Microsoft signs historic carbon capture deal to remove 3 million tonnes of CO2

Microsoft has signed a historic 10-year deal with Stockholm Exergi to remove 3.33 million tonnes of CO2 from the atmosphere using bio-energy with carbon capture and storage (BECCS).

Delivery of the carbon removal certificates, emitted by Exergi from its planned Värtan BECCS facility in Stockholm, are set to begin in 2028 and will take place over a period of 10 years. The facility received environmental approvals earlier this year, and construction should begin in 2025, pending a “final investment decision” due in Q4 2024.

Microsoft sustainability: focus on carbon removals

The agreement, estimated to be one of the world’s largest carbon removal purchases to date, confirms that Microsoft is prioritising carbon removals to achieve its targeted ‘carbon negative’ status by 2030. In 2022, the company already contracted 1.4 million tonnes of carbon removals.

Microsoft plans to reduce Scope 1 and 2 emissions to “near zero”, mainly through the direct and indirect purchase of renewable energy, and cut Scope 3 emissions by more than half by 2030, from a 2020 baseline. 

But its Scope 1 and 2 (location-based) emissions, as well as its value chain emissions, have been increasing every year since 2020. In 2022, the tech mammoth achieved a 0.5% reduction in its overall carbon footprint thanks to the purchase of 18,153,218 MWh of renewable energy credits and PPAs, bringing its Scope 2 market-based emissions down significantly, to 288,029 tonnes of CO2.

Corporate carbon capture and storage agreements take off

Many companies are betting on carbon capture and storage to achieve “permanent carbon removals” as a way to help the world reach net zero emissions by 2050. Recently, BCG agreed to buy 21,000 tonnes of direct air capture (DAC) removals from 1PointFive – one of the most expensive carbon removal methods at US$600 to US$1,000 per tonne.

In Microsoft’s case, the plant to be built by Exergi will capture the CO2 emitted by its existing biomass-based combined heat and power plant and store it in geological formations in the Nordic region, producing net zero electricity and heating for the region and selling the resulting carbon removal certificates to Microsoft for its own carbon offsetting purposes.

"Leveraging existing biomass power plants is a crucial first step to building worldwide carbon removal capacity. In this case, we are pleased with the efficiency of recovering heat from carbon capture and adding it into district heating networks. Finally, it is crucial to sustainably source the biomass for BECCS projects and we were impressed with Stockholm Exergi's commitment in this regard," said Brian Marrs, Microsoft’s Senior Director, Energy & Carbon Removal.

Carbon removals growing in importance on net zero journey

Carbon removals are now an official part of the EU’s net zero strategy, and the bloc is currently developing a certification framework to ensure their quality (though the current draft has been met with mixed reactions).

In fact, the EU is deemed to be betting too heavily on carbon capture and storage in its 2040 climate strategy, which targets a 90% reduction in emissions. “Instead of preventing emissions by prioritising cost-effective and safe solutions, such as circularity and material and energy efficiency, the Commission decided to gamble on carbon capture to achieve the 2040 target. This careless plan does not pay attention to the risks associated with carbon capture performances and casts strong doubts on the likelihood of achieving the 2040 goal,” said Riccardo Nigro, the European Environmental Bureau's Senior Policy Officer for Zero Pollution Industry. 

Experts have repeatedly warned against relying too much on carbon capture and storage for climate action, as this nascent technology remains too expensive and largely unproven. Chevron, for example, has been trying to capture and bury 80% of the carbon released at its Gorgon gas export plant in Australia since 2019, but has repeatedly failed to meet this target. 

Think tank Climate Analytics has even calculated that the world could have an 86 billion tonne “carbon bomb” on its hands if the capture rates of CCS technologies were reduced from an optimistic level of 95% to the level seen in plants operating today, around 50%.

Speaking ahead of COP28 negotiations last year, World Resources Institute Global Climate Programme Director Melanie Robinson said: “Oil companies and producer countries would have us believe that if CCS is widely adopted, the world could continue to burn fossil fuels and achieve our climate goals. And I'm afraid that simply put there's no credible scenario where CCS would allow the continued significant and widespread use of fossil fuels, let alone expand oil and gas production.”