Microsoft has signed a deal with Indian startup Varaha to purchase more than 100,000 tons of carbon dioxide removal credits over the next three years, aimed at supporting its efforts to become carbon-negative by 2030. The deal, part of Microsoft’s broader push to address its growing carbon footprint from expanding AI and cloud operations, will see Varaha produce biochar from cotton crop waste in Maharashtra, India.
Investment In Biochar Technology
Under the agreement, Varaha will develop 18 industrial reactors to process cotton crop waste into biochar, a material that can be used to store carbon in soil for long periods while also reducing air pollution from burning agricultural waste. The project will involve around 40,000-45,000 smallholder farmers in India and has a projected carbon removal capacity of over 2 million tons over its 15-year lifespan.
The project aligns with the growing interest in carbon removal initiatives, which are designed to capture and store carbon dioxide from the atmosphere to combat climate change. Microsoft has been working toward its carbon-negative goal, but its emissions, particularly from its expanding AI and cloud business, have been rising, which has pushed the company to diversify its approach to carbon management.
Challenges Of Scaling In India
The partnership with Varaha highlights the complexities of scaling carbon removal efforts in countries like India, where large volumes of agricultural waste are produced. Varaha’s CEO, Madhur Jain, explained that working with tens of thousands of smallholder farmers adds complexity to data tracking and logistics, making the operation more challenging than in regions like the U.S. or Europe, where biomass is more concentrated at industrial sites.
Despite these challenges, Varaha’s experience in agriculture and its team’s expertise have enabled the company to design systems that function effectively with farmers on the ground.
Varaha’s Expanding Operations
Varaha has rapidly grown its biochar operations over the past year, processing approximately 240,000 tons of biomass in 2025, producing 55,000-56,000 tons of biochar, and generating around 115,000 carbon removal credits. The company expects to at least double this output in 2026, aiming for around half a million tons of biomass processed and 250,000 tons of carbon sequestered.
The startup operates 20 projects across India, Nepal, and Bangladesh, spanning regenerative agriculture, agroforestry, and enhanced rock weathering. These projects have the potential to sequester about 1 billion tons of CO2 over the coming decades.
Microsoft’s Broader Carbon Removal Portfolio
The deal with Varaha adds to Microsoft’s growing portfolio of carbon removal agreements. In fiscal year 2024, the company contracted for approximately 22 million metric tons of carbon removals as part of its strategy to be carbon-negative. Other major agreements include supporting AtmosClear’s project in Louisiana and purchasing carbon credits from a biofuels plant in Louisiana owned by C2X.
While the Varaha deal is significant, it represents a small portion of Microsoft’s overall emissions. The company reported 15.5 million metric tons of CO2 equivalent emissions in FY2024, and the carbon removal credits purchased through Varaha will play a small part in offsetting this footprint.
Varaha’s Growth And Funding
Since its inception in 2022, Varaha has raised around $50 million in funding. The startup’s backers include RTP Global, Omnivore, Orios Venture Partners, IMC Pan Asia Alliance Group, and Japan’s Norinchukin Bank. In November, the company secured $30.5 million from Mirova, a French climate-focused investment firm, to expand its regenerative farming program.
As carbon removal markets grow, Varaha and similar companies are positioning themselves as key players in the push to mitigate climate change through innovative agricultural and technological solutions.
Featured image credits: Roboflow Universe
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