Microsoft’s AI Carbon Playbook: Can Cotton Waste Offset a Tech Giant’s Growing Emissions?

Microsoft’s AI boom is spewing more CO2 than ever—now it’s betting on Indian cotton waste to offset its carbon footprint. The tech giant’s FY2024 emissions rose 23.4% due to AI and cloud operations, prompting a partnership with Varaha, an Indian startup turning agricultural waste into biochar.

Varaha’s 2025 throughput—55,000–56,000 tons of biochar from 240,000 tons of biomass—has already generated 115,000 carbon removal credits. But scaling this to 2+ million tons by 2029 will require navigating logistical hurdles across 40,000–45,000 smallholder farmers.

Varaha CEO Madhur Jain said:

"More than 30% of our team has worked in agriculture. The project design is both scalable and durable."

Microsoft’s Phil Goodman echoed this optimism, but the company’s total carbon removal contracts (~22 million tons in FY2024) still lag behind its 15.5 million-ton footprint.

While biochar is already being applied to farms in Maharashtra, scaling production to meet Microsoft’s 2 million-ton target will depend on solving the "tracking and logistics" challenges Jain described. With 18 reactors planned over 15 years, the question remains: Can this model outpace the relentless growth of AI emissions?