Microsoft is charting a path forward for carbon removal. How can others follow?

Companies are looking to bolster their net zero plans, with new research highlighting both the significant opportunities and challenges in scaling markets and technology.

In 2021, it seems like news around carbon dioxide removal is everywhere. Climate scientists recently acknowledged the need for large-scale carbon removal to meet Paris Agreement goals, the Biden Administration is looking to fund carbon removal efforts at historic levels, and new technologies that pull carbon dioxide directly out of the air have made headlines.

Businesses, who are increasingly setting ambitious net zero goals, have taken notice. In January, Microsoft made a major splash, announcing the largest corporate purchase of carbon removals to-date, paying for the removal of 1.3 million tons of carbon from the atmosphere. Yet as many other companies look to turn their goals into action, the role of carbon removal remains murky and confusing.

A new paper from Microsoft and experts like EDF Chief Scientist Steve Hamburg highlights lessons learned from their historic purchase, shedding additional light on how businesses should look at carbon removal in their own climate strategies.

Their work shows that carbon removal holds promise in the long term; it also shows that the complexity, cost, and uncertainty of current carbon removal markets. These learnings demonstrate that while carbon removal is a valuable option most companies should also look elsewhere for key opportunities to double down on progress in the near term. Thankfully, multiple options exist for companies to act now on climate change.

Carbon Removal Challenges

Despite its promise and necessity, Microsoft identified major barriers that still need to be overcome for carbon removal to be an accessible solution.

First, the market for carbon removal is in its infancy. In other words, there just aren’t enough removal credits to go around. Technological solutions, like direct air capture machines that suck carbon dioxide out of the atmosphere, remain expensive and untested at the large scales needed. These markets are likely to grow – but it’s unclear how fast.

Second, quality remains a concern. Only a tiny fraction of carbon removal credits on the market met Microsoft’s stringent definition of quality.  

Finally, carbon removal markets suffer from a lack of clear, transparent standards and accounting mechanisms. This confusion stands in the way of investment. 

These issues are not necessarily limited to markets for carbon removal. Questions around credibility, quality and transparency also plague voluntary carbon markets at large. Thankfully, work is underway to bring necessary clarity to these markets.

Strategies for Immediate Action

Given the current challenges in carbon removal, where should companies prioritize their limited time, attention, and resources to make the biggest impact now?

  1. Prioritize direct reductions

Microsoft highlights the importance of reduce a company’s own emissions from their operations and value chain. We couldn’t agree more that this is an urgent priority. Climate science tells us we need to halve emissions by 2030 on the way to mid-century net zero goals.

Microsoft’s strategy includes a focus on renewable energy, fleet electrification, and value chain engagement, backed by programs to incentivize reductions like an internal carbon fee.

Each sector and organization will have their own unique approach to cut emissions. Yet whatever the strategy, companies should ensure that investments in carbon credits (including carbon removal) should be in addition to – not in place of – a science-based strategy to reduce emissions directly.

2. Invest in protecting carbon stocks

Protecting existing carbon sinks like tropical forests will be critical to meeting Paris Agreement goals. While markets for carbon removal are limited, companies looking to fund climate progress outside of their value chain can invest now in high-integrity tropical forest carbon credits. Carbon removal from reforestation and afforestation is a benefit, but new trees take years to be mature carbon sinks.  In the near term, nothing is more critical than helping support tropical forest nations to keep their forests standing.  These are carbon emission reduction credits because they reduce emissions from the loss of existing stocks of carbon.  They also have the added benefit of preserving the ability of these forests to continue removing carbon from the atmosphere as they grow in the future.  For example, the LEAF Coalition, a new public-private effort to protect tropical forests, leverages an innovative jurisdictional approach to ensure environmental integrity, scalability and benefits for local communities.

3. Commit to collaboration and transparency

Companies like Microsoft know that they can’t go it alone on climate change. They have taken a collaborative approach to carbon removal by engaging with peer companies, scientists, and other experts to identify rigorous, high-quality solutions. This approach should be commended and emulated.

Microsoft and fellow carbon removal leader Stripe have published extensive information about their respective carbon removal journeys. This transparency, which highlights their successes as well as their challenges, is critical in paving the way for other companies to go further and faster in their desire to tackle climate change.

New cross-sector initiatives like the Business Alliance to Scale Climate Solutions aim to build on this spirit of collaboration and transparency, serving as a venue for companies to innovate and collaborate on climate funding.

As Microsoft concludes in their paper, “anyone who can do more should do more.”

One tool or strategy will not be sufficient to meet climate goals. Companies will need to deploy all tools and strategies available, as quickly as possible. While this includes early investment in technologies and natural climate solutions that remove emissions (including carbon removal and storage technology), these investments must be made in conjunction with direct emissions reductions and the protection of forests – all of which are critical to achieving a net zero future.