• Multi-year offtake that sources crop residues for durable carbon removal across India’s cotton belt
• More than 2 million tonnes of projected carbon dioxide removals over a 15-year project life
• Co-benefits for air quality, farmer income, soil health, and regenerative practices

Microsoft has agreed to purchase long-duration biochar carbon removals from Varaha, a climate tech developer that works with smallholder farmers across Asia. The agreement enables Varaha to build up to 18 industrial biomass gasification reactors in India over the next 15 years, with more than 2 million tonnes of projected carbon dioxide removals over the life of the project.

Varaha sources cotton stalks from smallholder farms in Maharashtra as its primary feedstock. Cotton stalks are typically treated as agricultural waste after harvest, and field burning is widespread across India’s cotton regions. By routing stalks into gasification reactors, the project converts biomass into biochar and locks biogenic carbon into durable storage for centuries.

Local Impacts on Air, Soil, and Farmer Livelihoods

Varaha describes the initiative as a carbon removal program that also tackles persistent environmental and social challenges facing rural communities. Air pollution is a central concern given the seasonal rise in particulate matter linked to open burning of crop residues. The diversion of stalks into a commercial value chain provides an alternative for farmers and lowers PM 2.5 emissions in the region.

The project links carbon removal to regenerative agriculture. Farmers participating in the initiative adopt practices such as mulching and biochar application to soil. These approaches improve soil structure, help retain water, and contribute to higher agricultural productivity over time.

The income dimension is material. Varaha reports that thousands of smallholder farmers will receive payments for providing biomass and implementing crop residue incorporation practices. The company says these incentives create a path to sustainable livelihoods and reduce dependence on low-margin commodity production.

“This agreement demonstrates that high integrity carbon removal can drive transformative co-benefits for communities and ecosystems,” said Madhur Jain, Varaha CEO. “We’re not just removing carbon, we’re creating economic incentives for farmers to mitigate open burning of crop residues.”

Pilot Reactors and Scaling Across the Cotton Belt

The first reactor is sited next to Varaha’s 52-acre cotton research farm in Maharashtra. The facility serves as a demonstration space where agronomists and farmers test real-world soil management strategies, including biochar application. Field trials form an important evidence base for both the agronomic and carbon claims of the program.

The Microsoft commitment finances a scale up to 18 reactors located across India’s cotton regions. Varaha states that the deployment approach is designed to prioritize farmer participation while ensuring measurement and verification standards that meet corporate carbon procurement requirements.

CDR Standards and Market Development in Asia

The market context behind the deal is notable. Biochar has gained traction as a durable carbon dioxide removal method. Its durability and agricultural co-benefits position it as a comparatively affordable pathway for removals at scale. Asia has lagged North America and Europe in high integrity CDR development, but emerging supply in India, China, and Southeast Asia is beginning to reshape procurement strategies for multinational buyers.

Phil Goodman, program director for carbon dioxide removal at Microsoft, said the deal strengthens the company’s portfolio diversity and advances the regional supply base. “This offtake agreement broadens the diversity of Microsoft’s carbon removal portfolio with Varaha’s biochar project design that is both scalable and durable. It represents a step forward in scaling biochar CDR growth in Asia and advancing co-benefits for farmers, improved soils, cleaner air, and shared economic opportunity,” he said.

Varaha says credits generated through the program meet strict measurement, reporting, and verification requirements. Each tonne sold represents permanent removal rather than avoided emissions or temporary storage. Buyers in this segment are increasingly seeking removal pathways that can serve as long-term hedges against climate liability and disclosure obligations.

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Regional Lessons and Global Implications

For policymakers and investors, the agreement highlights three strategic dynamics. First, crop residues represent a significant feedstock for bio-based removals across emerging markets. Second, durable carbon removal markets are becoming more sensitive to co-benefits that reduce local pollution and strengthen rural economies. Third, corporate procurement is consolidating around verifiable project-level data and agricultural evidence rather than abstract carbon accounting.

Microsoft has been among the most active buyers of durable carbon removal globally. Its procurement choices have helped shape market expectations for quality, disclosure, and verification. If Asia continues to demonstrate that smallholder-driven removal projects can scale with real integrity, it could diversify the global CDR map beyond the United States and Europe.

The Varaha agreement also lands in a period when capital markets are assessing how carbon removal fits into net zero plans, regulatory compliance, and investor expectations. Durable removals remain scarce relative to demand projections, and projects that deliver measurable social and environmental co-benefits are increasingly prioritized by both buyers and regulators.

If the reactors perform as designed, the initiative could establish a template for biochar deployment across India and potentially other agricultural economies. For the broader climate finance ecosystem, the deal expands the geography of credible removals and offers a reminder that the next wave of CDR growth may come from regions where carbon, agriculture, and livelihoods are tightly linked rather than from frontier technology alone.

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