Microsoft (NASDAQ:MSFT) has entered into an agreement with Climate Impact Partners and Terra Natural Capital to fund a large-scale afforestation project in India. The deal involves purchasing 1.5 million tonnes of carbon removal credits over the next 30 years, covering half of the project’s estimated carbon sequestration. The Panna afforestation project will be implemented in Madhya Pradesh, covering 20,000 hectares with 11.6 million native trees. The initiative aims to contribute to carbon removal efforts while also delivering economic and environmental benefits to local communities.
Microsoft has previously engaged in similar carbon removal projects, including a 7 million-ton nature-based removal deal with Chestnut Carbon earlier this year. The company’s portfolio also includes investments in direct air capture, biochar-based carbon removal, and ocean-based solutions. The Panna project marks Microsoft’s first carbon removal purchase in India and its largest in the Asia-Pacific region. Compared to earlier projects, this initiative integrates multiple benefits, such as income generation for local farmers and biodiversity improvements.
How Does This Agreement Work?
The agreement pools together the expertise and resources of multiple stakeholders. Climate Impact Partners is responsible for project development, while Terra Natural Capital provides financial backing. Microsoft, as the buyer, guarantees long-term demand for carbon credits. This structured collaboration is expected to facilitate the successful implementation of the afforestation project.
“This transaction reflects the power of collaboration between trusted project developers, corporate demand, and innovative finance to unlock climate impact,” said Erica Vertefeuille, Managing Director of Terra Natural Capital.
What Are the Expected Benefits?
In addition to carbon reduction, the project is expected to generate economic opportunities for local communities. Farmers will receive a share of carbon credit sales, while trees planted will provide fruit and medicinal products for additional income. Training programs on climate-smart agriculture are also planned to improve farming techniques and yields. Water conservation efforts will be integrated, enhancing the region’s resilience to water shortages.
“Panna forms an important part of our growing portfolio of carbon removal projects – our first in India and largest in the APAC region,” said Brian Marrs, Senior Director Energy Markets at Microsoft. “The collaboration with Climate Impact Partners helps to ensure that millions more trees are planted, more carbon is removed from the atmosphere, more jobs are created, and more finance flows back to local communities.”
Biodiversity will also be a focal point, with native species being used to restore degraded land. The introduction of butterfly and bird species is expected to improve the ecological health of the project area. These additional benefits align with broader sustainability objectives while addressing environmental concerns specific to the region.
Microsoft continues to expand its carbon credit portfolio as part of its commitment to becoming carbon negative by 2030. The Panna project not only adds to these efforts but also highlights the increasing role of corporate investments in nature-based climate solutions. Climate Impact Partners and Terra Natural Capital are positioning themselves as key facilitators in scaling up such projects, emphasizing the importance of financial backing for large-scale carbon removal initiatives.
Corporations investing in carbon removal initiatives are often scrutinized for the effectiveness and long-term impact of such projects. The Panna afforestation effort demonstrates a structured approach to ensuring measurable carbon sequestration while maintaining social and environmental co-benefits. The success of this project will likely influence future corporate investments in similar initiatives, particularly in regions facing environmental degradation and economic challenges.
