Microsoft taps India’s Varaha for durable carbon removal offtake

Microsoft has signed an agreement with Indian climate startup Varaha to purchase more than 100,000 tons of durable carbon dioxide removal credits over the next three years, through 2029. The deal expands Microsoft’s growing portfolio of carbon removal projects as the company scales up its AI and cloud computing operations.

Under the agreement, Varaha will convert cotton crop residue—often burned after harvest—into biochar, a charcoal-like substance that can be added to soil. Biochar stores carbon for long periods and helps reduce air pollution from open-field burning. The project will initially focus on the western Indian state of Maharashtra and involve approximately 40,000 to 45,000 smallholder farmers.

The partnership comes as large corporations increase spending on carbon removal technologies that physically extract carbon dioxide from the atmosphere. Microsoft is working toward its goal of becoming carbon-negative by 2030. However, the company reported that its total greenhouse gas emissions rose 23.4% in fiscal year 2024 compared with a 2020 baseline, primarily due to value-chain emissions associated with its expanding cloud and AI business.

As AI-driven energy demand grows, companies are increasingly looking beyond the United States for scalable carbon removal opportunities. India has emerged as an attractive market due to the scale of its agricultural sector and the large volumes of crop residue available for piochar production.

Varaha plans to develop 18 industrial biochar reactors that will operate for 15 years, with a projected total carbon dioxide removal of more than 2 million tons over the project’s lifetime, the companies said. According to Varaha co-founder and CEO Madhur Jain, the company’s ability to reliably deliver credits at scale has positioned it as one of the world’s largest suppliers of durable carbon removal and has drawn Microsoft’s interest.

Microsoft’s requirements for detailed digital monitoring, reporting, and verification led Varaha to build custom systems in-house, Jain said, noting that working with tens of thousands of smallholder farmers adds complexity compared with biochar projects that rely on centralised biomass sources in the U.S. or Europe.

The first reactor will be built next to Varaha’s 52-acre cotton research farm in Maharashtra, where the company works with farmers to test biochar soil applications under real-world conditions. Varaha plans to expand to 18 reactors across India’s cotton-growing regions under the Microsoft offtake agreement.

Varaha has rapidly scaled its operations. In 2025, the company processed roughly 240,000 tons of biomass, producing about 55,000 to 56,000 tons of biochar and generating approximately 115,000 carbon removal credits, up sharply from the prior year. Jain said the company aims to at least double throughput in 2026 as new contracts begin.

The startup currently operates 20 projects across India, Nepal, and Bangladesh, spanning regenerative agriculture, biochar, agroforestry, and enhanced rock weathering, and works with around 150,000 farmers. Collectively, these projects could sequester up to 1 billion tons of carbon dioxide over lifetimes ranging from 15 to 40 years, according to the company.

Beyond generating carbon credits, the Microsoft-backed project aims to curb the open burning of cotton stalks, a major contributor to seasonal air pollution in parts of India, while improving soil health and reducing reliance on chemical fertilisers.

“This offtake agreement broadens the diversity of Microsoft’s carbon removal portfolio with Varaha’s biochar project design that is both scalable and durable,” said Phil Goodman, Microsoft’s carbon dioxide removal program director, in a statement.

While the deal underscores Microsoft’s push into carbon removal, the volumes remain small relative to the company’s overall footprint. Microsoft reported total greenhouse gas emissions of 15.5 million metric tons of carbon dioxide equivalent in fiscal year 2024 and contracted for about 22 million metric tons of carbon removals.

Microsoft is not alone in pursuing such agreements. Google also signed a deal in January 2025 to purchase 100,000 tons of carbon removal credits from Varaha, marking its largest biochar-related agreement to date.

Founded in 2022, Varaha has raised about $50 million across multiple funding rounds and counts investors including RTP Global, Omnivore, Orios Venture Partners, IMC Pan Asia Alliance Group’s Octave Well-being Economy Fund, and Norinchukin Bank. In November, French climate-focused investment firm Mirova invested $30.5 million in the startup tohttps://www.varaha.earth/ expand its regenerative agriculture programs.