Tech giant signs durable carbon removal offtake with Indian startup Varaha, turning cotton residue into biochar as AI-driven emissions climb

Microsoft is expanding its global push into durable carbon removal by tapping India’s vast agricultural economy. The software major has signed an agreement with Indian climate-tech startup Varaha to purchase more than 100,000 tons of carbon dioxide removal (CDR) credits through 2029, as it works to counter rising emissions from its rapidly expanding cloud and artificial intelligence operations.

The partnership will convert cotton crop waste—often burned after harvest and a major contributor to seasonal air pollution—into biochar, a charcoal-like material that stores carbon in soils for decades while improving soil health. The project will initially focus on Maharashtra and involve 40,000–45,000 smallholder farmers.

The agreement highlights how large corporations are increasingly looking beyond the U.S. for scalable carbon removal solutions. With abundant agricultural residue and a massive farming base, India is emerging as a key market for projects designed to physically remove carbon dioxide from the atmosphere.

Under the arrangement, Varaha will deploy 18 industrial biochar reactors with a 15-year operating life, delivering a projected total carbon removal of more than 2 million tons over the project’s lifetime. The first reactor will be located next to Varaha’s 52-acre cotton research farm in Maharashtra, where farmers test biochar application under real-world field conditions.

Microsoft, which aims to become carbon-negative by 2030, has been steadily expanding its carbon removal portfolio even as its total greenhouse gas emissions continue to rise. In FY2024, emissions increased 23.4 per cent from a 2020 baseline, largely driven by value-chain emissions linked to the rapid build-out of data centers and AI infrastructure.

Varaha has scaled its biochar operations sharply over the past year. In 2025, the company processed around 240,000 tons of biomass, producing roughly 55,000–56,000 tons of biochar and generating about 115,000 carbon removal credits, a significant increase from the previous year. Volumes are expected to rise further as new contracts come into effect.

Beyond carbon credits, the project is designed to reduce open-field burning of cotton stalks while returning biochar to farms, improving soil productivity and lowering dependence on chemical fertilizers.

Founded in 2022, Varaha operates 20 projects across India, Nepal, and Bangladesh, spanning biochar, regenerative agriculture, agroforestry, and enhanced rock weathering. Backed by investors including RTP Global, Omnivore and Mirova, the startup is positioning India’s agricultural landscape as a critical lever in the global carbon removal market, even as Big Tech’s energy demand continues to accelerate.