Microsoft signs carbon capture deal with Occidental

Microsoft Corp. this week announced plans to buy 500,000 carbon credits from Occidental Petroleum over the next six years as it faces challenges in achieving its carbon-neutral goal by 2030.

Under the agreement, 1PointFive, an arm of Occidental, will provide 500,000 metric tons of carbon dioxide removal (CDR) credits in the largest deal of its kind to date, supporting Microsoft’s carbon removal strategy.

The CDR process involves various methods to capture and permanently store atmospheric carbon dioxide.

The credits will be generated by STRATOS, 1PointFive’s first industrial-scale direct air capture (DAC) facility, currently under construction in Texas.

Under the terms of the agreement with Microsoft, the captured carbon dioxide underlying the credits will be securely stored through subsurface saline sequestration and will not be used to produce oil and gas.

Direct air capture provides a transparent and durable way to address emissions on a large scale, particularly from hard-to-abate industries.

“We are excited about this landmark agreement, which is a result of Microsoft’s leadership in carbon removal and focus on building a more sustainable future,” said Michael Avery, president and general manager of 1PointFive.  “A commitment of this magnitude further demonstrates how one of the world’s largest corporations is integrating scalable direct air capture into its net zero strategy. Energy demand across the technology industry is increasing and we believe direct air capture is uniquely suited to remove residual emissions and further climate goals.”

“We’re very pleased to announce this deal with 1PointFive, a pioneer in the direct air capture space, which is building the largest such project worldwide. To achieve the gigatons of removals needed this century, first-of-a-kind projects like STRATOS are essential to move from pilots to scale. Direct air capture plays an important role in Microsoft’s carbon removal portfolio supporting our broader goal of becoming carbon negative by 2030,” said Brian Marrs, senior director for carbon removal and energy at Microsoft.

The Microsoft-Occidental deal comes amid a surge in overall emissions by tech giants, including Google, as their artificial intelligence tools put climate goals in jeopardy.

Google’s emissions rose 48% to 14.3 million metric tons last year when compared with the 2019 baseline, with a 13% year-over-year increase, according to the ‘Google Environment Report 2024’.

The company cited an increase in data center energy consumption, supply chain emissions and AI prioritization as reasons behind greater emissions.

A disclosure from Microsoft this month showed its total emissions were up by 29% between 2020 and 2023.

Energy-intensive data centers power large language models such as ChatGPT.

Tech firms are getting creative to tide over the issue.

Amazon Web Services is looking to buy energy directly from a nuclear plant on the US East Coast, while Microsoft is pursuing carbon offsets. Google’s sustainability report was accompanied by an statement that it had tied up with BlackRock to build a 1 gigawatt pipeline of solar capacity in Taiwan.