Microsoft announced a groundbreaking deal yesterday, signaling its commitment to carbon capture technology and its investment in Heirloom, a California startup focused on removing carbon dioxide (CO2) directly from the air. The agreement allows Microsoft to purchase up to 315,000 metric tons of CO2 removal over the next decade. Heirloom utilizes innovative techniques involving limestone to capture and permanently store CO2 pollution, boasting the ability to accelerate the natural absorption process from years to days.
While 315,000 tons may seem insignificant compared to Microsoft’s goal of becoming carbon negative by 2030, it is a significant boost for Heirloom and the carbon capture industry as a whole. The investment not only provides much-needed funding for Heirloom but also stability, allowing for rapid scaling and growth similar to what the renewable energy industry has experienced.
Heirloom has already attracted other corporate clients such as Shopify, Stripe, and Klarna, who are receiving credits for their early support and contribution to the technology’s development.
JP Morgan Green Economy Banking’s managing director, Robert Keepers, praised the magnitude of such agreements, highlighting how corporate buyers like Microsoft can significantly reduce the cost of capital for direct air capture companies. In May, JP Morgan announced its intention to spend over $200 million on carbon dioxide removal credits.
In terms of the financials, Microsoft’s annual CO2 emissions currently amount to 13 million metric tons. With the Heirloom deal spanning ten years, the company plans to remove an average of 31,500 metric tons annually, which represents less than 0.25% of Microsoft’s total emissions. The Wall Street Journal estimates that Microsoft will spend a minimum of $200 million over the duration of the deal based on current market prices.
Heirloom recently raised $53 million in capital from investors, including Bill Gates’ Breakthrough Energy Ventures and Microsoft’s Climate Innovation Fund. Additionally, Heirloom is part of Project Cypress, a multi-company endeavor that received $600 million in funding under the Biden administration’s Bipartisan Infrastructure Law. Heirloom will capture CO2 for Microsoft at two new commercial facilities in the US, including one in Louisiana.
Looking at the broader carbon capture industry, the International Energy Agency (IEA) estimates that it currently captures 45 metric tons of CO2 annually. However, the IEA projects that this number could reach 125 metric tons by the end of the decade, still far below the 1.2 gigatons of CO2 per year required to achieve net zero emissions by 2050.
Microsoft has been actively pursuing carbon-mitigating deals in recent months, including partnerships with Climeworks, CarbonCapture, Running Tide, and Ørsted. These collaborations involve various methods of carbon removal, such as direct air capture, ocean alkalinity enhancement, and carbon storage beneath the North Sea.
In summary, Microsoft’s deal with Heirloom showcases its commitment to combating climate change and investing in innovative carbon capture technologies. The partnership not only provides financial support but also instills confidence in the carbon capture industry as a whole. As Microsoft works towards its goal of becoming carbon negative by 2030, it continues to forge strategic alliances and explore various methods of removing CO2 from the environment.
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