Microsoft has announced the purchase of 1.4 million carbon removal credits from Living Carbon, a U.S.-based public benefit company that has developed a reforestation project across 25,000 acres of former mining lands in the Appalachian region, devastated by decades of coal extraction. The goal is threefold: to absorb CO₂, regenerate ecosystems, and repurpose marginal lands.
According to Maddie Hall, CEO and co-founder of Living Carbon, “restoring degraded mining lands offers one of the most significant and scalable opportunities for nature-based climate action.”
Microsoft, for its part, confirms a strategy that goes well beyond offsetting: it is building a diversified portfolio of permanent CO₂ removal solutions, including innovative projects with high social impact like this one.
But why does a deal like this make headlines?
The voluntary carbon market (VCM) is currently at the center of intense debate: caught between extremely high expectations—with estimates suggesting a potential value of $250 billion—and a still fragmented reality, marked by doubts about project quality, metric transparency, and the additionality of interventions.
In this context, carbon removal projects—like those developed by Living Carbon—are considered credible when backed by rigorous certifications, such as those provided by Isometric, a partner in the initiative.
On the other hand, it is increasingly clear that there is a need to expand and diversify the available solutions, which include renewables, biochar, and new methods for CO₂ capture and storage—through both technological projects and nature-based approaches.
Expert interview: understanding beyond the headlines
To decode what this agreement really tells us about the current and future state of the carbon credit market—and what criteria we should use to evaluate projects like the one between Microsoft and Living Carbon—we interviewed Andrea Ronchi, a deep connoisseur of the mechanisms and dynamics of the Voluntary Carbon Market and founder of CO₂ Advisor, a pioneering firm in Italy in this field.
Andrea Ronchi, carbon credits are a hot topic, but for most people they remain a mystery. We’d like to understand them better with your help. For example, is Microsoft’s announced commitment a good deal? What does it really mean? 1.4 million tons of carbon removed sounds like a lot—is it? And are those emissions truly removed in this kind of project, and over what timeframe?
To assess whether the agreement between Microsoft and Living Carbon is a “good deal,” more economic and contractual details would be needed. Assuming a total value between $25 and $50 million—as suggested by market estimates for this type of credit—it could indeed represent a beneficial operation for both parties: for Living Carbon, it means access to financial resources that ensure stability to develop high-quality projects; for Microsoft, locking in a price today for offsetting residual emissions is a forward-thinking move, especially considering that the cost of CO₂ removal credits is expected to rise significantly in the coming years.
That said, while 1.4 million tons may sound like a lot, the number needs to be put in perspective. We don’t know the timeline for the delivery of the credits covered by the agreement: if spread over 10 or 20 years, it would amount to less than 100,000 tons per year. Moreover, when compared to Microsoft’s overall carbon footprint—which exceeds 10 million tons annually, including direct emissions and value chain—it’s still a relatively small-scale operation.
Reforestation projects, however, remain among the most valued on the market because they fall under the “removal” category: they don’t just reduce emissions, but actively capture and sequester CO₂ from the atmosphere. Of course, permanence is the most delicate aspect when it comes to nature-based solutions. But today’s monitoring, reporting, and verification protocols have evolved and are now mature enough to provide an adequate level of assurance on this critical front.
We’re generally used to hearing about carbon credits derived from tree planting, but this project focuses on degraded former mining lands—characterized by poor soils, erosion, potential contamination from toxic metals, and invasive species. Is the landscape for carbon credit generation evolving? What are the most promising new solutions?
Reforestation projects are often the first example that comes to mind when we talk about carbon offsets, but they actually represent only a small fraction of the market. According to the latest data, credits generated from afforestation and reforestation projects account for just 3% of all credits issued globally each year. Today, the carbon credit market generates approximately 372 million credits annually, while global residual emissions amount to around 55 billion tons of CO₂ per year. This means that for every ton emitted, less than 1% is currently offset through credits.
This clearly highlights the need to expand and diversify the available solutions. There are many existing types and methodologies, involving renewables, energy efficiency, biochar, and increasingly in the future, carbon capture and storage—through both technological and nature-based projects.
In this context, reforestation projects like Living Carbon’s still represent an important signal of the market’s evolution. These are initiatives that demonstrate how reforesting less “productive” areas—such as temperate zones or lands degraded by industrial activity—is now economically viable, not just fast-growing tropical forests. It’s true that implementation costs in complex settings, like post-mining lands, are higher, but they remain significantly lower than many advanced technological removal solutions, such as direct air capture, which will nonetheless be necessary to meet future demand.
Moreover, the fact that these interventions take place on degraded lands enhances the environmental and social value of the project, generating co-benefits such as soil improvement, erosion control, contaminant remediation, and biodiversity recovery.
It is claimed that the carbon removal is “measurable, meaningful, and highly additional.” But how can a project prove—meaning, measure—its “additionality,” in other words, that this carbon removal would not have happened without Living Carbon’s intervention and Microsoft’s support?
Additionality is one of the fundamental criteria for any project aiming to generate carbon credits. To be considered valid, a project must prove that the CO₂ it removes or avoids would not have been otherwise removed or avoided in the absence of that project. This involves three dimensions:
- Physical: the carbon removal would not occur naturally;
- Economic: the project would not happen without external financial support;
- Regulatory: there is no legal or regulatory obligation that requires the action being taken.
In the case of Living Carbon, additionality is based on all three of these aspects:
- Environmentally degraded context: the project takes place on former mining lands with eroded, poor, contaminated soils often overrun by invasive species. Natural forest regeneration—and thus natural CO₂ removal—is highly unlikely.
- No legal obligation: there is no law, regulation, or policy mandating reforestation of these areas. The project is entirely voluntary and not fulfilling any pre-existing requirement, which makes it eligible to generate valid credits.
- Economic additionality: the project is made possible thanks to Microsoft’s financial backing through a pre-purchase agreement (offtake). Without this guarantee, it would have been difficult to secure the capital needed to carry out the intervention.
Additionality is then certified by independent verifiers who assess a counterfactual scenario—known as the “baseline”—to estimate how much CO₂ would have remained in the atmosphere if the project didn’t exist. Credits are issued only for the proven net removal beyond that baseline.
In summary, the project is additional because it delivers carbon removals that would not occur naturally, are not required by law, and wouldn’t be economically viable without external support. That’s exactly what legitimizes its carbon credits in the voluntary market.
The project generates a range of co-benefits—such as improved soil and water health, increased biodiversity, and new economic opportunities for local communities. How are these co-benefits monitored or measured in a carbon credit project? Do they influence the market value or perceived quality of the credits, according to market players or verification standards?della qualità dei crediti dal punto di vista del mercato o degli standard di verifica?
From a strictly technical standpoint, environmental and social co-benefits should not affect the value of a carbon credit. One ton of CO₂ removed is—by definition—the same as any other, regardless of where or how it’s sequestered. That’s the principle behind the Kyoto Protocol: “a ton is a ton.” The market is supposed to reward efficiency, not the aesthetics of a project.
And yet, in reality, co-benefits make a huge difference. Even if they don’t count directly toward the calculation of tons removed, they often ensure the project’s true sustainability—its ability to endure over time, to withstand risks, and to actually deliver the promised credits year after year.
A project like Living Carbon’s, which improves soil, water, biodiversity, and creates local economic opportunities, is far more likely to be protected and valued by the surrounding community—reducing risks such as fire, abandonment, or land-use conflicts. And that’s no small detail: if a project is expected to last 20, 30, or even 50 years to generate the promised credits, it needs more than just scientific metrics—it needs a supportive context.
From the buyer’s perspective—whether it’s Microsoft or another company—co-benefits are not a “nice-to-have,” but a form of assurance. It’s not idealism, it’s risk management. That’s why more and more companies are requesting clear reporting on these aspects: not because they “count” in tons, but because they count in reliability.
So yes, formally, one credit equals one ton. But in practice, over the long term, projects with strong co-benefits are worth more—because they are much more likely to deliver on their promises.
Quality vs. Quantity: Microsoft’s project will undergo scientific and data-driven verification by Isometric. How important are rigor and transparency in building trust within the carbon credit market? Can we say that the quality of verification is now more important than the sheer quantity of credits?
Yes, the quality of verification is absolutely central to the credibility of the carbon credit market — but we must be careful not to create a narrative where there are “first-class” and “second-class” standards. What truly matters is that each standard meets the minimum criteria for eligibility, rigor, and transparency. That’s exactly what the IETA-ICROA Code of Best Practice sets out — currently the most widely accepted market reference for identifying trustworthy methodologies and program operators.
Isometric is certainly an interesting and emerging standard, with a tech-first approach and a strong emphasis on transparency — for example, through monthly credit issuance. However, it’s worth noting that it is still only conditionally approved under the IETA-ICROA Code. It’s right to be optimistic, but also prudent: it takes years of proven track record to demonstrate the reliability of a certification system.
That said, the real issue isn’t the emergence of new standards per se, but the fact that they’re proliferating too quickly. I’m not a supporter of this rapid multiplication of certifiers — it risks confusing buyers and undermining trust in the market. That’s why I hope that following the COP in Belém, we’ll finally move toward a more centralized framework, under the UN’s guidance, that brings order and clarity to the quality criteria in the voluntary market.
In short: yes to quality, yes to transparency — but within shared and globally recognized rules. We don’t need to create elites; we need to create trust.
The role of large corporate buyers: when a major player like Microsoft purchases a significant volume of credits, what impact can it have on the market? Do big companies help drive innovation and quality standards, as this agreement seems to suggest, or is there a risk that their demand could somehow distort the dynamics of the carbon credit market?
The role of large corporate buyers like Microsoft is now absolutely central to the development of the carbon credit market. At a time when there is still much confusion and polarisation over the use of offsets, not least because of the very ‘biased’ positions of some voluntary codes of conduct – such as in the case of SBTi and other frameworks – the choices of global players to include offsets in their Net Zero plans are a strong and positive signal.
Microsoft, like other companies seriously committed to decarbonisation, knows that ‘non-avoidable’ emissions will still be there for many years, especially in the transition phase. And the only credible way to manage them is through quality credits from verifiable removal or reduction projects. The fact that a company of this scale decides to put capital into play in a structured way, with long-term offtake agreements, is what enables many developers to design, finance and implement new solutions.
These large buyers, therefore, not only help to drive demand, but in fact help to define the industry’s operating standards. They generate trust in other ‘buyers’, stimulate competition on quality and legitimise the use of compensation as an integral – and not ancillary – part of corporate climate strategies.
The risk is not that big companies will alter the market: the risk would be that they will stay out, leaving the market without direction, capital and credibility. On the contrary, we need these players to lead the evolution of the sector, financing high-quality projects with clear, transparent and long-term contracts.
To wrap up, how do you see the evolution of the voluntary carbon credit market in the coming years?
With the perspective of both an academic analyst and as the founder of CO₂ Advisor—a company active for five years following over twelve years of pioneering work in the carbon industry in Italy—I see the voluntary carbon market on the brink of a major expansion. We are entering a critical phase of climate policy, in which realism and pragmatism must return to the center of the conversation, if we want to prevent declared goals from becoming unrealistic promises—ever more expensive and increasingly unacceptable to society.
Carbon credits, just as envisioned in the Kyoto Protocol, remain the most efficient tool to allocate economic resources intelligently—channeling them where the marginal cost of CO₂ reduction is lowest. In practical terms, this means investing every dollar where it achieves the greatest emissions reduction. And given the scale of the challenge—colossal—and the expected cost—enormous, even in the most optimistic scenarios—we cannot afford to waste the limited resources we have on inefficient or ideologically driven solutions.
And the numbers speak for themselves: today, fewer than 400 million CO₂ credits are generated annually (to be precise, about 372 million in 2023), against more than 50 billion tons of emissions that have yet to be avoided or removed. The imbalance is staggering—and says it all.
What can we expect in a market with such conditions? Spoiler: sharply rising prices, a race for quality, and a boom in the development of new projects. Those who act now—with competence, vision, and resilience—will be in a position to lead this transformation, rather than be swept away by it.
