Is the golden age of corporate carbon removal purchases over?

Microsoft scales back carbon credit purchases after building 70 million tonne stockpile

Microsoft has reportedly paused new carbon dioxide removal purchases after accumulating over 70 million tonnes of credits. The move has sparked questions about the future of voluntary carbon markets. However, the picture is more nuanced than it first appears.

The tech giant has dominated corporate carbon removal buying since 2020. Its approach has shaped how these markets work. Now, as other companies enter the space, the market appears to be shifting rather than collapsing.

For UK businesses watching carbon markets, this matters. Microsoft’s actions have influenced pricing and availability of high-quality carbon credits. Understanding what comes next helps companies plan their own net zero strategies.

Microsoft’s carbon removal strategy reaches inflection point

Microsoft issued its first request for proposals in 2020. The company selected 15 suppliers for 1.3 million metric tons of carbon dioxide removal. Since then, its buying has accelerated dramatically.

In 2024, Microsoft accounted for 63% of all engineered carbon removal purchases. The total market reached 8 million tonnes that year. By 2025, estimates suggest Microsoft’s share climbed to 90% of durable carbon removal transactions.

This buying spree relates directly to Microsoft’s 2020 commitment to become carbon negative by 2030. The company aims to remove all emissions it has produced since 1975. Data center expansion for artificial intelligence has increased the urgency of this goal.

The company signed deals worth 45 million tonnes in 2025 alone. This doubled its 2024 volumes. Recent contracts include 3.69 million tonnes over 12 years from a bioenergy facility equipped with carbon capture and storage.

Chief Sustainability Officer Melanie Nakagawa clarified the company’s position in recent statements. She confirmed the carbon removal program continues. However, she noted potential adjustments to pace or volume of future purchases.

Microsoft retires roughly 600,000 credits annually. It plans to retire 6 million by 2030. With its current stockpile, the company has enough credits to maintain carbon neutrality for a decade beyond 2030. This assumes data center emissions remain controlled.

Carbon removal technologies mature as prices remain high

Bioenergy with carbon capture and storage now dominates the market. BECCS accounted for 58% of carbon removal purchases delivered in 2024. Two suppliers, Stockholm Exergi and Ørsted, secured the majority of these contracts.

Supply constraints continue to affect the market. High prices reflect limited availability of verified carbon removal capacity. Policy uncertainty adds complexity for companies planning long-term carbon strategies.

Microsoft updated its criteria for high-quality carbon removal in 2025. The new standards emphasize additionality and durability exceeding 1,000 years. These requirements favor geological storage methods over shorter-term solutions.

Consequently, nature-based solutions face increasing scrutiny. Forest projects and soil carbon sequestration offer lower durability than engineered removal. This shift affects which projects can attract corporate buyers.

The voluntary carbon market has grown rapidly despite these challenges. Total volumes doubled annually since 2020. Nevertheless, growth rates are decelerating as the market matures.

New corporate buyers enter carbon removal markets

Microsoft’s reduced buying creates space for other companies. Non-Microsoft buyers purchased 3.2 million tonnes in 2025. This roughly doubles the combined total from 2023 and 2024.

Equinor accounted for 9% of 2024 volumes. J.P. Morgan has also entered the market. These companies represent sectors beyond technology and finance. Their involvement suggests broadening demand.

The market no longer relies on a single dominant buyer. This diversification could stabilize prices over time. It may also encourage innovation in carbon removal technologies.

Frontier, a collective of companies pooling carbon removal purchases, has gained traction. Members commit to advance market commitments. This de-risks investment for carbon removal suppliers.

Policy frameworks are evolving to support these markets. The Voluntary Carbon Markets Integrity Initiative released its Claims Code. This provides guidance on how companies can use carbon credits in net zero claims.

What Microsoft’s shift means for carbon markets

• Microsoft holds approximately 70 million tonnes of contracted carbon removal credits, with over 36 million tonnes in its stockpile ready for retirement.
• The company’s share of engineered carbon removal purchases fell from 90% in early 2025 to 63% by year end as other buyers increased activity.
• Bioenergy with carbon capture and storage accounts for 58% of carbon removal deliveries, establishing it as the dominant technology pathway.
• Non-Microsoft corporate buyers doubled their purchase volumes annually through 2024, reaching 3.2 million tonnes in 2025.
• Microsoft plans to retire 6 million carbon credits by 2030, well below its current stockpile, suggesting reduced near-term demand.
• Total carbon removal market volumes reached 8 million tonnes in 2024, representing 78% year-on-year growth but showing signs of deceleration.
• The company updated its quality criteria in 2025 to emphasize removal durability exceeding 1,000 years and strict additionality requirements.

Commercial implications for UK businesses pursuing net zero

Microsoft’s approach demonstrates how large corporations are securing carbon removal capacity years in advance. This forward buying reduces uncertainty but locks up supply. UK companies should consider whether similar advance commitments make sense for their timelines.

The emphasis on durability affects project selection. Technologies offering permanent geological storage command premium prices. Nature-based solutions face questions about longevity and verification. Companies need to weigh cost against the quality standards their stakeholders expect.

Supply constraints will likely persist for several years. Carbon removal capacity is expanding but remains limited relative to potential demand. Early movers secure better pricing and availability. Delays may mean paying more or accepting lower-quality credits.

Public sector suppliers face particular considerations. PPN 06/21 carbon reduction plans require credible net zero pathways. Carbon removal may play a role in addressing residual emissions. However, the procurement note prioritizes direct reduction over offsetting.

For manufacturers and heavy industry, carbon removal addresses genuinely hard-to-abate emissions. Process emissions from cement, steel, or chemicals may require removal to reach net zero. Understanding which technologies will be available and affordable matters for long-term planning.

The market is shifting from a Microsoft-dominated phase to broader participation. This creates both opportunities and risks. More buyers mean more competition for credits. However, it also signals growing confidence in carbon removal as a viable climate solution.

Financial planning should account for price volatility. Microsoft’s reduced buying might ease upward pressure on prices. Alternatively, if other buyers quickly fill the gap, prices could remain elevated. Budget flexibility helps manage this uncertainty.

Verification standards continue to tighten. Companies purchasing carbon removal need robust documentation. Third-party certification provides credibility. The Voluntary Carbon Markets Integrity Initiative and other bodies are raising the bar for what counts as high-quality removal.

For businesses just starting their net zero journey, timing matters. Building a credible strategy takes time. Carbon reporting and compliance support helps establish baselines and identify reduction opportunities. Carbon removal should complement reduction, not replace it.

Planning for a diversifying carbon removal market

The market Microsoft largely created is maturing. A single corporate buyer cannot sustain indefinite growth. Diversification signals health rather than decline.

UK businesses should monitor how this transition unfolds. Carbon removal will likely play a role in most net zero strategies. Understanding which technologies work, what they cost, and how to verify quality requires attention.

Companies with hard-to-abate emissions particularly need to understand their options. Waiting may mean fewer choices or higher costs. However, rushing into low-quality credits carries reputational risk.

The path to net zero depends primarily on direct emissions reduction. Carbon removal addresses what remains after all practical reductions are made. Getting the sequence right matters both environmentally and commercially.

Microsoft’s stockpile gives it flexibility through 2030 and beyond. Most businesses lack that luxury. Planning ahead, understanding market dynamics, and building relationships with credible suppliers will help navigate what comes next.

Where to find authoritative guidance on carbon markets

The UK government’s carbon markets policy provides official guidance on regulatory frameworks and future policy direction.

The Voluntary Carbon Markets Integrity Initiative offers detailed guidance on carbon credit quality standards and how companies can make credible claims.

For carbon removal specifically, the Department for Energy Security and Net Zero’s assessment of removal technologies examines different approaches and their potential scale.

The Institute of Environmental Management and Assessment publishes accessible guidance on the difference between offsetting and carbon removal.

Companies looking at sustainable procurement should consult the Procurement Policy Note 06/21 for requirements on carbon reduction plans in public sector supply chains.