Published

2 years ago

May 30, 2024

Alice Rush

Ørsted has announced a significant expansion of its partnership with Microsoft, agreeing to sell an additional 1 MT of carbon removal over 10 years from the Avedøre Power Station. This is part of the bioenergy carbon capture and storage (BECCS) initiative known as the ‘Ørsted Kalundborg CO2 Hub’. This new deal builds on Microsoft’s existing commitment to purchase 2.67 million tonnes of CO2 from the Asnæs Power Station, bringing their total contracted carbon removal to 3.67 MTs.

The Key Highlights of the Ørsted-Microsoft Deal

1. Carbon Capture Implementation

As part of the ‘Ørsted Kalundborg CO2 Hub’, Ørsted will install carbon capture technology at the wood chip-fired Asnæs Power Station in Kalundborg, western Zealand, and the straw-fired boiler at Avedøre Power Station in Greater Copenhagen. The combined heat and power plants will capture 430,000 tonnes of biogenic CO2 annually, which will then be transported to a storage reservoir in the Norwegian North Sea for permanent storage. The hub is expected to be operational by early 2026.

2. Microsoft’s Carbon Removal Commitment

Starting in 2026, Microsoft will receive one million tons of carbon removal from the straw-fired unit at Avedøre Power Station. This plant uses locally sourced straw, an agricultural by-product, to generate electricity and district heating. By capturing and storing biogenic carbon from these biomass-fired plants, the process not only reduces CO2 emissions but also removes carbon from the atmosphere, creating negative emissions. This is because biogenic carbon from sustainable biomass is part of a natural cycle.

3. Supporting Sustainable Development

The collaboration between Ørsted and Microsoft is crucial for advancing the ‘Ørsted Kalundborg CO2 Hub’, especially since bioenergy-based carbon capture and storage technology is still emerging. The project, which received a subsidy from the Danish Energy Agency, included anticipated revenue from carbon removal certificates in its investment decision. This competitive pricing was a key factor in the subsidy award.

4. Importance of BECCS for Climate Goals

The UN’s Intergovernmental Panel on Climate Change (IPCC) has highlighted the importance of carbon removal technologies like BECCS for limiting global warming. Projects such as the ‘Ørsted Kalundborg CO2 Hub’ are essential for helping companies like Microsoft achieve their sustainability targets and contribute to global climate goals.

Is Microsoft Leading the Charge Toward a Carbon-Neutral Future?

Decoding its carbon emissions and net-zero plans

In 2023, Microsoft expanded its renewable energy assets to over 19.8 gigawatts (GW), incorporating projects across 21 countries. Additionally, last year the company secured contracts for 5,015,019 MTs of carbon removal to be retired over the next 15 years. Its net-zero plans focus on three primary areas:

Reducing carbon emissions
Increasing the use of carbon-free electricity
Removing carbon

The company’s latest ESG report suggests that the pathway to becoming carbon-negative has the following milestones:

Reducing Scope 1 and Scope 2 Emissions

Microsoft aims to nearly eliminate its Scope 1 and 2 emissions by increasing energy efficiency, decarbonizing its operations, and achieving 100% renewable energy by 2025. It achieved a 6% reduction in its Scope 1 and 2 emissions from the 2020 base year by advancing clean energy procurement, implementing green tariff programs, and using unbundled renewable energy certificates

Reducing Scope 3 Emissions

Microsoft’s Scope 3 emissions account for more than 96% of its total emissions. Most of these emissions come from purchased goods and services, capital goods, downstream, and the use of sold products downstream. By 2030, Microsoft aims to cut its Scope 3 emissions by 50% from the 2020 baseline.

Although Scope 3 emissions have surged by 30.9% since 2020, Microsoft remains committed to expanding clean energy purchases across its supply chain. It aims to invest in the decarbonization of hard-to-abate industries like steel, concrete, and other materials used in its data centers.

Tracking progress toward carbon negative by 2030

Microsoft’s overall emissions increased by 29.1% in FY23 from the base year. Additionally, it retired 605,354 MTs of carbon removal as part of its net zero goals.

Microsoft

Can Ørsted’s Bold Strategies Propel Us to a Carbon-Free Future? Find Out…

Ørsted has committed to achieving net-zero emissions across its value chain by 2040, aiming to reduce emissions through various initiatives, including renewable energy projects, energy efficiency measures, and engaging stakeholders in sustainable practices.

The company reports its greenhouse gas emissions under three categories: Scope 1, Scope 2, and Scope 3, as defined by the Greenhouse Gas (GHG) Protocol.

Reducing Scope 1 and Scope 2 Emissions

Ørsted significantly reduced its Scope 1 emissions by transitioning from fossil fuels to renewable energy sources like wind and biomass. For Scope 2 emissions, Ørsted focused on increasing energy efficiency and sourcing renewable energy to reduce the emissions from purchased electricity and heat.

Scope 1 and 2 emissions: FY2023 was 38g CO2e/kWh

Reducing Scope 3 Emissions

To address Scope 3 emissions, Ørsted engages with suppliers, optimizes logistics, and promotes sustainable practices across its value chain, targeting emissions from fuel production and transportation, manufacturing of wind turbine components, business travel, and the use of sold products.

Scope 3 emissions: FY2023 was 80g CO2e/kW

The image depicting Ørsted’s installed renewable capacity and GHG emissions intensity

orsted source: Ørsted

Key sustainability targets

Scope 1-2 emissions intensity: 98 % reduction by 2025 and 99 % reduction by 2030 (from 2006)
Scope 1-3 emissions intensity (excl. natural gas sales): 77 % reduction by 2030, and 99 % reduction by 2040 (from 2018)
Scope 3 emissions (from natural gas sales): 67 % reduction by 2030, and 90 % reduction by 2040 (from 2018)

Top Clean Energy and Decarbonization Projects

Microsoft:

The company invests in renewable energy sources such as wind, solar, and hydroelectric power, and implements energy efficiency measures across its operations. Like its partnership with Ørsted, and other CDR projects alike to offset emissions and remove CO2 from the atmosphere. Through these efforts, Microsoft aims to become carbon-negative by 2030, addressing both its direct emissions and those across its entire value chain.

Some remarkable decarbonization achievements of Microsoft include:

Orsted:

Ørsted is leading the way in clean energy and decarbonization. It is transitioning from fossil fuels to renewable energy sources such as wind, solar, and biomass. The company majorly focuses on:

Large-scale offshore wind farms
Onshore wind energy
Bioenergy carbon capture and storage projects.
Solar power and grid stabilization

These initiatives aim to reduce and remove CO2 emissions, contributing to Ørsted’s goal of achieving net-zero emissions across its value chain by 2040. Thus, Ørsted is making significant strides in combating climate change and promoting sustainable energy solutions through these projects.

Ørsted’s Global Footprint

Orsted source: Ørsted

Notably, Ole Thomsen, Senior Vice President and Head of Ørsted’s Bioenergy business has commented:

“This expanded collaboration with Microsoft is a testament to our shared vision for a sustainable future. By combining Ørsted’s expertise in bioenergy carbon capture and storage with Microsoft’s commitment to reducing its carbon footprint, we’re showcasing how strategic relations can accelerate the transition to a greener economy.”

The post Ørsted Secures Major Carbon Removal Deal with Microsoft appeared first on Carbon Credits.

Carbon Footprint

Insetting vs Offsetting: Which Actually Counts Toward Your Scope 3 Targets

Published

7 days ago

August 12, 2026

Alice Rush

The accounting differences that decide whether your nature investment shows up in inventory, in BVCM, or nowhere at all.

The question reaches a procurement team about three weeks before the next sustainability committee meeting. Someone has read about insetting. Someone else has just signed off on an offset purchase. The CSO wants to know if the two are interchangeable. The answer is no, and the GHG Protocol Land Sector and Removals Standard is the reason why.

This article walks through what each term means at audit-grade specificity, what the standards actually say about how each gets counted, and how to decide which tool fits which target. The insetting vs offsetting question is one of the most-searched in corporate climate strategy, and one of the most poorly answered. By the end of this piece, you should be able to brief a committee on the difference without notes.

The two definitions, in plain English

Offsetting means buying carbon credits generated outside your value chain and retiring them against your residual emissions. The reduction happens somewhere else, financed by you, and the credit is the receipt.

Insetting means investing in emission reductions or removals inside your own value chain, typically with suppliers, where the reduction is directly linked to the products and services you buy. The reduction happens inside the boundary of your Scope 3 inventory, and the accounting treatment is fundamentally different.

The shorthand from the University of Oxford’s Nature-based Insetting Initiative is useful: insetting is what you do with the supply chain you have; offsetting is what you do with the supply chain you do not have.

What the GHG Protocol Land Sector Standard actually says

The GHG Protocol Land Sector and Removals Standard, finalised in 2024 after a multi-year pilot, sets the rules for how land-based emission reductions and removals enter corporate inventories. The Standard distinguishes between inventory accounting (Scope 1, 2, and 3) and project or intervention accounting (a separate methodology for crediting).

For insetting, the practical implication is that supplier-level interventions, when properly measured and attributed, can reduce your Scope 3 category 1 (purchased goods and services) emissions in your inventory. The reduction is not a credit retired against the inventory; it is a lower inventory number, period.

For offsetting, the credit is retired separately. It can be reported as a contribution toward a net-zero claim under the SBTi Beyond Value Chain Mitigation framework or as part of a VCMI Carbon Integrity claim, but it does not lower the inventory number.

A practical consequence: if your Science Based Target requires a 50% absolute reduction in Scope 3 emissions by 2030, insetting moves you toward the target. Offsetting does not. This single point of difference reshapes the procurement decision.

When insetting counts toward Scope 3 (and when it does not)

Insetting counts toward Scope 3 only when several conditions are met:

The intervention must occur with an entity in your value chain.
The emissions reduction or removal must be measured against a defensible baseline.
The reduction must be attributed to your share of that supplier’s output, not double-counted with other buyers.
It must follow the inventory accounting rules in the GHG Protocol Land Sector Standard, not the project accounting rules used to generate credits.

The most common failure mode is double counting. If your supplier sells the same reduction as a credit on the voluntary market and also reports it to you as a Scope 3 reduction, the math breaks. The Standard requires you to address this risk, typically by purchasing and retiring the supplier-issued credit as part of your inventory or by contractual provisions that prevent the supplier from selling the reduction twice.

When insetting does not count toward Scope 3: when the intervention sits with a supplier you do not buy from, when the baseline is not defensible, when the attribution is unclear, or when the documentation does not survive audit. Those cases default to Beyond Value Chain Mitigation, which is still useful but operates on a different ledger.

The procurement and supplier engagement question

Insetting is harder than offsetting. That is the unfashionable truth most buyers eventually confront. Offsetting is a transaction; insetting is a relationship.

To run an insetting program, you need supplier mapping precise enough to know which farms or facilities sit at which Scope 3 boundary. You need an engagement model that gets suppliers to participate, which usually requires multi-year commitments and shared economics. You need an MRV architecture that measures the right things and produces audit-ready documentation. And you need a contractual structure that prevents double counting and protects both sides.

The trade-off you receive in return is significant. Reductions count against your inventory rather than your residual. Supplier relationships deepen, which protects sourcing continuity. Yield and quality improvements often follow regenerative interventions, which reduces your input cost over time. And the regulatory file, under CSRD, CSDDD, EUDR, and the SBTi FLAG Guidance, is materially stronger.

Choosing the right tool for the right target

A practical decision rule. If your target is a science-based Scope 3 reduction and you operate in a FLAG sector or source FLAG commodities, insetting is the structurally correct tool. If your target is a net-zero claim that includes neutralising hard-to-abate residual emissions outside your value chain, BVCM via high-integrity offsets is the structurally correct tool. Most companies with material Scope 3 exposure need both, in different proportions, sequenced over time.

The sequencing matters. Insetting takes longer to stand up but produces a permanent reduction in the inventory. Offsetting can be transacted faster but does not change the inventory and now sits under tighter claim restrictions. Treat them as complementary tools with different jobs, not as substitutes. The Accountability Framework Initiative and the IUCN Global Standard for Nature-based Solutions both provide useful guardrails for the insetting side, with biodiversity, human rights, and benefit-sharing requirements that go beyond carbon math.

If you are mapping a Scope 3 reduction roadmap and need to scope which interventions count toward your inventory versus which sit in Beyond Value Chain Mitigation, the carbon and sustainability experts at Carbon Credit Capital can help you structure a nature-based supply chain investment program that fits your FLAG exposure, your target architecture, and your audit horizon. Schedule a consultation.

Carbon Footprint

Net zero needs nature: a carbon credit guide

Published

1 week ago

August 11, 2026

Alice Rush

Net zero is often described as a balancing act: cut what you can, account for the rest, and reach zero on the ledger. That framing is useful, but it leaves something out. It treats every tonne of carbon as interchangeable and every route to zero as equally sound, while the science tells a more specific story.

Carbon Footprint

Deforestation in Malawi: causes and solutions

Published

1 week ago

August 10, 2026

Alice Rush

Malawi has lost a striking share of its forests over the past three decades. Woodlands that once covered well over a third of the country now cover less than a quarter, and the pressure on what remains is increasing. Behind those figures sit two practical questions: what is driving the loss, and what reverses it?