Microsoft announced that it is purchasing 315,000 metric tons of carbon removal over a multi-year period from climate tech startup Heirloom Carbon, one of the biggest deals of its kind to date.
The agreement could be worth $200 million, according to The Wall Street Journal, which first reported the news.
San Francisco-based Heirloom is harnessing a geologic approach to catching and holding carbon dioxide. Limestone naturally binds to carbon, but Heirloom’s technology dramatically speeds up the process, cutting it from years to days. The startup operates the only U.S. facility permanently capturing carbon.
Even more important than the volume of carbon to be removed is the deal’s ability to unlock additional funding and investments to grow Heirloom’s business and the sector more broadly.
“Microsoft’s agreement with Heirloom is another important step in helping build the market for high-quality carbon removal and supports our path to become carbon negative by 2030,” said Brian Marrs, Microsoft’s senior director of energy and carbon, in a statement.
Microsoft previously invested in Heirloom through its $1 billion Climate Innovation Fund. The new deal represents a financially empowering “bankable agreement,” said Heirloom CEO Shashank Samala.
“Bankable agreements of this magnitude enable Heirloom to raise project finance for our rapid scale-up, fueling exponential growth like what we’ve seen in the renewable energy industry,” Samala said in a statement.
The guaranteed cash flow can facilitate financing needed to build Heirloom’s next two commercial sites.
Additionally, the deal is an example of the impact of the Biden administration’s 2021 infrastructure bill: the purchase was tied to Heirloom being selected by the U.S. Department of Energy as one of the nation’s direct air capture (DAC) hubs. It will receive $600 million of matching funding thanks to the designation.
Microsoft made its first long-term carbon removal purchase in 2022 when it signed a deal with Climeworks to remove 10,000 tons of carbon.
Climeworks launched the world’s first commercial scale carbon removal facility in Iceland. The Swiss company pulls carbon dioxide out of the air and pumps it underground where it permanently binds to basaltic rock formations.
Seattle-based Lithos is also marketing a carbon removal technology using basalt. It’s spreading the dust of crushed basalt rock on croplands, which reacts with rainwater and carbon dioxide in the air, turning it into dissolved bicarbonate.
