Microsoft has secured a significant deal aimed at restoring parts of Brazil’s Amazon and Atlantic forests in exchange for carbon credits, making it one of the leading tech companies investing in nature-based solutions to offset the environmental impact of AI growth. In a move to address the surge in emissions driven by generative artificial intelligence, Microsoft will purchase 3.5 million carbon credits over 25 years from Re.green, a Brazilian startup that specializes in land restoration. The credits, which are linked to forest restoration, are part of a broader effort to mitigate the rising emissions from data centers, which are expanding rapidly to accommodate AI’s increasing energy demands.
The deal, valued at an estimated $200 million, will help Microsoft achieve its carbon reduction goals, while also contributing to the restoration of critical ecosystems in Brazil. These credits are earned by planting native tree species on lands that were previously used for farming and cattle grazing. Re.green finances these projects through carbon credit sales and timber sales, helping transform degraded land back into thriving forest ecosystems.
This agreement is part of Microsoft’s broader strategy to reduce its carbon footprint, which has grown by 40% from 2020 to 2023, largely due to the expansion of data centers and energy-intensive AI technologies. Microsoft’s total carbon footprint in 2023 was reported at more than 17 million tonnes of CO₂ and other greenhouse gases. In response to these rising emissions, the company has pledged to become “carbon negative” by the end of the decade, balancing emissions through a combination of cutting energy use and investing in carbon removal solutions.
Nature-based solutions, like forest restoration, have become an attractive option for tech companies looking to meet their sustainability targets. These solutions are cheaper than some of the more technologically advanced carbon removal methods, such as underground CO₂ storage, which are more expensive and still in early stages of development. However, nature-based solutions do face challenges such as vulnerability to climate-related disruptions like fires and droughts, which could undermine their long-term effectiveness.
In addition to this deal with Re.green, Microsoft has already committed to purchasing carbon credits from other projects, including a similar deal for 3 million credits with Re.green in 2022 and 8 million credits from BTG Pactual Timberland Investment Group. Microsoft’s investment in carbon credits comes as part of a broader trend among major tech companies, including Google, Amazon, and Meta, who are also committing to large-scale carbon offset programs.
Despite the growth of the carbon credits market, the industry faces challenges, including concerns over the verification of carbon reductions and the risk of “greenwashing.” Nevertheless, Microsoft’s commitment to paying above-market prices for high-quality carbon credits—reportedly over $50 per tonne in recent transactions—positions it as a leader in the field.
