Microsoft takes another significant step in its sustainability journey by partnering with Climate Impact Partners and Terra Natural Capital to support the Panna afforestation project in India’s Madhya Pradesh state. This initiative aims to plant up to 11.6 million native trees across 20,000 hectares, an area larger than Washington D.C., over the next 30 years.
The project aims to cut 3 million tonnes of carbon dioxide (CO₂) from the air. Microsoft will buy 1.5 million tonnes of verified carbon removal credits, which is half of what the project will produce.
Remarking on their big carbon removal initiative, Brian Marrs, Senior Director Energy Markets, Microsoft said:
“At Microsoft, we believe that high-quality, nature-based solutions are vital to addressing climate change. Panna forms an important part of our growing portfolio of carbon removal projects – our first in India and largest in the APAC region. The collaboration with Climate Impact Partners helps to ensure that millions more trees are planted, more carbon is removed from the atmosphere, more jobs are created, and more finance flows back to local communities.”
Climate Impact Partners is a leader in carbon market solutions, supporting over 600 carbon removal and reduction projects in 56 countries for more than 25 years. The company helps businesses offset emissions, drive carbon pricing, and achieve climate goals.
A Model for Sustainable Carbon Removal
The Panna afforestation project is a collaborative effort that brings together Climate Impact Partners’ expertise in project development, Terra Natural Capital’s financial backing, and Microsoft’s long-term commitment to carbon removal. This marks Microsoft’s largest carbon removal deal in the Asia-Pacific region and its first in India.
The initiative is more than just a tree-planting effort. This is a big community project. It helps local farmers and communities. At the same time, it plays a key role in global carbon sequestration efforts.
The project is built to provide lasting environmental, economic, and social benefits. It uses several key strategies to achieve this, including:
- Economic Empowerment: Farmers in the project will get a portion of the carbon credit revenue.
- Sustainable Agriculture: They will offer training on climate-smart farming.
- Biodiversity Boost: The project will plant native species.
- Water Conservation: They’ve built big water systems like ponds, borewells, and drip irrigation.
The project follows the latest Verra standards. It includes the Afforestation, Reforestation, and Revegetation Methodology (VM0047). This methodology is approved by the Integrity Council for the Voluntary Carbon Market (ICVCM) under the Core Carbon Principle (CCP) label. It got an ‘A’ rating from BeZero. It will also be verified under the Climate, Community, and Biodiversity Standard. This ensures it provides climate and social benefits.
More Than Just Trees: The Economic and Social Impact of Carbon Removal
Microsoft’s involvement in the Panna project underscores its leadership in the carbon removal sector. In 2024, the company retired 5.5 million carbon credits, making it one of the top buyers in the voluntary carbon market.
About 80% of these credits came from BECCS projects, which stands for Bioenergy with Carbon Capture and Storage. This shows Microsoft’s commitment to investing in new and reliable carbon removal technologies.
Carbon Dioxide Removal (CDR) is a critical component of global climate strategies. Simply reducing emissions is no longer enough to keep global warming below the 1.5°C threshold. The Intergovernmental Panel on Climate Change (IPCC) says the world needs to remove 5-16 billion metric tons of CO₂ each year by 2050 to meet this goal.
Microsoft’s purchase of 1.5 million tonnes of carbon removal credits from the Panna project aligns with its broader corporate commitment to becoming carbon-negative by 2030. This means the company aims to remove more CO₂ than it emits each year.
By backing projects like Panna, Microsoft cuts its carbon footprint. It also helps spread solutions that can work globally. Climate Impact Partners’ CEO emphasized the importance of this collaboration, saying:
“By securing a long-term supply of high-quality carbon credits, this model empowers companies like Microsoft to meet their ambitious climate targets, drive growth in the carbon removal market, and bring benefits to communities most impacted by climate change.”
The Role of Carbon Markets in Scaling Solutions
The voluntary carbon market is projected to grow from $2 billion in 2023 to over $50 billion by 2030, with CDR credits playing a significant role. CDR credits are different from traditional carbon offsets.
Instead of just reducing or avoiding emissions, CDR credits actually remove CO₂ from the atmosphere. They also ensure that this CO₂ is stored for a long time. This makes projects like Panna crucial for achieving long-term climate stability.
Nature-based solutions, like afforestation, hold great promise. But scaling these projects can be challenging. Key factors to address include access to project finance, land availability, and long-term monitoring of carbon sequestration.
Terra Natural Capital comes in by providing financial support. This shows how new financing solutions can boost carbon removal efforts.
Scaling Carbon Removal: The Future of Corporate Climate Action
Microsoft’s commitment to the Panna afforestation project is commendable. However, challenges still exist in scaling these efforts. High costs for new carbon removal technologies, like BECCS and Direct Air Capture (DAC), can slow down their adoption.
DAC pulls CO₂ from the air and stores it underground. However, it is costly. Prices are over $600 per tonne because of high tech and operation costs.
To make CDR easier to access, costs need to go down. This can happen through new technology and larger production. Government policies and incentives are key to supporting growth in the CDR market.
The United States has started programs like the 45Q tax credit. Meanwhile, the European Union is working on a certification framework for carbon removal.
Microsoft’s partnership with Climate Impact Partners and Terra Natural Capital for the Panna afforestation project shows the company’s dedication to combating climate change through innovative carbon removal strategies. Microsoft leads by investing in big, community-focused projects like Panna. This sets a standard for others to follow and helps reach global climate goals.
