Microsoft Pause on Carbon Removal Purchases Stuns Climate Industry

Microsoft’s decision to pause future carbon removal purchases rattled a market that had come to depend on it more than any other buyer. The company told some suppliers and project developers it was stepping back from new deals, even as it said its carbon removal program had not ended and would continue to be reviewed alongside market conditions.

The timing matters because Microsoft has not been a minor participant. In fiscal 2025, the company said it signed agreements to remove a record 45 million metric tonnes of carbon dioxide with 21 companies worldwide, a volume it described as equal to taking about 9.8 million internal combustion cars off the road for a year. Industry trackers cited in reports said Microsoft accounted for about 90% of global carbon removal purchases in 2025, far ahead of the next-largest buyer, Frontier, which had bought about 1.8 million tons to date.

That concentration is the industry’s central vulnerability. Carbon removal projects, from direct air capture to biochar, enhanced weathering, afforestation, and bioenergy with carbon capture and storage, have often leaned on Microsoft’s contracts to secure financing before projects were fully built or even listed on carbon registries. Microsoft also helped shape early market norms by publishing guidelines for what it considered ideal projects, effectively setting the standard for a field still trying to prove it can operate at scale.

The pause does not mean Microsoft is abandoning the strategy. The company says carbon removal remains part of its plan to become carbon negative by 2030 and to remove its historical emissions by 2050. It has also said the world may need 7 billion to 9 billion tonnes of carbon dioxide removal each year by 2050. But the company’s own climate record shows the strain of that goal: its 2025 Environmental Sustainability Report said emissions were up 23.4% since 2020, largely because of AI and cloud expansion.

That tension explains why the latest move landed so hard. Microsoft’s contracted volume may already cover much of its near-term needs, but the retrenchment still exposes how few other buyers are positioned to replace its demand. If the industry’s most powerful customer is pulling back, the deeper question is not just whether individual projects survive. It is whether carbon removal was ever a standalone climate business at scale, or a financing model built around the expectation that a handful of corporate buyers would keep paying until the technology matured.