Microsoft signs multi‑year biochar carbon removal deal with India's

Microsoft has agreed to purchase more than 100,000 tons of carbon‑removal credits from Indian climate‑tech startup Varaha over the next three years, marking the tech giant’s first large‑scale biochar deal in Asia [1]. The partnership will convert cotton crop residues—normally burned after harvest—into biochar, a stable form of carbon that can be stored in soil while also cutting air‑pollution from open‑field burning [1][2].

Key takeaways

• Microsoft will off‑take over 100,000 t of biochar credits through 2029 [1].
• Varaha plans up to 18 industrial gasification reactors, each designed for a 15‑year life, with a projected total removal of more than 2 million t CO₂ [1][2].
• The first reactor will be sited next to Varaha’s 52‑acre cotton research farm in Maharashtra, involving 40,000‑45,000 smallholder farmers [1].
• Varaha processed roughly 240,000 t of biomass in 2025, producing about 55,000 t of biochar and generating 115,000 credits, and aims to double throughput in 2026 [1].
• The project promises co‑benefits for air quality, farmer income, and soil health, linking carbon removal to regenerative agriculture [2].

Scaling biochar in India’s cotton belt

Varaha’s business model centers on turning cotton stalks—often burned after harvest—into biochar via industrial reactors. The company will build up to 18 reactors across India’s cotton‑growing regions, each operating for 15 years and collectively targeting more than 2 million t of CO₂ removal over their lifetime [1][2]. The first unit will be located beside Varaha’s 52‑acre research farm in Maharashtra, where the startup already works with farmers to test biochar application under real‑world conditions [1]. By the end of 2025 the firm had processed about 240,000 t of biomass, yielding roughly 55,000 t of biochar and creating 115,000 carbon credits, a sharp rise from the 15,000‑18,000 credits generated a year earlier [1]. Varaha expects to double its 2025 throughput in 2026, handling around half a million tons of biomass and sequestering close to 250,000 t of carbon [1].

The agreement required Varaha to develop bespoke digital monitoring, reporting, and verification systems to satisfy Microsoft’s stringent carbon‑procurement standards. This effort was complicated by the need to coordinate with tens of thousands of smallholder farmers, a scale far larger than typical biochar projects in the United States or Europe [1]. More than 30 % of Varaha’s team has agricultural experience, which the co‑founder and CEO Madhur Jain says helped design ground‑level systems that can track feedstock, reactor performance, and credit issuance [1].

Why it matters

The deal highlights Microsoft’s strategy to diversify its carbon‑removal portfolio as its AI and cloud services drive up emissions. While the 100,000‑ton credit purchase is modest compared with Microsoft’s FY 2024 carbon‑removal contracts of about 22 million t, it signals a shift toward durable, high‑integrity removal pathways in emerging markets [1]. For India, the project offers multiple co‑benefits: reducing seasonal particulate pollution from crop‑residue burning, providing income to thousands of smallholder farmers, and improving soil health through biochar application [2]. As biochar gains traction as a cost‑effective, long‑lasting removal method, Varaha’s scaling plan could position India as a key supplier of high‑quality credits, influencing both corporate procurement strategies and regional climate‑policy discussions.