale and lower costs over time.
Analysts think the carbon removal market might reach $50–100 billion a year by 2030. This growth will depend on policy support and corporate buyer demand.
Both companies see this partnership as a model for combining technology, industry, and nature to fight climate change. For Microsoft, it is a key step in cleaning up emissions from its fast-growing AI business. For Arca, it provides a launchpad for global expansion and further innovation.
As more companies race toward net-zero goals, the demand for reliable and permanent carbon removal will keep rising. The Microsoft–Arca deal shows that tackling climate change can also drive new business opportunities where sustainability and growth can work hand in hand.
The post Microsoft Seals 10-Year Arca Carbon Deal Ahead of Earnings Beat and Record Profits appeared first on Carbon Credits.
For most businesses, the emissions that matter most sit outside their own walls. Scope 3 emissions, everything generated across your value chain, from the suppliers who make your inputs to the customers who use your products, typically make up the majority of a company’s total carbon footprint. Under the Corporate Sustainability Reporting Directive (CSRD), those value-chain emissions now have to be measured and disclosed with a rigour that spend-based estimates alone struggle to satisfy. This guide sets out how to improve Scope 3 data accuracy for CSRD: the calculation methods open to you, how to move from estimates to verified supplier data, and how to govern that data so it holds up to audit.
A carbon credit is a commitment that extends well into the future. The tonne of CO₂ compensated for today from a nature-based carbon project must remain out of the atmosphere for good, which means the forest behind the credit has to remain standing long after the transaction is complete. For any buyer, this raises a defining question: What ensures that the forest endures?
What replaced the cheap REDD credit on the boardroom slide deck, and why procurement is leading the rewrite.
Three years ago, a corporate slide showing a portfolio of cheap REDD+ credits could carry a board meeting. The number was big, the price was low, and the press release wrote itself. Today, that same slide gets sent back with questions. The questions are uncomfortable, the answers are unclear, and your general counsel is suddenly in the room.
Conventional carbon offsets are not dead. The voluntary carbon market retired 202 million tonnes in 2025, and the Morgan Stanley Institute for Sustainable Investing survey published in January 2026 confirmed that interest from corporate buyers remains substantial. What changed is the credibility threshold. The integrity floor has risen, the disclosure scrutiny has tightened, and the buyer profile has shifted. This article tracks what changed, what sophisticated buyers now ask before signing, and what serious corporates are putting on the board slide instead.
What boards used to buy, and why it stopped working
The 2020 to 2022 model was simple: buy a large tranche of avoidance credits at low single-digit prices, retire them against the company footprint, announce the carbon-neutral claim, and move on. Most of those credits came from REDD+ projects, renewable energy installations in countries where the renewable energy was already economic, or methane projects with thin documentation.
Several things broke that model. Academic research published in 2023, including a widely cited Science paper, found that the majority of REDD+ credits issued under the most common methodologies did not represent additional reductions when tested against rigorous counterfactuals. The Voluntary Carbon Markets Integrity Initiative published its Claims Code of Practice, which sets requirements for what companies can credibly claim from credit use. The European Union finalised its Green Claims Directive, restricting how companies can describe products as climate-neutral. France’s Décret 2022-539 already restricts carbon neutrality advertising. California’s AB 1305 imposes disclosure requirements on any company making net-zero or carbon-neutral claims while doing business in the state.
The collective effect: the cheap credit no longer buys the announcement, and the announcement now carries litigation risk.
The integrity reset: ICVCM, VCMI, and what changed
The Integrity Council for the Voluntary Carbon Market published the Core Carbon Principles in 2023 and began assessing methodologies against them in 2024. The first methodologies received the CCP label later that year. The point of the label is to give corporate buyers a defensible quality screen they can cite in disclosure.
The Voluntary Carbon Markets Integrity Initiative complements this on the demand side. Its Claims Code of Practice defines what a buyer can say (Silver, Gold, or Platinum claims, with associated requirements) based on the quality of credits used and the underlying decarbonisation strategy. Together, CCP and VCMI build a quality stack: CCP on the supply, VCMI on the claim, with the science-based target sitting underneath both.
The reset is not a ban on offsets. It is a ratchet. Credits that meet the new bar continue to clear; credits that do not, do not. The Morgan Stanley survey found that 61% of current buyers like the CCP label concept but that supply of labelled credits remains limited. That supply constraint is now visible in pricing.
What sophisticated buyers ask before they sign
The questions on the procurement scorecard have changed. A 2022 buyer might have asked about price, vintage, and project type. A 2026 buyer asks five different questions before any of those.
- What does the counterfactual look like, and who validated it.
- What is the permanence regime, and what is the buffer pool exposure.
- What is the leakage risk, and how is it mitigated.
- What rating has the project received from the independent ratings agencies (Sylvera, BeZero, Calyx Global), and what was the rationale.
- What is the documentation discipline that survives an audit four years from now when the procurement team that signed the contract has moved on.
If the vendor cannot answer those five questions on a first call, the conversation ends. Conversely, if the vendor can answer them with documented specificity, the conversation often expands beyond a single transaction toward a multi-year engagement.
Where this leaves your near-term commitments
You probably have near-term commitments that pre-date the integrity reset. Public targets to be carbon neutral by 2025 or 2030. Product-level claims that ran in last year’s marketing. Disclosed reduction trajectories that assumed continued access to cheap credits.
You have three workable paths. The first is to re-baseline your strategy, replacing the most exposed credits with higher-quality alternatives and adjusting the public language to match what you can defend. The second is to shift the underlying spend from offsetting outside your value chain to investing inside your value chain, where reductions count against Scope 3 directly and the audit trail is cleaner. The third is to keep the strategy and absorb the risk, which is increasingly the most expensive option once you price in litigation, restatement, and reputational exposure.
Most serious buyers are choosing the second path. It moves the carbon spend from a compliance cost to a procurement and resilience investment, and it removes the central failure point of the legacy model: the disconnect between where the emissions occurred and where the reductions sat. Nature-based supply chain investments, structured under the GHG Protocol Land Sector and Removals Standard and aligned to the SBTi FLAG Guidance, are the asset class that fits this brief. They generate inventory-grade reductions, they produce audit-grade documentation, and they survive the new claim restrictions because the carbon math sits inside the value chain that the disclosure already covers.
If you are reassessing a carbon strategy under the new integrity bar, or rebuilding a board narrative that has to survive a more skeptical audience, the carbon and sustainability experts at Carbon Credit Capital can help. The Dual-Value Model gives you a defensible alternative to legacy offset purchases, with the documentation and operational integration that survives the procurement scorecard and the audit. Schedule a consultation.
-
Climate Change11 months ago
Guest post: Why China is still building new coal – and when it might stop
-
Greenhouse Gases11 months ago
Guest post: Why China is still building new coal – and when it might stop
-
Greenhouse Gases2 years ago嘉宾来稿：满足中国增长的用电需求 光伏加储能“比新建煤电更实惠”
-
Climate Change2 years ago嘉宾来稿：满足中国增长的用电需求 光伏加储能“比新建煤电更实惠”
-
Climate Change2 years ago
Bill Discounting Climate Change in Florida’s Energy Policy Awaits DeSantis’ Approval
-
Renewable Energy9 months agoSending Progressive Philanthropist George Soros to Prison?
-
Carbon Footprint2 years agoUS SEC’s Climate Disclosure Rules Spur Renewed Interest in Carbon Credits
-
Greenhouse Gases1 year ago
嘉宾来稿：探究火山喷发如何影响气候预测