Microsoft has temporarily halted all new carbon removal purchases as it reviews its broader climate strategy. The move affects direct air capture, biochar, and other engineered carbon removal solutions supported by its $1 billion Climate Innovation Fund, launched in 2020. It could delay hundreds of millions of dollars in planned investments across the carbon removal sector.
The pause was first reported by Heatmap News, in which a company spokesperson said that Microsoft is not indefinitely halting all of its purchases. Rather, she stated:
“We continually review and assess our carbon removal portfolio along with market conditions for the optimal balance on our path to carbon negative.”
Microsoft has been one of the largest corporate buyers of high-quality carbon removal credits. Its decision signals a shift in how major companies evaluate carbon offsets and removal technologies.
The review focuses on whether current solutions can deliver reliable, long-term emissions reductions at scale. It also reflects growing scrutiny of corporate net-zero claims from regulators, investors, and climate groups.
Impact on Carbon Removal Market Pricing
Microsoft’s pause is expected to have an immediate impact on the voluntary carbon market (VCM). The company has played a leading role in scaling demand for engineered carbon removal credits.
These credits are more expensive than traditional offsets. Microsoft has typically paid between $100 and $600 per metric ton of CO₂ removed, compared with $5 to $15 per ton for many nature-based or avoidance credits.
Industry estimates suggest that Microsoft’s pause could significantly reduce demand in the engineered carbon removal market. The tech giant has accounted for as much as 80% to 90% of global purchases of carbon removals, as data from CDR.fyi shows below.
Several suppliers are directly exposed. Companies such as Climeworks and Carbon Engineering have signed multi-year agreements with Microsoft worth a combined $200 million to $300 million. These deals helped fund the early deployment of direct air capture facilities.
The broader voluntary carbon market has already seen price pressure. According to the Ecosystem Marketplace, average prices for carbon credits vary widely depending on quality. Premium removal credits trade at a steep premium due to limited supply and higher verification standards.
Microsoft’s exit, even if temporary, may accelerate a correction in these high prices. It may also reduce near-term funding for early-stage carbon removal technologies.
Microsoft’s Net-Zero Targets Face a Reality Check
Microsoft has some of the most ambitious climate goals in the corporate sector. The company aims to become carbon negative by 2030 and remove all the carbon it has emitted since its founding by 2050.
To support this, the tech giant has committed significant capital to carbon removal. By 2025, it had invested more than $750 million in carbon removal projects and contracted roughly 45 million tonnes of removals.
The current review is examining whether these investments can scale fast enough to meet long-term targets. Key concerns include:
- The permanence of carbon storage, especially for geological projects
- The high cost of engineered removal compared to direct emissions cuts
- The limited capacity of current technologies to deliver millions of tons annually
Many removal methods are still in early stages. Direct air capture, for example, currently removes only a small fraction of global emissions. The International Energy Agency estimates that global carbon removal capacity remains well below what is needed to meet net-zero scenarios by mid-century.
Microsoft is also reviewing how carbon removal fits into its broader decarbonization strategy. This includes aligning removal purchases with renewable energy investments and operational emissions reductions
SEE MORE:
- Microsoft Inks Biggest-Ever U.S. Biochar Deal with Liferaft
- Microsoft Buys 60,000 Soil Carbon Credits from Indigo’s Largest Carbon Crop
- Microsoft Strikes 2 Record-Breaking Carbon Credit Deals
Broader Big Tech Climate Strategy Shifts
Microsoft’s move reflects a broader shift across the technology sector. Other major companies, including Amazon, Meta, and Google, have slowed their carbon removal purchases in recent quarters.
Instead, many are focusing more on reducing emissions directly. This includes expanding renewable energy use, improving energy efficiency, and redesigning supply chains.
This trend aligns with updated guidance from the Science Based Targets initiative (SBTi). The SBTi emphasizes that companies should prioritize emissions reductions across Scope 1, 2, and 3 before relying on carbon removal.
Under this framework, carbon removal is treated as a solution for residual emissions that cannot be eliminated. This approach reduces reliance on offsets and increases pressure on companies to decarbonize core operations.
At the same time, regulatory scrutiny is increasing. In the United States, the U.S. Securities and Exchange Commission has proposed new climate disclosure rules. These rules would require companies to provide more detailed reporting on emissions and climate-related risks.
This is pushing companies to strengthen verification standards for carbon credits and avoid reputational risks linked to low-quality offsets.
A Turning Point for Carbon Removal Investment Models
Microsoft’s decision may signal a broader shift in how companies support carbon removal technologies. Instead of buying credits directly, some firms are exploring new funding models.
These include advance market commitments, where companies guarantee future demand, and direct investments in technology development. These approaches can provide more stable funding while reducing reliance on spot market purchases.
The technology sector has been a major driver of carbon removal demand. Since 2022, it has accounted for about 40% of high-quality removal credit purchases. Between 2020 and 2025, major tech companies committed billions of dollars to carbon removal initiatives.
If large buyers step back, developers may face funding gaps in the short term. However, this could also push the industry to improve cost efficiency and scalability.
Current removal costs remain high. Direct air capture can exceed $500 per ton, though companies aim to reduce this below $100 per ton over time. Achieving this will require technological advances, economies of scale, and supportive policy frameworks.
What It Means for Carbon Markets and Climate Goals
Microsoft’s pause marks a key moment for the VCM. It highlights the growing demand for higher standards, better verification, and clearer climate impact.
In the short term, the decision may slow growth in the premium carbon removal segment. Prices could soften, and some projects may face delays or funding challenges.
However, the long-term impact could be positive. Stronger scrutiny may lead to more reliable and transparent carbon removal solutions. This would help build trust in the market and attract new investment.
For companies, the message is clear. Net-zero strategies must focus first on reducing emissions. Carbon removal remains important, but it must be credible, scalable, and cost-effective.
For the carbon removal sector, the challenge is to prove that its technologies can deliver on these expectations. If successful, it will play a critical role in global climate efforts.
The International Energy Agency and other bodies have made it clear that carbon removal will be essential to achieving net-zero emissions by 2050. The question is not whether it is needed, but how fast it can scale.
As the sector evolves, companies that can deliver verified, permanent, and affordable carbon removal solutions are likely to lead the next phase of expansion.
The post Microsoft Hits Pause on All Carbon Removal Purchases: A Major Shift in Corporate Climate Strategy appeared first on Carbon Credits.
Nature-based carbon investments deserve consideration when they address a specific business dependency and produce outcomes you can measure. Imagine Moonbucks, a global coffee roaster planning next season’s espresso blend. It is considering natural Grade 4 coffee from Jimma, in southwestern Oromia, Ethiopia. Its sourcing decisions affect the roasting schedule and the cash tied up in coffee purchases. Moonbucks needs to understand which measures could protect that supply, what they would cost and how it would judge the results.
1. Define the sourcing problem before choosing a project
Moonbucks needs a dependable component for its espresso blend. Its procurement team wants continuity of volume and an agreed cup profile. Replacing a shipment at short notice could require new sample approval and changes to the blend, and given the schedules for cultivation, processing, and freight delivery, is practically impossible. Moonbucks needs to get this right, and its initial concern is inconsistent deliveries. It commissions an assessment of the supplying farms and post-harvest chain. The questions cover land condition, harvest availability and whether drying or storage problems are affecting saleable lots.
This distinction changes the investment brief. A tree-planting proposal cannot be assumed to fix drying problems. Better storage cannot restore eroded land. The team must establish which problem exists before selecting the response.
CCC’s guide to finding nature-based solutions in your supply chain explains where to look. Here, the next task is to turn a broad concern into a testable proposal.
2. Develop nature-based carbon investments around the actual supply chain
The assessment would trace Moonbucks’ purchases back through the exporter and supplying producer groups. Which farms supply the contracted lots? Who controls land-management decisions? How long does the buyer expect to maintain the purchasing relationship?
Furthermore, Jimma natural Grade 4 cannot be treated as interchangeable with every Ethiopian coffee. Moonbucks would need to test any substitute against its own blend and quality requirements.
Suppose Moonbucks’ assessment identifies an opportunity to maintain shade trees and restore vegetation along exposed streambanks. The IPCC describes agroforestry as a way to store carbon in vegetation and soil, with potential benefits for erosion control and water quality.1 Moonbucks would need local advice on species, growing conditions and maintenance before deciding how these measures fit its sourcing plan.
The proposal now has a defined sourcing connection and a candidate intervention. The next steps are to test its effect on production, assess carbon eligibility and build the financial case.
3. Compare the proposal with other ways to protect supply
WBCSD’s Nature-based Solutions Blueprint recommends comparing nature-based options with other responses across their benefits and costs.2 For Moonbucks, that means evaluating the landscape proposal alongside drying improvements, storage controls and alternative sourcing arrangements.
The product’s natural-process designation matters. Moonbucks should examine the drying and dry-milling chain alongside land conditions. Its team would check storage practices, contamination risks and incoming-lot quality to see whether problems arise before or after the coffee leaves the farms.
The revised proposal might combine land stewardship with separate post-harvest controls. Each component needs its own purpose and budget. A sustainability label should not obscure which activity is expected to solve which problem.
The project develops as the evidence improves. Its scope should follow the diagnosis rather than preserve the first idea unchanged.
4. Establish what the carbon outcome could count toward
Moonbucks’ sustainability team now tests the proposed carbon case separately from the sourcing case. Is the objective a measurable change in Moonbucks’ value-chain emissions, verified credits for separate voluntary use, or distinct outcomes under carefully defined arrangements?
Scope 3 covers value-chain emissions. A purchasing relationship alone does not prove that a farm intervention can be included in Moonbucks’ inventory. The team needs an applicable accounting method, defensible boundaries and evidence supporting attribution.
SBTi’s FLAG Guidance (forest, land and agriculture), version 1.2, says purchased credits used as offsets cannot meet near-term FLAG or energy and industry targets. Eligible land-based removals are subject to accounting requirements.3 Moonbucks needs to test its proposal against those rules before including an outcome in its targets.
For Moonbucks’ Jimma proposal, maintaining existing trees and establishing new vegetation could involve different carbon questions. Specialists must examine the baseline and additionality, meaning what changes because the project proceeds. They must also assess measurement and the risk that stored carbon is lost. CCC’s MRV and additionality article introduces those tests.
Until that work is complete, Moonbucks should not budget an assumed Scope 3 reduction or credit-sale receipt. Direct emissions reductions remain the priority.
5. Build a financial case that survives weaker assumptions
Moonbucks’ finance team would now build a multi-year budget. UNEP’s State of Finance for Nature 2023 compares current finance with the investment needed to meet climate, biodiversity and land-restoration goals.4 The company would cost its proposed activities, farmer participation and ongoing monitoring. Verification, where required, is a separate expense. Maintenance and responsibility for replacing failed plantings must remain visible after the initial establishment budget ends.
Operational benefits need equally careful treatment. If fewer rejected lots reduce emergency purchasing, count that saving once. Do not add “supply resilience” as another financial benefit when it represents the same avoided cost.
Moonbucks should compare a base case with slower benefits, higher implementation costs and no carbon revenue. It should also distinguish production outcomes from quality and shipment outcomes. A single good harvest would not prove that the landscape intervention caused better delivery performance.
A project can remain worth funding even when its carbon case needs more work. That decision must rest on the operational evidence and the company’s objectives, without unsupported environmental claims.
6. Fund a pilot with a clear expansion decision
Moonbucks’ first approval would fund a bounded pilot, rather than commit the entire sourcing program. Before spending, Moonbucks would agree on participating farms, responsibilities and the evidence needed at review.
Its scorecard could track farmer participation, implementation costs and plant survival, alongside accepted coffee volumes and lot-quality results. Carbon measurements would follow the selected method. Farm-level traceability must connect the intervention to the actual sourcing relationship.
Suppose Moonbucks’ review later finds that storage changes explain most quality improvements, while the land measures need longer observation. Those findings would shape the next decision: expand the proven component, adjust the landscape work or pause further spending. They would not justify crediting all improvements to tree planting.
This gives nature-based carbon investments a practical place in a multi-year strategy. Funding increases as the evidence supports it, and the project can change direction before a larger commitment.
Discuss a sourcing opportunity with CCC
Carbon Credit Capital’s nature-based supply-chain investment service uses its Dual-Value Model to examine supply-chain economics alongside potential sustainability outcomes.
Schedule a consultation to discuss your sourcing exposure and the questions to resolve before allocating capital.
Sources
- Intergovernmental Panel on Climate Change (IPCC), Climate Change 2022: Mitigation of Climate Change, Chapter 7, Agriculture, Forestry and Other Land Uses, section 7.4.3.3 (Agroforestry).
- World Business Council for Sustainable Development (WBCSD), Nature-based Solutions Blueprint, 5 June 2024.
- Science Based Targets initiative (SBTi), Forest, Land and Agriculture Science-Based Target-Setting Guidance, version 1.2, March 2026, section 3.1.4, pp. 37–38.
- United Nations Environment Programme (UNEP), State of Finance for Nature 2023, 2023.
A plastic credit funds the collection of plastic waste in places where no formal system exists to collect it. Each credit represents a measured, independently audited quantity of plastic taken out of the environment or returned to use, tracked on a public registry.
EU carbon credit claims changed on 27 September 2026, the day the Directive (EU) 2024/825 began to apply across the European Union. The change is narrow. It changes how a company can talk about the credits it buys. A product can no longer be called neutral on the strength of compensation alone; however, every specific, evidenced statement about what a company measured, reduced, and funded stays fully available.
