Microsoft signs large carbon removal deal backing AtmosClear’s Louisiana project

Microsoft said on Tuesday it signed a contract for a project in Louisiana that would remove 6.75 million metric tons of carbon dioxide over 15 years, which it says is the world's biggest permanent carbon removal project to date. 

The technology giant's greenhouse gas emissions were 29.1% higher than 2020 levels last year amid growing demand for energy for artificial intelligence uses and it last reported annual greenhouse gas emissions of 17.2 million tons at the end of 2023.

The bioenergy carbon capture and storage project being developed by carbon capture company AtmosClear is located at the Port of Greater Baton Rouge and will use materials like sugarcane bagasse and forest trimmings to generate energy and capture the associated carbon emissions and store them underground.

The agreement is a part of Microsoft's goal to become carbon negative by 2030.

The announcement comes amid uncertainty about the future of U.S. carbon removal and sequestration projects, which have been incentivized over the last few years by an $85 a ton federal tax credit known as 45Q. The Trump administration is seeking to reverse numerous decarbonization incentives put in place during former President Joe Biden's time in office in upcoming budget negotiations.

The companies did not comment on whether the project would proceed if the tax credit is scaled back or repealed by the Trump administration.

Fidelis, the Texas-based company that owns AtmosClear, said it expects to use the 45Q tax credit for the carbon sequestration component of the project.

Fidelis has estimated that the project will result in more than $800 million of investment and around 75 permanent and 600 construction jobs, and could revive forestry management jobs in the region that had been impacted by recent mill closures. 

Brian Marrs, Microsoft's senior director of energy and carbon, said in a statement the technology giant valued the deal's emphasis on jobs in local agricultural communities. It would also show Louisiana's leadership in becoming a hub for carbon management research and applied technology, he said. 

Louisiana state officials have been lobbying the U.S. Department of Energy and the state's congressional delegation over the last few days to urge them to save federal funding to support the state's planned Direct Air Capture hub in Calcasieu Parish, as well as the 45Q tax credit. 

Construction of the plant would begin in 2026, with commercial operations slated to start in 2029.