On Thursday, Microsoft declared its intentions to purchase more than 7 million tons of carbon credits from Chestnut Carbon.
This long-term agreement, spanning 25 years, will allow Chestnut Carbon to restore 60,000 acres of land in Arkansas, Louisiana, and Texas, as reported by Axios here. The technology giant has been facing challenges in managing its carbon footprint due to a rapid increase in data centre construction and usage driven by artificial intelligence.
Last year, Microsoft disclosed a 29% increase in its emissions since 2020, attributed to the AI and cloud computing boom, jeopardising its ambition to capture more carbon than it emits by 2030. In 2023, the company reported a total of 17.1 million tons of greenhouse gas emissions prior to any offsets.
Carbon credits vary in their characteristics. Chestnut Carbon is dedicated to reforestation efforts, which involves tree planting and ongoing monitoring to ensure the survival and growth of these new forests, preventing their destruction. The company currently operates eight projects in the Southeastern United States, areas that had previously been utilised for agriculture or grazing.
As trees grow, they naturally absorb carbon; however, not all carbon credits related to forests are of equal quality. Credits generated from projects that introduce non-native, rapid-growing trees are generally considered inferior and fetch lower prices, as they do not support as much biodiversity and have shorter lifespans. Conversely, projects that enhance diverse, native plantings tend to command higher prices due to the more resilient ecosystems they foster over time.
Despite their benefits, nature-based carbon credits come with some drawbacks. The largest nature-based carbon credit registry, Verra, was the focus of a thorough investigation in 2023, revealing that the organisation exaggerated the environmental advantages of its projects. This controversy led to the removal of its CEO and prompted a reevaluation of industry standards. Following this, Chestnut Carbon transitioned from Verra and now relies on Gold Standard for the certification of its carbon credits.
