Microsoft To Buy 18M Tonnes Nature Carbon Credits

In a major step towards achieving its climate neutrality objectives, Microsoft has signed a historic deal with carbon markets platform Rubicon Carbon to buy 18 million tonnes of nature-based carbon removal credits. The transaction, announced today, is one of the biggest carbon credit purchases by a single business in the voluntary carbon market to date and reflects Microsoft's leadership in carbon dioxide removal (CDR) efforts.

As part of the agreement, Rubicon Carbon will enable the purchase of high-quality carbon removal credits, with each deal being a long-term 15 to 20-year offtake. The credits will be purchased from a global portfolio of Afforestation, Reforestation, and Revegetation (ARR) projects. These projects, which include planting trees and rehabilitating degraded lands, are some of the most effective nature-based solutions for the removal of atmospheric carbon dioxide.

Introduced in 2022, Rubicon Carbon offers an integrated set of carbon credit solutions for companies, such as proprietary project curation, portfolio construction, sophisticated monitoring, and in-depth analytics. Founded with the financial support of global alternative asset manager TPG, Rubicon Carbon received a $300 million capital commitment through TPG's climate-oriented investment platform, TPG Rise Climate, and its impact-oriented strategy, The Rise Fund.

Jim Coulter, TPG's Founding Partner and Managing Partner of TPG Rise Climate, highlighted the importance of the transaction as a milestone in their efforts to scale high-quality carbon projects. "We started Rubicon Carbon three years ago with the goal of catalyzing high-quality carbon projects at scale. This deal with Microsoft is a key milestone on our path to bringing innovative, market-based solutions," Coulter stated.

Under the partnership, Rubicon will be responsible for sourcing, assessing, and due diligence on ARR projects globally. All this will be done under an assessment framework jointly developed with Microsoft to meet the company's high scientific and quality standards. Furthermore, Rubicon will employ continuous quality control and monitoring techniques utilizing extensive reliance on remote-sensing technologies to monitor and validate outcomes of carbon sequestration. A central goal of the initiative is to focus on projects that are scalable but that don't yet have adequate access to capital.

Rubicon Carbon CEO Tom Montag called the partnership a blueprint for scaling climate effect using financial innovation. "To address climate change, it takes more than good intentions—it takes the deployment of capital at scale.". This partnership is a template for how the finance industry can address the need of the hour while also delivering good financial returns," he said. Montag pointed out that the model can have more investors come on board by demonstrating the economic viability and profitability of nature-based carbon removal activities at scale globally.

The new deal also reinforces Microsoft as the world's largest corporate carbon removal credit buyer. As per updated information from CDR.fyi, Microsoft's aggregate carbon removal purchases now account for over 20.5 million tonnes, way ahead of the second-highest buyer, the Frontier group, at 1.25 million tonnes. Microsoft's pipeline already has important ARR investments to its name, including a 7 million tonne deal with Chestnut Carbon and a 3.5 million tonne deal with re.green, both of which have been announced in earlier this year.

Brian Marrs, Microsoft's Senior Director of Energy & Carbon Removal, made a comment on the deal's strategic significance. "This deal shows how science, finance, and business model innovation can come together to scale affordable and high-quality climate solutions," Marrs said. He went on to highlight the crucial position of project finance in the voluntary carbon market, and how this commitment over the long term indicates strong demand for carbon removal, which is pivotal to driving infrastructure-scale investment and delivering climate projects at world-class level.

The partnership between Microsoft and Rubicon Carbon is a shining example of how private sector leadership, in consonance with science-based frameworks and sustainable investment principles, can lead the way in making meaningful strides in the global war on climate change. With the world in a rush to achieve net-zero goals, partnerships like this could be the template for corporations looking to marry environmental stewardship with economic opportunity.