Microsoft in record deal for soil carbon credits as data centres surge

LONDON, Jan 15 (Reuters) - Microsoft has agreed with Indigo Carbon to buy a record 2.85 million soil carbon credits linked to regenerative agriculture in the United States, as ​the tech giant aims to become "carbon negative" by 2030 despite surging emissions linked to AI.

While ‌Microsoft - the world's biggest buyer of carbon removal credits - did not disclose the cost of the 12-year tie-up, a person ‌with knowledge of the deal said it falls within the historic range of $60 to $80 a ton for Indigo Carbon's credits, which would value the deal at between $171 million and $228 million.

Regenerative farming covers a range of actions such as reducing tilling, using cover crops and letting livestock graze to improve the ability of ⁠the soil to capture climate-damaging carbon ‌emissions and retain water.

Market data firm Sylvera said it had seen an increase in demand for such credits last year, including a deal by Microsoft for ‍2.6 million credits from Agoro Carbon, which previously held the record for the biggest deal.

"It's bringing the importance of soil carbon removal into corporate climate action, and really for Indigo, solidifying our reputation and leadership on high-integrity ​carbon credits," Meredith Reisfield, Indigo's senior director for policy, partnerships and impact told Reuters in an ‌interview.

Farmers also benefit financially, receiving 75% of the average weighted cost of a credit from any given issuance or crop year, she added.

"Microsoft is excited by Indigo’s approach to regenerative agriculture that delivers measurable results through verified credits and payments to growers," Phillip Goodman, Director of Carbon Removal at Microsoft said in a press release.

Being carbon negative means Microsoft plans to ensure it facilitates more removals of ⁠carbon than the amount its operations globally emit.

In the ​voluntary carbon market, projects can be awarded credits for each ​ton of carbon dioxide they remove from the atmosphere and companies can buy these credits to offset emissions from their business operations.

Indigo helps identify areas where emissions ‍can be cut or removed ⁠and then works with the farmers to develop the projects and sell the credits.

Many scientists say carbon-removal projects are essential for the world to slow global warming by offsetting emissions ⁠from industries, such as power generation, that continue to use fossil fuels.

Sceptics say there are wider concerns about measurement and ‌permanence of removal credits and say removal technologies can distract from emissions reductions.

(Reporting by ‌Susanna Twidale and Simon JessopEditing by Tomasz Janowski)