Microsoft agrees to buy a record 500K carbon credits from US oil producer Occidental Petroleum's 1PointFive to offset its emissions amid the AI energy surge
Additionally, section 45Q credits are uncapped, and act as a subsidy (your tax dollars become private profits) for carbon capture. … X: @ft : The deal between Microsoft and one of the largest US oil producers will allow the tech company to offset its emissions by paying Occidental to remove carbon from the atmosphere and store it underground. https://www.ft.com/... [image] Robert Höglund / @roberthoglund : Biggest Direct Air Capture credit sale so far, Microsoft buys 500,000 tonnes from 1PointFive. CDR is more and more becoming a story about Microsoft. They have now has purchased 75% of all durable CDR tonnes as recorded on https://www.cdr.fyi/. 18 times more than the second [image] Max Welling / @wellingmax : Agreement comes as tech groups seek to meet climate promises while expanding power-hungry artificial intelligence Good initiative by MSFT. Hopefully this will create momentum for the DAC players. https://search.app/... @1pointfive_ : We're excited to announce our agreement with @Microsoft and their commitment to purchase 500,000 tonnes of carbon dioxide removal credits (CDRs) enabled by STRATOS, our first Direct Air Capture (DAC) facility currently under construction. https://www.1pointfive.com/... [image] @h_hitesh1 : This is why everyone is sceptical of ESG. A petroleum company selling ‘carbon credits’ to energy guzzling big tech. Offset 🤔 Microsoft and Occidental sign carbon credit deal to help offset AI energy surge https://www.ft.com/... via @ft
Context & Ripple Effects
Microsoft’s purchase follows its 2030 carbon-negative commitment, while its reported emissions had already risen with its AI expansion in the 2020–2023 emissions increase. The agreement turns that target into a large contracted demand signal for direct air capture.
The deal also establishes an early benchmark for Microsoft’s role as a removal buyer: later coverage describes it as dominating purchases from technology-based carbon-removal projects across the emerging market.
First-order effects
- Microsoft contracts for 500,000 tonnes of carbon dioxide removal credits, giving it a mechanism to address part of the emissions associated with expanding AI-related energy use.
- 1PointFive gains a committed buyer for removals tied to its planned STRATOS direct-air-capture facility, strengthening the commercial case for bringing that capacity online.
Second-order effects
- A record-scale purchase raises the bar for other large corporate buyers seeking durable-removal claims, while concentrating scarce early DAC demand in a small set of purchasers.
- Long-term corporate offtake becomes more important to DAC developers and their financiers because facility economics depend on credible buyers before removal capacity is operating.
Third-order effects
- If repeat purchases persist, carbon removal could develop as an infrastructure-like contracted market, in which a few large technology companies shape which removal methods scale first.
- Buyer concentration may also make the sector more exposed to changes in a single purchaser’s climate strategy, as suggested by later reporting that Microsoft shelved some contracts under negotiation.
The trend: AI-driven emissions growth is pushing major technology companies toward long-term purchases of durable carbon removal, turning climate commitments into demand-side financing for new removal infrastructure.