Microsoft Halts New Carbon Removal Credits as AI Emissions Rise

Microsoft paused new purchases of carbon dioxide removal (CDR) credits around April 2026, stepping back from a carbon removal market it dominated. The move comes as Microsoft pours major budgets into AI infrastructure and reports a 23.4% emissions increase in 2024. Key details: - Scale: Microsoft accounted for roughly 79%–90% of global CDR purchases in recent years. - Recent demand: In 2025, it contracted 45 million metric tonnes of carbon removals, about double its 2024 level, with investments over $750 million. - Policy stance: Chief Sustainability Officer Melanie Nakagawa says the program is not dead—it’s being recalibrated. Microsoft will honor existing contracts and continues limited procurement. But new carbon removal credits purchases are frozen with no public restart timeline. Market implications for CDR providers: - Startups that planned around Microsoft’s ongoing offtake may face a funding squeeze. - Projects with long-term offtake agreements signed before the pause are comparatively safer. - Government support helps, but not enough to replace Microsoft’s purchasing power. FY2026 appropriations include $116+ million earmarked for CDR projects. Broader context: Microsoft reiterates a carbon-negative goal by 2030 and pledges to remove historical emissions by 2050. Additional pressure is expected as Microsoft expands compute capacity for its OpenAI partnership and Copilot products. Other tech commitments (e.g., Google, Stripe’s Frontier initiative) exist, but none match Microsoft’s prior volume.