Microsoft Partners with India’s Varaha for Pioneering Carbon Removal Initiative
In a significant move to bolster its environmental sustainability efforts, Microsoft has entered into an agreement with Indian startup Varaha to purchase over 100,000 tons of carbon dioxide removal credits over the next three years, extending through 2029. This collaboration marks Microsoft’s first durable carbon removal offtake in Asia and underscores the tech giant’s commitment to mitigating its carbon footprint amidst the rapid expansion of its AI and cloud operations.
Transforming Agricultural Waste into Environmental Solutions
The core of this initiative involves converting cotton crop residues, traditionally burned post-harvest, into biochar—a charcoal-like substance that, when integrated into soil, sequesters carbon for extended periods. This process not only aids in carbon storage but also addresses the prevalent issue of air pollution resulting from open-field burning practices. The project is set to commence in Maharashtra, a western state in India, and will engage approximately 40,000 to 45,000 smallholder farmers in its initial phase.
Aligning with Microsoft’s Carbon-Negative Ambitions
This partnership aligns with Microsoft’s broader objective of becoming carbon-negative by 2030. Despite this goal, the company reported a 23.4% increase in total greenhouse gas emissions in fiscal year 2024 compared to its 2020 baseline. This rise is primarily attributed to value-chain emissions associated with the growth of its cloud and AI services. The collaboration with Varaha represents a proactive step towards offsetting these emissions and advancing Microsoft’s environmental commitments.
India’s Role in Global Carbon Removal Efforts
As AI operations expand, leading to increased energy consumption and emissions, corporations are seeking carbon removal projects beyond their domestic borders. India’s vast agricultural sector and substantial volumes of crop waste position it as a strategic location for such initiatives. The partnership with Varaha exemplifies this trend, leveraging India’s resources to contribute to global carbon reduction efforts.
Project Scope and Impact
Varaha plans to establish 18 industrial reactors over the next 15 years, with a projected total carbon dioxide removal exceeding 2 million tons throughout the project’s duration. This ambitious undertaking not only contributes to carbon sequestration but also offers economic benefits to participating farmers by providing an alternative use for crop residues.
Overcoming Challenges in Carbon Credit Markets
The carbon removal market faces challenges beyond the mere installation of biochar production equipment. Ensuring reliable project execution and navigating the complex process of issuing carbon credits are significant hurdles. Varaha’s proven capability to deliver credits at scale has positioned it as a leading player in durable carbon deliveries, attracting Microsoft’s interest. Co-founder and CEO Madhur Jain highlighted the company’s success in this area, noting that Varaha has become the world’s second-largest entity in durable carbon deliveries.
Implementing Advanced Monitoring and Verification Systems
To meet Microsoft’s stringent requirements for digital monitoring, reporting, and verification, Varaha developed customized in-house systems. Managing operations involving tens of thousands of smallholder farmers in India presents unique challenges compared to biochar projects in the U.S. or Europe, which often rely on biomass from single industrial sites. Jain emphasized that over 30% of Varaha’s team has experience in agriculture, facilitating the design of systems that effectively operate in collaboration with farmers.
Strategic Location and Future Expansion
The project’s inaugural reactor will be situated adjacent to Varaha’s 52-acre cotton research farm in Maharashtra. This facility serves as a testing ground for practices such as applying biochar to soil under real-world conditions. Varaha intends to scale up to 18 reactors across India’s cotton-growing regions under Microsoft’s commitment, aiming to expand the project’s reach and impact.
Scaling Biochar Operations
Over the past year, Varaha has significantly increased its biochar production. In 2025, the company processed approximately 240,000 tons of biomass, yielding around 55,000 to 56,000 tons of biochar and generating about 115,000 carbon credits. This marks a substantial increase from the 15,000 to 18,000 credits produced in the previous year. With new contracts in place, Varaha anticipates further growth, aiming to at least double its 2025 throughput in 2026 to around 500,000 tons of biomass and nearly 250,000 tons of carbon sequestered.
Expanding Regional Projects
Currently, Varaha operates 20 projects across India, Nepal, and Bangladesh, encompassing regenerative agriculture, biochar production, agroforestry, and enhanced rock weathering. These initiatives involve approximately 150,000 farmers and have the potential to sequester about 1 billion tons of carbon dioxide over lifetimes ranging from 15 to 40 years. This extensive network underscores Varaha’s commitment to scalable and impactful carbon removal solutions.
Addressing Environmental and Agricultural Challenges
Beyond generating carbon credits, the partnership aims to mitigate the environmental impact of open burning of cotton stalks, a practice contributing to seasonal air pollution in parts of India. By converting crop residues into biochar and returning it to the soil, the project enhances soil health and reduces reliance on chemical fertilizers, offering a holistic approach to environmental and agricultural challenges.
Microsoft’s Diversification of Carbon Removal Portfolio
Phil Goodman, Microsoft’s Carbon Dioxide Removal (CDR) program director, emphasized the significance of this agreement in diversifying Microsoft’s carbon removal portfolio. He highlighted Varaha’s scalable and durable biochar project design as a valuable addition to the company’s environmental initiatives.
Contextualizing Microsoft’s Carbon Footprint
While the agreement with Varaha represents progress, the volumes involved are relatively small compared to Microsoft’s overall carbon footprint. In fiscal year 2024, the company reported total greenhouse gas emissions of 15.5 million metric tons of carbon dioxide equivalent. To address this, Microsoft contracted for about 22 million metric tons of carbon removals in the same fiscal year as part of its carbon-negative strategy.
Broader Carbon Removal Initiatives
In recent months, Microsoft has entered into several large carbon removal agreements. These include a partnership with AtmosClear’s Louisiana project to remove 6.75 million metric tons of carbon dioxide over 15 years and an agreement to purchase 3.6 million carbon removal credits from a biofuels plant in Louisiana owned by C2X. These initiatives reflect Microsoft’s comprehensive approach to addressing its carbon emissions through diverse and large-scale projects.
Industry-Wide Efforts in Carbon Removal
Microsoft’s efforts are part of a broader industry trend, with other tech giants like Google also engaging in carbon removal deals. In January 2025, Google agreed to purchase 100,000 tons of carbon removal credits from Varaha, marking its largest biochar deal to date. This collective movement underscores the tech industry’s recognition of the importance of proactive environmental stewardship.
Varaha’s Growth and Investment Milestones
Since its inception in 2022, Varaha has raised approximately $50 million through various funding instruments. The startup’s investors include RTP Global, Omnivore, Orios Venture Partners, IMC Pan Asia Alliance Group’s Octave Well-being Economy Fund, and Japan’s Norinchukin Bank. In November 2025, Mirova—a French climate-focused investment firm backed by Kering and other corporate investors—invested $30.5 million in Varaha to expand its regenerative farming program. This investment highlights the growing confidence in Varaha’s innovative approach to carbon removal and sustainable agriculture.
Conclusion
The partnership between Microsoft and Varaha represents a significant step in leveraging innovative technologies and collaborative efforts to address global carbon emissions. By transforming agricultural waste into a valuable resource for carbon sequestration, this initiative offers a scalable and sustainable model for environmental stewardship. As both companies continue to expand their efforts, this collaboration serves as a testament to the potential of strategic partnerships in driving meaningful progress toward a carbon-negative future.
