Microsoft Invests in Vaulted Deep to Advance Carbon Removal Efforts

Microsoft is accelerating construction of its global data center network, a move that has significantly increased the company’s carbon emissions—by nearly 25% since 2020. This surge complicates Microsoft’s high-profile pledge to achieve carbon negativity by 2030, where it plans to extract more carbon from the atmosphere than it produces.

Microsoft’s Carbon Removal Initiative

To address its growing emissions, Microsoft has committed to large-scale carbon-removal credit purchases. The latest agreement—recently announced—sees Microsoft purchasing 4.9 million metric tons of carbon removal credits from Vaulted Deep, a climate-tech startup. The deal spans 12 years, running through 2038. Though the financial details remain undisclosed, the volume signals a significant commitment to combating carbon output from its operations.

How Vaulted Deep’s Process Works

Vaulted Deep approaches carbon sequestration with a novel method: solid waste such as treated sewage, agricultural manure, or residual paper sludge—materials typically destined for landfills—are processed into a slurry. This slurry is then injected deep underground into porous geological formations, essentially reversing methods that have traditionally been used for fossil fuel extraction. The wells are created using drilling technology adapted from the oil and gas sector.

To date, Vaulted Deep has removed over 18,000 metric tons of CO₂. The startup achieved recognition as a runner-up in the Xprize Carbon competition and recently raised $32 million in Series A funding, led by Prelude Ventures.

Challenges: Data Centers, Supply Chains, and Emissions

Microsoft’s rapid expansion, particularly in data center construction, has made hitting its sustainability targets increasingly difficult. Although the company has invested substantially in renewable energy, some essential resources—like semiconductors—have no carbon-neutral production options at present, making emissions inevitable.

In 2024, Microsoft’s total greenhouse gas output reached nearly 15 million metric tons, a figure more than twice the level targeted for 2030. To bridge this gap, Microsoft is scaling up removal initiatives, including deals involving reforestation and industrial carbon capture projects, such as a 7-million-metric-ton reforestation venture in the southeastern United States and a 3.7-million-metric-ton contract with CO280 to capture emissions from paper mills along the Gulf Coast.

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Why it matters

This Microsoft-Vaulted Deep partnership signals a substantial shift where tech giants not only offset emissions but actively drive new carbon removal markets. For startups, it illustrates how enterprise demand can spark rapid commercialization and adoption of advanced climate technologies. The success of direct waste-to-carbon removal models underscores increasing corporate accountability—opening the door for even more climate-driven B2B collaborations.

Risks & opportunities

While such deals inject capital and credibility into nascent carbontech startups, they also expose both sides to risks of under-delivery and reputational blowback if outcomes are not validated. Opportunity-wise, the long-term nature (12 years) of the deal sets new standards for sustained engagement—making carbon removal contracts more akin to utility or SaaS agreements. Startups capable of proving reliability and scale stand to win lucrative, multi-year enterprise contracts.

Startup idea or application

Inspired by this development, a compelling startup concept would be to build a cloud platform that tracks, verifies, and reports the lifecycle of enterprise carbon removal investments. Integrating blockchain or AI for transparency, founders can serve both buyers (corporate sustainability teams) and sellers (climate-tech providers), ensuring robust validation, risk management, and compliance in this emerging sector.

Carbon Removal Microsoft Climate Tech Data Centers Vaulted Deep

For more on how large tech firms are transforming their sustainability practices, read how Meta is powering the next generation of AI data centers with renewable energy, or explore how Amogy is innovating clean energy solutions in the data center space.

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