Microsoft buys six million removal credits on lender's terms

The largest buyer in the carbon-removal market now contracts like a lender. Microsoft has purchased five times more removal credits than the next ten largest buyers combined, according to CDR.fyi, and its latest round of just over six million credits across four forestry, agriculture and industrial carbon-capture projects rests on dynamic baselines, soil samples and drone surveys — the mechanics of diligence rather than the language of offset marketing.

Baseline discipline answers the market's recent failures directly. The scandals that have roiled carbon markets have repeatedly traced back to baselines — estimates of what would have happened absent a project — and when those estimates are set low, developers issue more credits than the project justifies. Bloomberg earlier this year found some China projects unbuilt or lacking the emissions-controls systems they claimed. Microsoft's contractual response includes a Brazilian reforestation project that adjusts its baseline by monitoring control areas, and sustainable timber projects whose baselines must shift as policy and market conditions move.

Measurement is the second leg. Microsoft's 2.9 million credits with Indigo Carbon cover regenerative practices such as cover crops and reduced tillage, with progress reported through a "measure and model" approach combining soil samples, third-party verification and modeling. The developer behind the Brazil reforestation project, Mombak, flies drones over its forests. Industrial capture gets the same scrutiny: in 2024, Microsoft contracted for one million credits from the Avedøre Power Station near Copenhagen, where Ørsted is installing equipment to capture and store emissions from crop-residue combustion.

None of that narrows the gap to Microsoft's 2030 carbon-negative pledge, which the company says has grown harder as its emissions surged. Nor does it reverse the contraction already under way: Microsoft cut purchases by 80% through mid-July, and global carbon-removal credit sales fell 66% as the young market lost its anchor buyer. Six million credits mark a step toward recovery, not a restored market.

Dynamic baselines, drone monitoring and soil samples are the machinery of a market trying to make its product auditable; carbon removal has to grow up, and these contracts are what growing up looks like. The labeled era of transition finance is giving way to structured terms, with Microsoft inserting covenants into each ton, and whether other large buyers adopt the same terms will determine whether that discipline becomes the market standard.