ANALYSIS: Microsoft continues to dominate CDR deals from May to the end of August
Quantum Commodity Intelligence – New buying by tech giant Microsoft catapulted advanced commitments for carbon dioxide removals (CDR) credits to almost 17.6 million tonnes of carbon dioxide equivalent (tCO2e) between May 1 and August 31, according to analysis by Quantum of announced deals.
This figure, which is likely to be higher as several offtake announcements did not specify the purchase size, is more than the 17 million assessed by Quantum for the whole of last year and also dwarfs the more than 1,671,734 tCO2 announced between January 1 and April 30.
Microsoft accounted for 16,916,000 of the CDR commitments in the four-month period to the end of August, not including a deal with Carbon Streaming Corporation and Rubicon Carbon Capital for credits from Ponterra for the Azuero reforestation project in Panama.
The tech company has a goal of becoming 'carbon negative' by 2030, obliging it to remove more CO2 from the atmosphere than it generates through its use of fossil fuels. By mid-century, Microsoft has undertaken remove a volume of CO2 emissions equivalent to all its historical emissions since the company was founded in the 1970s.
Huge deals
It announced some huge multi-year deals over the period assessed, the largest unveiled on June 18 to buy up to 8 million nature-based CDR credits until 2043 from initiatives backed by Brazilian investment bank BTG Pactual. The credits will be issued from projects divided between the restoration of natural forests over a total 135,000-hectare area and the planting of sustainably-managed tree farms over an area of the same size.
Other notable purchases include 3.33 million CDRs over 10 years from a planned bioenergy with carbon capture and storage (BECCS) facility at Swedish utility Stockholm Exergi's combined heat and power plant in the Nordic country's capital, the companies announced on May 7.
A few days later, on May 10, Microsoft said it had agreed with Rio de Janeiro-based project developer Re.Green to purchase 3 million CDRs over a 15-year period from tree planting projects across deforested lands in Brazil. Re.Green will restore over 16,000 hectares of degraded pastureland by planting over 10.7 million native seedlings across two ecologically important biomes: the Atlantic Forest, the most deforested biome in Brazil, and Amazon Rainforest.
Another May deal saw Microsoft extend an existing agreement with Danish energy company Orsted for 1 million credits over 10 years starting in 2026 from a BECCS project in Denmark, adding to an existing deal between the parties for 2.67 million tCO2e from the Avedore power station.
This was followed in June by a 970,000 CDR agreement with US developer Anew Climate for credits from the latter's portfolio of improved forest management projects in North America. Then in July Microsoft struck what was described as world's biggest ever deal for CDRs from direct air capture (DAC) with 1PointFive. This is for 500,000 CDRs over six years from the Stratos DAC facility in Texas, which is under construction and scheduled to start operations next year.
Beyond Microsoft
Beyond Microsoft, the largest recorded purchase in the period was by Climate Impact Partners with certified forest plantation management company Form Ghana giving the company access to 371,000 credits from Form's flagship reforestation project in two locations in central Ghana.
The Verra-registered project aims to reforest 20,000 hectares of degraded forest reserves in Ghana over its lifetime with teak, indigenous trees and natural forest, CIP said, adding that to date, nearly 12,000 hectares have been restored.
At the start of May, the Frontier fund – which specialises in CDR credit purchases on behalf of tech firms – said its buyers would pay $58.3 million to "permanently" remove 152,480 tCO2e over the three years through an agreement with biomass carbon removal and storage company Vaulted Deep.
The fund announced in June a $48.6 million CDR deal for an undisclosed volume and then in July a $40 million agreement for 61,571 DAC CDRs from 280 Earth. The offtake agreement, which effectively prices carbon dioxide removals credits from the DAC project at $650 each, applies to removals that are scheduled to be delivered by 280 Earth from its pilot facility in Oregon, northwest US.