Microsoft has signed a cope with Indian startup Varaha to purchase greater than 100,000 tons of carbon dioxide elimination credit over the subsequent three years, via 2029, increasing its portfolio of carbon elimination tasks because the tech big scales up AI and cloud operations.
The challenge will flip cotton crop waste, which is commonly burned after harvest, into biochar — a charcoal-like materials that may be added to soil, storing carbon for lengthy intervals whereas additionally serving to cut back air air pollution from open-field burning. It can initially concentrate on the western Indian state of Maharashtra and contain round 40,000–45,000 smallholder farmers.
The settlement comes as massive companies, together with Microsoft, ramp up spending on carbon elimination — tasks designed to bodily take away carbon dioxide from the air. The Redmond-based software program maker is working towards its aim of turning into carbon-negative by 2030. Nevertheless, Microsoft’s total greenhouse gas emissions rose 23.4% in fiscal yr 2024 from a 2020 baseline, primarily pushed by value-chain emissions linked to its rising cloud and AI enterprise. Microsoft has not but reported on its carbon progress for 2025.
With the speedy enlargement of AI operations, power use and emissions are rising, pushing firms to look past the U.S. for carbon elimination tasks that may take carbon dioxide out of the ambiance. India has more and more emerged as a pretty marketplace for such tasks due to its massive volumes of agricultural waste and the size of its farming financial system.
Varaha will develop 18 industrial reactors that can function for 15 years, with a complete projected elimination quantity exceeding 2 million tons of carbon dioxide over the challenge’s lifetime, the businesses mentioned in an announcement on Thursday.
One of many largest gaps in carbon elimination markets is not only putting in gear to provide biochar, however working tasks reliably and navigating a stringent course of to situation credit. Varaha’s potential to ship credit at scale helped it emerge because the world’s second-largest participant in sturdy carbon deliveries and drew Microsoft’s consideration, co-founder and CEO Madhur Jain mentioned in an interview.
Microsoft’s necessities for digital monitoring, reporting, and verification meant Varaha needed to construct bespoke techniques in-house, Jain instructed TechCrunch, including that working with tens of 1000’s of smallholder farmers in India makes monitoring and logistics much more complicated than biochar tasks within the U.S. or Europe that depend on biomass concentrated at a single industrial web site.
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“Greater than 30% of our staff has labored in agriculture,” Jain mentioned, including that the expertise has helped Varaha design techniques that work on the bottom with farmers.
The challenge’s first reactor will probably be positioned subsequent to Varaha’s 52-acre cotton analysis farm in Maharashtra, the place the startup works with farmers to check practices similar to making use of biochar to soil underneath real-world circumstances. The startup plans to scale as much as 18 reactors throughout India’s cotton-growing belt underneath Microsoft’s dedication.
Varaha has quickly scaled its biochar operations over the previous yr, Jain mentioned. In 2025, it processed about 240,000 tons of biomass, producing roughly 55,000–56,000 tons of biochar and producing round 115,000 credit, up from round 15,000–18,000 a yr earlier, he added.
The startup expects volumes to rise additional as new contracts kick in, with Jain saying it goals to a minimum of double its 2025 throughput in 2026 to round half 1,000,000 tons of biomass and near 250,000 tons of carbon sequestered.
At present, Varaha has 20 tasks in whole throughout India, Nepal, and Bangladesh — 14 in superior phases and one other six in early phases — spanning regenerative agriculture, biochar, agroforestry, and enhanced rock weathering and works with round 150,000 farmers. These tasks have the potential to sequester about 1 billion tons of carbon dioxide over lifetimes starting from 15 to 40 years, Jain mentioned.
Past carbon credit, the most recent challenge goals to cut back open burning of cotton stalks, which contributes to seasonal air air pollution in components of India, whereas returning biochar to farms to enhance soil well being and cut back dependence on chemical fertilizers.
“This offtake settlement broadens the range of Microsoft’s carbon elimination portfolio with Varaha’s biochar challenge design that’s each scalable and sturdy,” mentioned Phil Goodman, Microsoft’s CDR program director, in a ready assertion.
Whereas the Varaha deal highlights Microsoft’s push to diversify its carbon elimination portfolio, the volumes stay small in contrast with its general footprint, because the software program big reported (PDF) whole greenhouse gasoline emissions of 15.5 million metric tons of carbon dioxide equal in FY2024.
Microsoft contracted for about 22 million metric tons of carbon removals in FY2024 as a part of its carbon-negative technique. In latest months, Microsoft has signed a string of huge carbon elimination agreements. These embody backing AtmosClear’s Louisiana project to take away 6.75 million metric tons of carbon dioxide over 15 years, and agreeing to purchase 3.6 million carbon removal credits from a biofuels plant in Louisiana owned by C2X.
Like Microsoft, Google has additionally been signing carbon elimination offers because the speedy AI developments push up power use and emissions. Google agreed to purchase 100,000 tons of carbon removal credits from Varaha in January 2025, as its largest biochar deal.
Since its inception in 2022, Varaha has raised round $50 million throughout completely different devices. The startup counts RTP World, Omnivore, Orios Enterprise Companions, IMC Pan Asia Alliance Group’s Octave Wellbeing Economic system Fund, and Japan’s Norinchukin Financial institution amongst its backers. In November, Mirova — a French climate-focused funding agency backed by Kering and different company traders — invested $30.5 million in Varaha to increase its regenerative farming program.
