Dec 12, 2025 · 35m · green-blueprint
Inside Microsoft’s plan to remove 50 years of carbon emissions
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gold bands on the timeline = statements, start to end. Hover to read, click to jump. CC turns on captions
Phil Goodman, Director of Carbon Removal Portfolio at Microsoft, explains how the company designs, negotiates, and scales bankable carbon offtake agreements to achieve its ambitious 2030 carbon negative commitment. The conversation explores PPA contract adaptation, rigorous due diligence, balanced portfolio allocation across nature-based and engineered durability tiers, and the essential shift toward public procurement.
How this conversation actually went
Every chapter scored 0–10 on four independent dynamics. Hover any point for the reasoning behind the score. The hosts hold 26.9% of the talking time here. How this is scored →
The hosts as informed peer 5.8 Guest teaching 3.3 Guest disagreement 0.1 The hosts pushing back 0.3
speaking balance: gold is the hosts, purple is the guest (3 minute bins)
Sharpest disagreement ▶ 8:16 Target neutrality amidst AI demand growth
Phil mildly pushes back against the premise that AI data center growth reshapes Microsoft's climate goals, firmly stating that targets remain unchanged and only increase urgency.
Hardest push from the hosts ▶ 21:18 Investor skepticism on pre-commercial unit economicsLara pushes back on theoretical project models by highlighting that growth equity and infrastructure investors demand full-scale operational facilities before deploying project capital.
Biggest teaching moment ▶ 11:22 Fundamental difference between power and carbon durabilityPhil educates the listener and host on why power purchase agreements cannot be mapped one-to-one to CDR without extensive contractual mechanisms for reversal management and durability risk.
The host holds their own ▶ 8:39 Utility operational perspective on demand headroomLara demonstrates deep industry expertise by citing utility-sector mechanics where strong revenue and demand growth provide structural headroom for unproven technology deployment.
the scores for every segment, with the reasoning behind each
| Chapter | Topic | The hosts as informed peer | Guest teaching | Guest disagreement | The hosts pushing back | Why |
|---|---|---|---|---|---|---|
| Microsoft's Carbon Negative Ambition and Market Realities | 4 | 2 | 0 | 0 | Lara presents a narrated introduction outlining Microsoft's 2030 carbon negative goals and the initial shortage of high-durability CDR projects. Phil explains how early RFP submissions were mediocre until the landmark Orsted BECCS transaction established a credible market signal. The segment is expository and highly collaborative. | |
| Show Introduction: Scaling Gigaton Carbon Dioxide Removal | 5 | 3 | 0 | 0 | Lara introduces the episode framing around gigaton CDR necessity as modeled by IPCC pathways. Phil outlines his background in renewable project finance and how power purchase agreements are being adapted into CDR offtake contracts. | |
| Tailoring Offtake Contracts and Managing AI Demand | 6 | 2 | 1 | 1 | Lara questions how rapid AI-driven datacenter expansion and increased energy demand impact Microsoft's carbon targets and CDR contracting. Phil clarifies that surging AI load does not change their 2030 targets but rather increases the urgency to establish viable net-zero procurement models. | |
| Bifurcated Strategy: Near-Term Scale and Frontier Technologies | 7 | 3 | 0 | 1 | Lara draws on her past utility background to ask whether high demand growth creates headroom for higher-risk frontier CDR innovation. Phil details Microsoft's bifurcated procurement strategy, separating near-term scalable technologies for 2030 from next-gen pathways like marine CDR and advanced DAC. | |
| Durability Risks, Registry Standards, and Biomass Sourcing | 6 | 5 | 0 | 0 | Lara prompts Phil to break down the technical nuances of CDR contracts beyond volume and price, focusing on permanence and MRV. Phil provides an in-depth breakdown of durability risk, registry protocol limitations, and biomass waste sourcing criteria developed with Carbon Direct. | |
| Due Diligence, Site Audits, and Contractual Verification | 6 | 4 | 0 | 0 | Lara inquires into the practical mechanisms Microsoft uses to enforce standards, such as audits and site visits, and asks what causes project applications to fail. Phil explains that premature project development lacking LCA boundaries or financial modeling is the primary rejection driver. | |
| Supplier Profiles, Project Financing, and Contract Tiers | 7 | 4 | 0 | 1 | Lara leverages investor refrains regarding the need for proven commercial facilities before project financing unlocks. Phil explains how Microsoft segments three distinct supplier types and provides short-term pilot offtakes for nascent technologies like enhanced rock weathering to build bankability. | |
| Landmark Deal Case Studies: Chestnut Carbon and BTG Pactual | 5 | 3 | 0 | 0 | Lara asks for case studies of successful deals, prompting Phil to analyze Chestnut Carbon's bankability structure with JP Morgan and BTG Pactual's massive native and eucalyptus reforestation fund in the Brazilian Cerrado. | |
| Strategic Portfolio Allocation Across Durability Tiers | 6 | 4 | 0 | 0 | Lara asks about Microsoft's preference between nature-based and engineered removals. Phil articulates their balanced portfolio strategy split evenly between low durability (under 100 years) and medium/high durability (100 to 10,000+ years) solutions. | |
| Industry Outlook and the Necessity of Public Procurement | 6 | 3 | 0 | 0 | Lara asks about supplier survival rates and whether corporate procurement alone is sufficient for net zero by 2050. Phil acknowledges an inevitable startup winnowing and emphasizes that public government procurement will be vital to achieve multi-gigaton scale. |
Statements from this episode (20)
Microsoft's 2020 carbon removal goals exceeded the entire global market size
“We knew at that time that the market was only in the couple millions of tons annually, and Microsoft schools were several times greater than that, and so for there to be a vibrant market where Microsoft is only buying a share of it, the car removal market need…”
Microsoft contracted 2.7M tons of carbon removal from Ørsted over 11 years
“Microsoft made a deal with Orsted to purchase 2.7 million tons of carbon removal over an 11 year period from a bioenergy carbon capture and storage plant.”
Microsoft's 2023 Ørsted transaction immediately improved supplier application quality
“Once we were able to structure that deal and we announced that transaction in the start of 2023, it became this huge signal. All of a sudden there was a shift And the quality of applications and the depth of applications that we saw.”
IPCC 2°C global warming scenarios require carbon dioxide removal
“All of the scenarios modeled by the IPCC that keep climate change to two degrees or lower by the end of the century agree. In addition to decarbonizing, we're going to need CDR.”
Carbon removal contracts must differentiate between biological and industrial project profiles
“A reforestation project may have a much longer, naturally would want a longer term because if you look at tree growth cycles, you'd have carbon credit generation over a long period of time. Whereas an infrastructure style BEX project kind of needs a fixed, you…”
Microsoft claims the AI boom has not altered its carbon negative goals
“AI doesn't change our sustainability goals. We're still buying CDR in pursuit of our carbon negative goal. And the AI hasn't really changed that target for us. It just increased the importance of a net zero world still needs to be possible in it, despite the A…”
Microsoft splits CDR procurement between 2030 scale and frontier technologies
“Our CDR The procurement strategy breaks down in sort of two general buckets. They're the pathways that we think can deliver scale by twenty-thirty, and in that case, I think it's more the example that you give, that you need to focus on the proven tech because…”
Direct air capture and marine CDR will not scale before 2030
“What is the next generation of direct air capture look like? What is the next generation of marine CDR look like? Those are pathways that aren't going to be so big on our 20 30 timescale, but really important in 2035 by 20 40.”
Microsoft builds carbon removal offtake agreements on standard power purchase frameworks
“Yeah, so the backbone of our offtake agreements is built on a power purchase agreement.”
Microsoft mandates strict biomass sourcing rules for bioenergy carbon removal feedstocks
“So one thing that we focused on quite a bit is ensuring we have a broad set of biomass sourcing principles that we worked on with Carbon Direct and is available on our website that identify, okay, we need to make sure that those sources of wood products are tr…”
Microsoft most commonly rejects carbon removal projects for being too early
“The most common way we say no to a project is because it's too early.”
Microsoft offers short-term contracts for early-stage carbon removal projects
“We vary our contracting in two big ways. So if the project's ready for scale, we will work through a long-term off-tick agreement that's modeled off a PPA. If the project is not ready for scale yet... We'll sign a shorter form agreement.”
Enhanced rock weathering measurement remains too immature for long-term offtakes
“The quantification methods just aren't there yet. So this has been true for enhanced rock weathering for us to date. It's something we're working through right now. Like, is, do we feel good enough about the quantification methods of carbon removal through enh…”
Microsoft agrees to purchase 8 million tons of carbon from Chestnut Carbon
“We signed a deal to purchase, I believe, eight million tons of carbon removal from them over a period of time, and they know finance very well.”
Microsoft's BTG Pactual transaction is the world's largest carbon removal deal
“BTG is a really exciting one. You know, this is the world's largest carbon removal deal out there.”
BTG Pactual has raised over $500 million for its reforestation fund
“We're in a pay-go relationship with them where we'll buy the credits as they sell them to us, and they're, they've raised, you know, well over half of their billion dollar fund, and on the timber side, they're working with best-in-class FSE standards.”
Microsoft targets a 50-50 portfolio split for low and high-durability removals
“And so for 2030, for us to meet our goals and for us to build a high quality carbon removal market, we've been targeting for about half of the portfolio to be low durability and half to be medium and high.”
BECCS offers the highest confidence for meaningful high-durability carbon removal volume
“And then in the high durability space, bioenergy with carbon capture and storage has been to the most, the highest confidence in that and the widest range of suppliers that can deliver meaningful volumes on the 20 30 timescale.”
Microsoft evaluates 250 carbon removal applications annually and considers 100 projects
“We see about 250 applications per year, and mostly from, it is probably from 200 plus suppliers, and we're seriously considering over a hundred projects right now in our pipeline.”
Reaching gigaton-scale carbon removal will require significant public government procurement
“There will definitely be a moment for government demand. I think when you look at the IPCC numbers for five plus gigatons, five to 10 gigatons of carbon removal, you need public procurement to play an essential role of that.”