Microsoft, Chestnut Ink 7 Mn Tonne Carbon Removal Megadeal

Microsoft and Chestnut Carbon have announced a landmark 25-year partnership for nature-based carbon removal, a significant step toward Microsoft's environmental goals. Under the agreement, Chestnut Carbon will deliver over 7 million tons of carbon removal credits to the tech giant, created from extensive forest projects in the Southern U.S. The deal is described by Chestnut Carbon as the largest voluntary corporate investment in conservation forestry in the United States and involves restoring about 60,000 acres of land and planting over 35 million native hardwood and softwood trees.

Chestnut Carbon was founded in 2022 by Kimmeridge, an alternative asset manager of energy. The company is focused on reducing carbon emissions through long-term forest development underpinning biodiversity and community well-being. It acquires neglected crop and pasture lands, and collaborates with local foresters, nurseries, and community to create sustainable forest ecosystems that respond to the conditions of place, including native tree species, soil composition, and land use patterns.

The newly launched project focuses on ARR activities in Arkansas, Texas, and Louisiana. Chestnut elaborated that the project is distinguished by the longevity of carbon sequestration and the notion of additionality, which basically means that these lands would not be restored without the carbon credit market. Apart from climate benefits, the project will improve native wildlife habitats, air quality and water quality, expand land use options and promote community engagement and economic development.

This deal follows up on Microsoft's initial 15-year agreement signed with Chestnut Carbon in December 2024 to deliver 3 million tons of carbon credits. The expanded partnership underscores Microsoft’s confidence in Chestnut Carbon’s ability to deliver high-quality carbon removal solutions. Ben Dell, CEO of Chestnut and Managing Partner of Kimmeridge, expressed enthusiasm about the collaboration, stating that the continued engagement with Microsoft reaffirms the value of Chestnut’s nature-based solutions. Dell noted that afforestation is one of the most scalable, low-cost, and scalable options for carbon removal and is ready to take the lion's share of the increase in demand for high-quality carbon credits.

The agreement is a part of Microsoft’s broader initiative to become carbon negative by 2030, which includes a diverse portfolio of carbon removal projects. These initiatives encompass large-scale reforestation agreements and advanced technologies such as ocean-based carbon removal, biochar-based projects, and direct air capture (DAC) solutions. Earlier this month, Microsoft announced another significant deal with Brazil-based re.green for 3.5 million tons of carbon credits, further strengthening its commitment to combating climate change through strategic partnerships.

Brian Marrs, Senior Director of Energy & Carbon Removal at Microsoft, said that the deal is a good step for them to move towards being carbon negative, and he believes scaling forest restoration in the U.S. and attracting more sophisticated private capital will play an important role. Marrs also highlighted that the Sustainable Restoration Project would help diversify the ecological impact of Microsoft's global carbon removal portfolio.

The long-term nature of the deal with Chestnut Carbon will be expected to bring transformative environmental and community benefits. By 2030, Chestnut plans to expand its ARR portfolio to 500,000 acres and remove carbon dioxide from the atmosphere in a period of 50 years, equaling 100 million tons. The partnership with Microsoft helps further the company's sustainability goals but also furthers more general climate aims by showcasing that nature-based solutions for carbon removal are viable and essential.

As corporations come under greater pressure to address their carbon footprints, the move by Microsoft to increase its partnership with Chestnut Carbon is an important precedent for other companies to make large-scale conservation and reforestation investments. The agreement represents the increasing recognition of nature-based solutions as an integral part of climate action strategies. The partnership is a major step forward in the global fight against climate change and ecological resilience, given Chestnut Carbon's expertise in forest restoration and Microsoft's market leadership in environmental sustainability.