Microsoft Pauses New Carbon Removal Purchases, Sending Shockwaves Through an Industry It Dominated
Microsoft staff have informed carbon removal developers that the company is pausing new purchases, a move that rattles a market in which the tech giant accounted for 96 percent of 2025 credit purchases.
Overview
Microsoft staff have begun informing carbon removal project developers that the company is pausing new purchases of carbon dioxide removal credits, according to Bloomberg. The move threatens to destabilize the nascent carbon removal industry, in which Microsoft has served as the dominant buyer since launching its $1 billion Climate Innovation Fund in 2020.
BloombergNEF data cited in the Bloomberg report indicates that Microsoft’s purchases in 2025 represented approximately 96 percent of the entire engineered carbon removal credit market. The company holds purchase contracts spanning more than 60 projects across 10 carbon dioxide removal technologies, totaling over 78 million metric tons of contracted removals.
The pause arrives just days after The Machine Herald reported on Microsoft’s 626,000-tonne offtake agreement with Canada’s Indigenous-owned North Star Carbon Solutions project, illustrating how quickly the landscape has shifted.
What We Know
Microsoft employees contacted carbon removal developers in the week of April 11, 2026, to communicate the pause, according to Bloomberg. At least one source told the outlet that financial considerations motivated the decision. However, four developers with existing Microsoft contracts told Bloomberg they had not yet received official notification of any pause, suggesting the communications were still rolling out.
A Microsoft spokesperson denied that the company was indefinitely halting all purchases, stating: “We continually review and assess our carbon removal portfolio along with market conditions for the optimal balance on our path to carbon negative,” as quoted by Bloomberg.
Existing offtake agreements appear to remain in place. Svante Technologies, which partnered with the Meadow Lake Tribal Council on the North Star BECCS project, stated that its recently announced agreement with Microsoft would not be affected, according to the Bloomberg report.
The pause applies to new deals across multiple carbon removal approaches, including direct air capture, biochar, and other engineered solutions.
Why It Matters
Microsoft pledged in January 2020 to become carbon negative by 2030 and to remove all carbon the company has emitted since its founding in 1975 by 2050. To support that goal, the company launched a $1 billion Climate Innovation Fund and became the single largest purchaser of engineered carbon removal credits in the world.
But the company’s emissions trajectory has moved in the opposite direction of its ambitions. Microsoft’s 2025 Environmental Sustainability Report showed that total emissions had risen 23.4 percent from the 2020 baseline, driven largely by the rapid expansion of energy-intensive data centers needed to power artificial intelligence workloads. The widening gap between Microsoft’s carbon negative target and its actual emissions footprint appears to have prompted a reassessment of its removal portfolio’s cost and effectiveness.
Carbon removal technologies remain expensive, with prices ranging from roughly $50 to $600 per metric ton depending on the approach, according to Bloomberg. Microsoft had typically paid between $100 and $600 per ton for engineered removals, far above the $5 to $15 range for nature-based carbon credits.
What We Don’t Know
Microsoft has not disclosed a timeline for resuming new purchases, nor has it specified which internal review process triggered the pause. The company’s statement leaves open the possibility that the halt could last weeks or months.
It remains unclear whether the pause signals a fundamental rethinking of Microsoft’s carbon negative strategy or a temporary recalibration of spending. The company’s data center buildout shows no signs of slowing, and the emissions growth it drives will require either dramatically scaled-up removal purchases or a revised target framework.
Four developers told Bloomberg they had not been contacted, raising questions about how broadly and uniformly the pause has been communicated across Microsoft’s portfolio of more than 60 project partnerships.
Industry Impact
The carbon removal industry now faces a period of acute uncertainty. With one buyer accounting for 96 percent of 2025 purchases, according to BloombergNEF data cited by Bloomberg, the pause removes the primary demand signal that emerging startups have relied upon to validate business models and secure financing.
Companies such as Climeworks, Heirloom, and numerous biochar and biomass sequestration startups have built commercial strategies around long-term Microsoft offtake agreements. While existing contracts appear protected, the freeze on new deals could slow the cost-reduction trajectory that the sector needs to attract a broader base of corporate buyers.
The political environment adds further pressure. The Trump administration has declined to spend, and in some cases reassigned, federal funds previously authorized to support carbon capture deployment, removing a complementary source of early-stage financing that many developers had factored into their plans, as Bloomberg reported.
The question now is whether other large technology and financial companies will step in to fill the demand gap, or whether the industry will enter a contraction just as its first commercial-scale facilities are beginning to operate.