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Microsoft’s reported pause in new carbon removal purchases, first disclosed on Saturday April 11, is highlighting constraints in a market where demand remains concentrated in a small number of buyers and few others are currently positioned to scale.The company has effectively underpinned the growth of the carbon removal market in recent years, accounting for close to 90% of tracked global offtake volumes in 2025, according to Fastmarkets data, and signing multiple multi-million-tonne agreements across technologies, including bioenergy with carbon capture and storage, afforestation and biochar.
Microsoft contracted nearly 22 million tonnes of carbon removal in financial year 2024 alone, underscoring the scale of its role in shaping demand, according to its 2025 sustainability report.
Microsoft has also significantly ramped up procurement, securing more than 68 million tonnes of carbon removal in 2025, according to Fastmarkets data. It has continued signing offtakes this year, with just under 4 million tonnes of CO2 equivalent (tCO2e) agreed in the first quarter.
A large share of these agreements is structured for delivery from the late 2020s through the 2030s and beyond, with some extending as far as 2050.
The company’s retirements stood at just under 600,000 tCO2e in the 2024 financial year, and it forecast in its 2025 sustainability report that it would require around 6 million tCO2e of credits in 2030 to meet its “carbon negative” goal.
This 2030 figure is likely to be larger given rising emissions from artificial intelligence and data centers. The current volumes contracted by Microsoft are likely to cover its near-term requirements into at least the early 2030s, however.
In this context, the “pause” comes as less of a surprise to the market and gives Microsoft a chance to take stock and evaluate what its future demand could look like, especially as other tech companies such as Google have started to look more closely at “superpollutant” markets for near-term emissions.
By contrast, most other corporate buyers have committed to significantly smaller volumes, typically in the range of a few thousand to tens of thousands of tonnes, highlighting limited depth beyond a handful of early movers.
Microsoft did not confirm a pause in procurement, but a company spokesperson said it “continually review[s] and assess[es]” its carbon removal portfolio in line with market conditions and its carbon-negative target.
The latest development comes against the backdrop of an already uneven demand trajectory.
Total carbon removal offtakes fell sharply in the second half of 2025, dropping by more than 75% compared with the first half, even as Microsoft remained the dominant buyer across both periods. Full-year volumes remained well above 2024 levels, however.
Non-Microsoft demand remained limited, with volumes from other corporates accounting for only a small share of total transactions, underscoring the lack of a broader buyer base, although more than 60 other companies contracted volumes last year.
Non-Microsoft buyers accounted for around 6.8 million tonnes of carbon removal offtakes in 2025, according to Fastmarkets data, although volumes remain significantly below Microsoft’s purchasing scale.
Taken together, this suggests that the current pause may be occurring alongside an existing slowdown in activity, rather than marking a clear inflection point on its own.
Market participants said the carbon removal market remains heavily reliant on a small number of buyers, with few currently capable of replacing Microsoft’s scale in the near term.
“There is a big gap to fill,” a broker said, adding that no alternative buyers are currently able to step in at comparable volumes.
“Microsoft has been so far and away a market leader here. No one has even come close,” they said.
The broker added that they would “err on the side of a broader slowdown” in corporate demand, although they noted that this remains a directional view rather than a confirmed trend.
Pricing remains key barrier to scaling demandWhile long-term interest in carbon removal appears intact, high costs continue to limit participation beyond a narrow group of early adopters.
“Forward demand is still there, but pricing needs to become much more competitive to incentivize other buyers,” the broker said. “At these high levels, the scale is hard to achieve.”
Recent transactions indicate that engineered removals such as direct air capture can exceed $400 per tonne of carbon dioxide equivalent, reinforcing barriers to entry for new buyers.
As a result, demand remains concentrated among corporates with both the financial capacity and strategic willingness to absorb higher costs.
The current structure of the carbon removal market points to a widening gap between large-scale demand and smaller, fragmented purchases.
While Microsoft has secured long-term supply through multi-decade agreements, most other buyers have focused on smaller transactions across a range of technologies.
Data suggests a missing middle layer of demand, with few buyers currently scaling commitments into the millions of tonnes required to support large infrastructure projects.
Data from CDR.fyi shows that the carbon removal market has historically been highly concentrated, with a small group of repeat buyers accounting for the majority of volumes, while growth in new purchasers has remained limited.
Microsoft has also indicated in its sustainability report that scaling carbon removal will require broader participation from corporates and policymakers, highlighting the need for demand beyond a small group of early buyers.
Higher cost removal pathways such as direct air capture and bioenergy with carbon capture and storage are likely to be more exposed to any softening in demand, given their reliance on large-scale, long-term offtake agreements to support project financing.
The broker said these segments face greater pressure due to pricing constraints, while more modular or lower-cost approaches such as biochar may be less immediately affected.
At the same time, there has not yet been a visible slowdown in deal activity, suggesting that existing pipelines and previously agreed transactions continue to support near-term momentum, even as forward demand signals become less certain.
Large-scale pre-purchase commitments from buyers such as Microsoft have played an important role in enabling project developers to secure financing, improving the perceived risk profile of early-stage carbon removal projects.
Microsoft has also positioned itself as a market builder, stating in its 2025 sustainability report that it is committed to developing the carbon removal markets it purchases from, while acknowledging that it cannot scale the market alone.
A slowdown in procurement from such anchor buyers could therefore have knock-on effects beyond demand, potentially affecting the pace at which new projects reach financial close, particularly if alternative sources of demand do not emerge at a similar scale.
Some market participants struck a more optimistic tone, emphasizing that Microsoft’s role in building the market has already translated into long-term infrastructure and project pipelines.
“As one of Microsoft’s largest suppliers, we’ve seen firsthand how their commitments helped establish the carbon removal market at scale,” said Jonathan Rhone, co-founder and chief executive officer at CO280, adding that the company’s purchases have set benchmarks for quality and due diligence.
Investors also pointed to growing regulatory momentum and broader corporate engagement as potential sources of future demand.
“Those existing commitments are just starting to translate into real projects and infrastructure,” said Max Zeller, founder and partner at Carbon Removal Partners, in a recent LinkedIn post, adding that regulatory carbon markets could help provide additional scale beyond voluntary demand.
Replacement demand remains uncertainHowever, market participants cautioned that the scale of new demand required to replace Microsoft’s role remains uncertain.
While smaller buyers continue to enter the market, their commitments remain significantly below the volumes required to support large-scale project deployment.
There is currently limited evidence of buyers or coalitions capable of matching Microsoft’s purchasing scale in the near term.
The pause may also reflect a degree of saturation of near-term demand, with Microsoft having already secured significant volumes of future supply through long-term contracts extending into the 2030s and beyond.
The company’s approach has also focused on securing large volumes through long-term agreements, effectively locking in supply at known prices and reducing exposure to future market uncertainty.
Many of these agreements span 10 to 15 years or more, indicating that a significant portion of future supply has already been secured, according to the company’s sustainability report.
This raises the possibility that the shift represents a move from rapid market seeding to portfolio consolidation, rather than a full retreat from carbon removal.
This interpretation remains dependent on how procurement activity evolves in the coming months, however.
The episode underscores a central challenge for the carbon removal market: while demand for high-integrity credits exists, it remains concentrated and sensitive to pricing.
The market remains constrained by demand, with supply growth outpacing the expansion of the buyer base, according to analysis by CDR.fyi.
Without a broader expansion in corporate participation or the emergence of compliance-driven demand through mechanisms such as Article 6 or CORSIA, the market’s growth trajectory is likely to remain dependent on a relatively small number of buyers.
In its sustainability report, Microsoft has also pointed to the role of policy and compliance markets in enabling scale, suggesting that voluntary demand alone may not be sufficient to support long-term market growth.
Microsoft’s pause therefore highlights the limits of a market that has yet to develop the depth needed to scale.
–Samuel Carew in London contributed to this analysis.
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