Microsoft is keeping the still-nascent carbon removal market afloat.

The tech giant purchased 93% of all the carbon removal credits globally last year, according to new research by BloombergNEF and the Business Council for Sustainable Energy. The data, part of the organizations’ annual Sustainable Energy in America Factbook, marked the first time the groups tracked market demand for carbon removal.

Microsoft’s near monopoly over the sector reflects its goal of removing all the carbon emissions that the company produced since its founding by Bill Gates in 1975. After making the pledge in 2020, Microsoft defined what it considered to be “high quality” CDR and struck long-term deals with startups like Climeworks and Heirloom, which each take distinct approaches to direct air capture.

For now, the industry needs an anchor buyer like Microsoft that’s willing to pay high prices for every ton of carbon removed from the atmosphere. That funding, combined with long-term offtake agreements, is helping companies scale up their operations in order to eventually drive down prices.

However, having one buyer dominate the market isn’t a sustainable strategy long-term, and industry advocates argue that governments need to procure CDR on a larger scale for the economics to work. 

The price of carbon credits vary widely — and often aren’t made public at all because deals are largely struck between private entities. Nature-based credits, which have been plagued by greenwashing scandals, average $7 to $20 per ton of carbon removed, while tech-based CDR can exceed $500, according to Sylvera, a firm that researches carbon markets. The highest-quality credits can cost even more. 

Microsoft in 2025 updated its criteria for high-quality CDR, specifying that they must be “additional,” meaning that the removal wouldn’t have happened if not for the purchase of the credits. The update also added that ideally they would store carbon for more than 1,000 years for “high durability.” 

The Biden administration had started to dole out funding for CDR from 2021’s bipartisan infrastructure law, including for the Direct Air Capture Hubs program. The industry has fought hard to preserve that funding since Trump took office last year.

But it’s not looking good; all but two projects appeared on DOE project cancellation lists last fall, including both Project Cypress in Louisiana and a South Texas hub led by Occidental and its subsidiary 1PointFive. Congress did preserve the 45Q tax credit for carbon management in the GOP’s One Big Beautiful Bill, which fossil fuel companies like Occidental and ExxonMobil benefit from, including if they use captured carbon dioxide for enhanced oil recovery.

Still, the market for CDR is growing. Global demand doubled between 2024 and 2025 to 57 million metric tons of carbon, the BNEF and BCSE report found. Reforestation projects accounted for 56% of the total, with the next largest sector being bioenergy paired with carbon capture and sequestration. 

The demand is largely fueled by corporations that can’t hit their climate goals without buying CDR credits to offset their own emissions; that’s true of Microsoft as well, as it races to build data centers to power artificial intelligence. The company’s total emissions grew nearly 30% between 2020 and 2024, mostly due to the energy intensity of its AI and cloud investments. 

The demand is largely fueled by corporations that can’t hit their climate goals without buying CDR credits to offset their own emissions; that’s true of Microsoft as well, as it races to build data centers to power artificial intelligence. The company’s total emissions grew nearly 30% between 2020 and 2024, mostly due to the energy intensity of its AI and cloud investments. 

Microsoft has been explicit about the fact that the company’s CDR investments are key to compensating for emissions from data centers, particularly all the steel and concrete needed to build them. Brian Marrs, who leads the company’s energy and carbon removal work, said over a year ago that hyperscalers “may need carbon removal to backstop 2030 net zero targets” because decarbonizing full data center supply chains on that timeline will be very challenging. 

Meanwhile, Phil Goodman, director of Microsoft’s carbon removal portfolio, echoed Marrs on an episode of  The Green Blueprint podcast in December, saying that the rise of AI made his work more important than ever.

“AI doesn’t change our sustainability goals,” Goodman said. “We’re still buying CDR in pursuit of our carbon-negative goal. A net-zero goal still needs to be possible, despite the AI growth.”

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