Microsoft Partners with Indian Startup Varaha for Carbon Removal
Microsoft has entered into an agreement with Indian startup Varaha to purchase over 100,000 tons of carbon dioxide removal credits by 2029. This initiative supports Microsoft’s goal to become carbon-negative by 2030, amidst rising emissions driven by its expanding AI and cloud operations.
### Varaha’s Innovative Approach
Varaha, a company specializing in carbon removal, is transforming cotton crop waste into biochar, a material that sequesters carbon when added to soil. This project, based in Maharashtra, India, involves 40,000–45,000 smallholder farmers and aims to mitigate air pollution from crop burning. Varaha plans to develop 18 industrial reactors over 15 years, projecting a total removal of over 2 million tons of carbon dioxide.
The startup’s ability to deliver carbon credits at scale has positioned it as a leading player in the carbon removal market. Varaha’s bespoke systems for monitoring and verification, tailored to work with numerous smallholder farmers, have been crucial in securing Microsoft’s partnership.
### Context and Competition
As tech companies like Microsoft and Google face increasing emissions from AI advancements, they are investing in global carbon removal projects. Microsoft has already contracted for 22 million metric tons of carbon removals in FY2024, including significant agreements in the U.S. with AtmosClear and C2X. Google has also partnered with Varaha for a similar carbon removal deal.
Varaha, founded in 2022, has rapidly expanded its operations, processing 240,000 tons of biomass in 2025 and generating 115,000 carbon credits. The company has secured around $50 million in funding from investors such as RTP Global and Mirova.
### Implications for the Industry
The collaboration between Microsoft and Varaha highlights the growing trend of tech giants investing in sustainable practices to counterbalance their carbon footprints. Varaha’s projects not only address carbon sequestration but also enhance soil health and reduce reliance on chemical fertilizers, offering a multifaceted environmental benefit.
As Varaha scales its operations, it expects to process half a million tons of biomass in 2026. The startup’s ongoing projects across India, Nepal, and Bangladesh have the potential to sequester about 1 billion tons of carbon dioxide over their lifetimes.
The partnership with Microsoft underscores the importance of innovative solutions in the fight against climate change, setting a precedent for future collaborations between technology companies and sustainable startups.
