Old Mills, New Mission: Microsoft’s Carbon Bet

Tech group agrees deal with CO₂80 to remove 3.7mn tonnes of CO₂ using retrofitted paper plants

18 Apr 2025

Microsoft has struck one of the largest carbon removal agreements to date, backing a project that will capture 3.7mn tonnes of carbon dioxide from pulp and paper mills in the US.

The deal is with CO₂80, a carbon removal start-up that aims to retrofit existing mills with carbon capture equipment rather than build new industrial facilities. The approach targets biogenic CO₂, emissions produced from processing wood and other natural materials, which are widely viewed as easier to capture than fossil-based emissions.

CO₂80 plans to install capture systems developed by SLB, the oilfield services group formerly known as Schlumberger. The captured CO₂ will be transported and permanently stored in approved underground geological sites. Financial terms of Microsoft’s agreement were not disclosed.

The project qualifies for federal 45Q tax credits, which subsidise carbon capture and storage in the US, improving the economics of the model. CO₂80 is also backed by investors including Toyota Ventures and the Grantham Foundation.

“This isn’t just a pilot or a promise. It’s a practical leap toward industrial-scale climate tech,” said a clean energy analyst, pointing to the use of established industrial sites rather than new-build plants.

Pulp and paper mills emit large volumes of biogenic CO₂ as part of routine operations. By focusing on these facilities, CO₂80 avoids some of the technical challenges associated with capturing emissions from fossil fuel combustion, while also reducing construction time and capital costs.

Microsoft has increasingly turned to carbon removal as part of its pledge to become carbon negative by 2030. The company has signed a series of long-term purchase agreements for removal credits, arguing that large-scale deployment is needed to develop the market.

The project still faces obstacles. Transporting captured CO₂ to storage sites will require pipelines, which often encounter local opposition and lengthy permitting processes. CO₂80 said it was working with regulators and communities to address these concerns.

If successful, the model could be replicated across other pulp and paper facilities, turning legacy industrial assets into carbon removal hubs. The approach reflects a broader shift in climate policy and investment towards adapting existing infrastructure rather than relying solely on new technologies.

The agreement adds to growing evidence that carbon removal is moving from experimental projects to commercial-scale deployment, driven by corporate demand and public incentives.