News that Microsoft was reportedly planning to pause its carbon removal purchases has rocked the still-nascent carbon removal industry. The company helped drive the market: In fiscal year 2025 alone, it made deals with 21 companies around the world to remove a record 45 million tons of CO2.
Those deals included new contracts with companies like Re.green, which is restoring a swath of the Amazon rainforest, and Vaulted, which removes carbon by burying organic waste. Last month, it added a contract with Liferaft, a company making biochar from agricultural waste in the Midwest. The industry uses a wide range of technologies to tackle one part of the climate challenge: at the same time society cuts emissions, it’s also critical to find viable ways to remove the CO2 that’s already in the atmosphere.
Microsoft was responsible for nearly 90% of all purchases of “durable” carbon removal credits last year, meaning projects that capture CO2 nearly permanently (that includes Vaulted’s work, for example, but not reforestation projects, where carbon can be lost in a wildfire or when trees die.)
The contracts last years, and the ones that were in place will keep going. But startups hoping to break in through the industry’s biggest buyer are now left wondering what comes next.
It’s not yet clear what Microsoft’s long-term plans are. In a statement, the company’s sustainability director, Melanie Nakagawa, said, “Our decarbonization approach combines reduction, removal and efficiency, and carbon removal is one piece of that equation. At times we may adjust the pace or volume of our carbon removal procurement as we continue to refine our approach toward sustainability goals.”
Some industry insiders say Microsoft may have already contracted enough carbon removal to meet its 2030 goal of becoming carbon negative, or removing more CO2 than it emits, though an expected spike in data center emissions is making that target more challenging.
New purchases that begin construction now also might not be ready in time for 2030; the company may be stopping to make plans for later decades. “2030 is now only four years away,” says Andrew Shebbeare, a partner at Counteract, a VC fund focused on carbon removal. “And it’s quite hard for a carbon removal developer to spin off a project inside four years that’s going to make a material contribution to the carbon budget of a company like Microsoft.”
A number of companies that were in talks with Microsoft say they haven’t heard directly about a pause in purchasing; another was told any pause would be temporary. But the reports have kicked off a more urgent conversation about funding. The industry has long known that Microsoft wouldn’t keep buying at a breakneck pace forever.
“I think the general sentiment has been, okay, the market has to be supported by a broader diversity of actors,” says Ben Rubin, executive director of the Carbon Business Council, a group representing more than 100 “carbon management” companies. “It can’t rest in the hands of just a few companies.”
Microsoft’s scale has somewhat obscured the fact that the rest of the market is growing. Other tech companies are active in the space: Meta, for example, met a goal last year to contract $35 million in new carbon removal credits, including from a forestry project in Washington State. Google hasn’t yet released its report for last year but committed $100 million to carbon removal projects in 2024. Apple continues to support nature-based removal, including a project that planted 8 million trees across 24,000 acres in Brazil last year. Frontier, a group designed to help catalyze the industry by committing to buy credits from early-stage startups, includes Google, Stripe, and Shopify, among others.
While tech companies have been foundational to the industry’s growth, a more diverse set of buyers is now emerging. Lego, for example, recently invested in both reforestation projects and new technologies like marine carbon dioxide removal. JPMorgan Chase is a major buyer, as are Airbus and Boeing.
Even as the industry grows, it’s still tiny in relation to the problem: the world emitted more than 53 gigatons of CO2 in 2025. Carbon removal companies have only removed between 1 and 5 million tons, cumulatively.
For companies to scale, support from corporate buyers needs to grow, but so does policy. “We need more voluntary buyers today in order to get new technologies from lab to field, and a diversity of buyers buying at scale is critical for a robust and healthy market,” says Hannah Bebbington Valori, head of deployment at Frontier. “And two, the voluntary carbon market is not the end game here, but at the end of the day, carbon removal getting to gigaton scale is really going to require meaningful policies in the long term.” Lawmakers in Canada are calling for the government to adopt national carbon removal goals; the European Union is considering including carbon removal in its emission trading scheme.
Since both corporate support and policy can be fickle, the ideal solution might be technology that can support itself without credits. Right now, many carbon removal technologies are still expensive, at hundreds of dollars per ton of CO2 removed. But others can make enough money to operate by selling other services. A startup called Capture6, for example, makes technology that processes brine waste at water treatment plants, creates sustainable chemicals for sale, and captures CO2 on the side.
“We’re hopeful that voluntary and compliance markets [for carbon credits] continue to grow,” Ethan Cohen-Cole, the founder, told me in 2024. “But in the absence of those, we also believe that ultimately carbon dioxide removal can scale to its potential by enabling other industries to become more efficient.”
Other companies, like Mati Carbon and Lithos, sell a crushed rock treatment that farmers can use to increase yields, but that doubles as another way to capture CO2. As power demand surges, others may build low-cost power plants, sell part of the power to a data center or the grid, and use the rest to run a direct air capture plant. Companies like Vaulted can make money by selling waste disposal services, not just carbon removal.
Crew Carbon, another startup, removes carbon from wastewater while improving the performance and cost of running a wastewater treatment plant. “It’s massively reducing the cost of plant upgrades for people who deploy the technology,” says Shebbeare. “So now when they pitch to a wastewater treatment plant, they’re not even selling on carbon removal. They’re selling on reduced opex and capex of the wastewater treatment plants. And they’re quietly removing CO2 from the atmosphere.”
A startup called Ebb makes technology that helps desalination plants produce more freshwater, generates chemicals that can be sold, and simultaneously helps amplify the ocean’s ability to capture CO2 from the air.
“There’s quite a lot of places that we think that that sort of model will help grow carbon removal without lots and lots of expensive private capital,” he says.