Microsoft is buying tons of carbon removal from Xprize startup Vaulted Deep

Microsoft is building data centers as fast as it can, and that’s killing its carbon balance sheet. Since 2020, its carbon emissions have grown by nearly a quarter, undermining the pledge it made that year to remove more carbon from the atmosphere than it generates by 2030.

So Microsoft has been buying massive amounts of carbon-removal credits to attempt to remedy that situation, including a newly announced purchase of 4.9 million metric tons from Vaulted Deep. Neither party disclosed the financial terms of the deal. It will last 12 years through 2028.

Vaulted Deep operates like a reverse oil company. It collects solid waste — like treated sewage, excess manure, or paper sludge — that would otherwise be headed for a landfill or incinerator, blends it into a slurry, and injects it into porous rocks deep underground. The wells are drilled and pores opened using technology developed for fracking oil and gas.

So far, Vaulted Deep has removed over 18,000 metric tons of carbon dioxide. The company was a runner-up in the Xprize Carbon competition, and it raised a $32 million Series A in November that was led by Prelude Ventures.

Recently, Microsoft has been stuck between a rock and a hard place to make good on its imperiled carbon pledge. While the tech company has been investing heavily in renewable power — avoiding emissions is considered the appropriate first step — there are some things it must use, like semiconductors, for which there are no zero-greenhouse-gas alternatives.

Last year, Microsoft generated 14.9 million metric tons’ worth of greenhouse gas emissions, it said, more than double what it hopes to be producing in 2030, when it plans on reaching negative carbon emissions. 

To hit its goal, the company has recently been ramping up its investments in carbon removal. Among them are a 7 million metric ton deal with Chestnut Carbon to reforest 60,000 acres in the southeastern U.S. and another for 3.7 million metric tons with CO280 to capture carbon from paper mill operations along the Gulf Coast.