Whalesbook
Microsoft has signed a three-year agreement to purchase 37,000 tons of carbon removal credits from the Indian startup Alt Carbon. This is the tech giant's first investment in Asia focused on enhanced rock weathering. The deal highlights the increasing role of Indian climate-tech firms in global supply chains.
What Happened
Microsoft has entered into a three-year partnership with Alt Carbon, a Bengaluru-based startup, to purchase approximately 37,000 metric tons of carbon removal credits. This is a significant development as it represents Microsoft’s first purchase of carbon removal credits using the 'enhanced rock weathering' method within Asia. The agreement follows over a year of due diligence and contract discussions, with the tech giant requiring stringent monitoring and verification protocols to ensure the carbon removal claims are accurate.
Understanding The Technology
Alt Carbon, which began operations in 2023, uses a technique known as enhanced rock weathering. This involves taking basalt rock, which is rich in minerals, and crushing it into a fine powder. This powder is then spread across agricultural land. When the rock reacts with rain and soil, it accelerates a natural chemical process that captures carbon dioxide from the air and turns it into stable bicarbonates, which remain trapped in the soil.
To execute this, the startup sources basalt from the Rajmahal Traps in eastern India and deploys it across farms in West Bengal. The company has already reported significant scale, working with over 35,000 farmers across roughly 80,000 acres of land, spanning tea estates and rice-growing regions.
Why Global Firms Are Interested
Large technology companies are increasingly investing in carbon removal to meet their long-term climate goals. The market for high-quality, verified carbon credits is currently facing a shortage of supply. While many companies offer carbon removal services, very few have the ability to prove their results at a commercial scale. Microsoft’s decision to sign this deal suggests it is prioritizing providers who can demonstrate reliable, scientific verification of their carbon sequestration impact.
The Sector Context
This agreement reflects a broader shift in the global carbon market. Suppliers in the Global South, including India, are gaining prominence. In 2022, developers from these regions accounted for a very small fraction of carbon removal credits, but that share has grown to approximately 26% more recently.
Initially, international buyers were cautious about carbon projects from emerging markets. However, the implementation of more rigorous verification standards and an increase in the volume of credits being issued have improved confidence among global buyers. Microsoft has previously engaged with other Indian climate firms, such as Varaha, for biochar-based carbon credits, indicating a growing interest in India as a hub for climate-tech innovation.
What Investors Should Monitor
For those tracking the climate-tech and carbon credit space, there are several factors to watch. The first is the challenge of scaling and verification. As companies look for verifiable results, the ability of startups to maintain low-cost and accurate monitoring, reporting, and verification (MRV) infrastructure will be a key differentiator. Investors may track whether the company can successfully expand its reach to more farmers and different crop types without compromising the quality of the carbon removal credits.
Another point of interest is the long-term demand for these credits. While demand from companies like Microsoft, and procurement groups like Frontier—which includes members like Google, Stripe, and Shopify—remains high, the sustainability of this market will depend on whether carbon removal costs become competitive with other emission-reduction strategies. Finally, watching the development of regulatory and certification standards for carbon credits in India will be important to see how the local industry matures.