Microsoft signals pause in funding for carbon dioxide removal market

Since 2020, Microsoft has spearheaded efforts to develop a carbon dioxide removal market. The Redmond-based software giant pledged to make the company carbon negative by 2030 and remove all its emissions since its founding by 2050.

Now, the company seems to be taking a step back from leading that charge. New York Times climate team reporter David Gelles spoke to KUOW’s Kim Malcolm about his reporting on what Microsoft is doing, and why.

This interview has been edited for clarity.

Kim Malcolm: Let's start with the big picture. What is the goal of carbon dioxide removal?

David Gelles: The idea for the carbon dioxide removal market, which to be fair is just getting started, is that even if we are able to remove the vast majority of planet warming emissions that come from the burning of fossil fuels and transportation and agriculture, there will still be a need decades down the road to remove some of that excess carbon dioxide from the atmosphere.

Companies like Microsoft invested in startup companies in the hope that decades from today, they might have the technology and the capacity to remove carbon dioxide at scale from the atmosphere, to sort of turn down the temperature on Earth.

This is essentially to mitigate the worst impacts of climate change, is that right, through creating this market?

That's right. Temperatures have already risen substantially over the last several decades as the result of more than 150 years of sustained and increasing emissions from things like transportation and the power sector. But what Microsoft and some other companies recognize is that if this continues for many decades, as it looks almost certain to do, there is going to be a need, they believe, to try to mitigate some of that damage.

And carbon dioxide sticks around in the atmosphere for quite a long time. So, they say if they can develop solutions for removing some of that CO2 from the atmosphere, that might help turn down the temperature of the planet, and critically, offset whatever long tail of smaller emissions might still be necessary decades from now.

Because, even if we are able to reduce the burning of fossil fuels for things like power and transportation, many experts believe they may still be needed for things like heavy industry and the creation of petrochemicals, for which there aren't sustainable solutions. If we're still creating emissions with those kinds of processes, carbon dioxide removal might be able to offset the worst effects of those industrial activities.

Microsoft has been a dominant player in this voluntary carbon removal market, but now suddenly they're pausing their actions. What have they changed and why?

They have told some partners that they are pausing future purchases. And I'm being specific there, because Microsoft has not said that they are abandoning the sale industry. They have said to some partners that they are going to put the brakes on some of these extensive purchases, and you have to step back and say, perhaps that's understandable.

Microsoft has single-handedly been propping up this industry, spending billions and billions of dollars over the last five years, essentially making future purchase commitments to very speculative companies, telling them that if they can verify the sequestration of carbon dioxide, Microsoft will pay them for that. That seems to have potentially run its course for the time being.

Microsoft had pledged to be carbon negative by 2030. Is this step back going to change that goal?

Right now, Microsoft says it is still committed to its goal of being carbon negative by 2030, and to removing all its historical emissions by 2050. At the same time, Microsoft is at a moment where they are facing increasing power demand driven by their race to compete with artificial intelligence and the necessity of building more data centers.

So, at the very same time that they are apparently walking back from some of their efforts to develop the carbon dioxide removal market, it's also the case that their operations are taking more energy intensity, including energy intensity powered by fossil fuels. So, it is a complicated time for Microsoft and all the big tech companies, many of which have also outlined very ambitious climate targets.

We still have this issue of massive amounts of carbon dioxide in the atmosphere. What is going to happen to the carbon removal industry, which was just starting to get off the ground?

There are a couple ways to look at it. There's no doubt that in the near term, this potentially is a blow. If Microsoft walks away, that means the single biggest buyer is essentially stepping away from the table.

On the other hand, I spoke to several people in the industry who took a much longer view. They say this has only been going on for a few years now. They are aiming for success, not next year, or the year after that. They believe the industry is really going to prove its worth decades from now, when the amount of carbon dioxide being introduced to the atmosphere is much lower than it is today, and when the capacity of the carbon dioxide removal industry is much larger than it is today.

So, they are playing a long game in which they hope to survive and gradually grow these companies and these technologies. They're sort of ready for prime time many years down the road, and it's unclear at this point whether Microsoft's retreat is going to impact the trajectory of that path for this industry.

What kind of dent has the effort to remove carbon from the atmosphere made so far?

Absolutely none. There is no way to sugarcoat this. Even if you take the upper estimate of all the carbon dioxide that has been removed from all these technologies combined since they were invented several years ago, it won't even come close to representing 1% of global emissions annually.

At this point, they are simply not even beginning to make a dent. But again, you talk to the proponents, and they say, we understand that, and yet we're playing a longer game. If we can get to a place where, 10, 15, 20 years from now, this industry is at scale, and we have been able to meaningfully reduce other global emissions, then the carbon dioxide removal industry might be able to sort of sop up some of that excess CO2 that is still being introduced into the atmosphere through things like heavy industry.

I understand Microsoft co-founder Bill Gates has played a side role in this. What has he been doing?

There is some rich irony here. Bill Gates, of course, has for the last decade been a real champion of efforts to address climate change. That has included funding the incubation of several of these carbon dioxide removal companies. His venture capital firm, Breakthrough Energy Ventures, has been one of the biggest funders of some of these very speculative companies, just the kind that Microsoft has been spending its money trying to get off the ground now. Now, I don't know how much further it goes, and Bill Gates himself hasn't said what he thinks about Microsoft's apparent change in policy.

Do you think he will comment at some point in the future?

I don't think he will, and I'll tell you why. It's not just because he might be reticent to speak about Microsoft, but it's because last year, if you remember, Bill Gates actually wrote a letter in which he essentially downplayed the threats posed by climate change and encouraged philanthropists and governments to turn their attention to issues of global health.

Many people in the climate community were shocked by this letter. It caught many people off guard and really struck many as a betrayal of many of the issues that Gates himself had championed. Taken against that backdrop, I find it very hard to believe that Bill Gates is going to come out and comment on this news cycle.

What are startup companies saying? What's next for them?

They're really channeling this long-term perspective. They point to the fact that there are more carbon dioxide removal companies being introduced every year. This is a growing industry. There's new innovation. They're figuring out which technologies are effective, which are too expensive, and which work well in cold weather versus warm weather.

They say, listen, we're doing exactly what we need to be doing right now for what is still admittedly a very young field. We're innovating, we're figuring out what works, what's economical, and they are moving forward again with that longer term view that someday somehow, more companies or more governments are going to be compelled or perhaps forced to pay for carbon dioxide removal.

But for now, it's important to note, this market is entirely voluntary. There is no law that says Microsoft or any other company has to pay for this. And many people say that until there is, until there is a regulation, what a lot of people would call a compliance market, that mandates big corporations, big emitters, pay to offset some of the pollution that they're putting into the atmosphere, until that happens, this industry will never really get off the ground.

Listen to the interview by clicking the play button above.