• Microsoft bought 8.55 million tonnes of carbon removal credits through mid-July, about 80% below the same period in 2025.
• The pullback comes as Microsoft’s emissions rose 25% last year, driven partly by rising electricity demand linked to AI infrastructure.
• Microsoft still accounts for almost half of carbon removal transactions in 2026, giving its purchasing decisions outsized influence over the market.

Microsoft has sharply reduced its carbon removal purchases in 2026 as spending on artificial intelligence reshapes capital priorities and increases pressure on its climate targets.

The company purchased 8.55 million tonnes of carbon removal credits through mid-July. That was about 80% less than during the same period in 2025, according to BloombergNEF calculations.

The decline puts Microsoft on course for its first annual retreat in carbon removal buying since 2023. The company entered the market in 2020 and has since become its dominant corporate buyer.

The change comes as Microsoft accelerates spending on data centres and AI infrastructure. Those investments are increasing demand for electricity at a time when lower-carbon power and removal technologies remain constrained.

AI growth puts climate targets under pressure

Microsoft’s carbon footprint increased 25% last year, according to its latest sustainability report. Growing energy demand from AI was one factor behind the increase.

That creates a widening tension between the rapid expansion of AI infrastructure and corporate commitments to cut emissions.

Microsoft reportedly paused some carbon removal purchases earlier this year because of financial considerations. At the time, the company said its removal programme had not ended.

In an emailed response to Bloomberg News, Microsoft said carbon removal purchases remained only one part of its broader decarbonisation strategy.

“Any adjustments we make are part of our disciplined approach, not a change in ambition,” a spokesperson for the company said.

Microsoft remains by far the largest participant in the voluntary carbon removal market. It has accounted for almost half of all transactions so far in 2026.

Since 2020, the company has purchased 41% of carbon dioxide removals globally, according to BloombergNEF data.

Microsoft pullback ripples through removal market

Microsoft’s scale means the slowdown has implications beyond its own climate strategy.

Global carbon removal credit sales totalled 18 million tonnes through mid-July. That figure was 66% below the comparable 2025 level.

“Aside from the sheer size of its purchase, Microsoft’s activity has also sent a key signal to its peers that carbon removals are a worthwhile investment,” said Layla Khanfar, a BNEF analyst tracking the market. “If it pulls back, that also sends a message and other companies could be disinclined to take its spot as a champion.”

The risk for the sector is particularly acute because many carbon removal technologies are still expensive and commercially immature.

Climate scientists have repeatedly warned that deep emissions cuts will need to be paired with large-scale carbon dioxide removal. By mid-century, billions of tonnes may need to be removed from the atmosphere each year.

Technologies such as direct air capture remain costly to deploy at scale. Corporate buyers therefore play an important financing role by giving project developers revenue visibility while technologies mature.

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Other buyers are stepping into the market

Microsoft is not the only source of corporate demand.

Frontier, a carbon removal coalition that includes Stripe, Anthropic and Alphabet, committed $915 million in June to support new removal projects.

That spending suggests the market is becoming more diversified, although Microsoft still remains unusually influential.

“People need to look beyond just Microsoft’s activity when forming an opinion on the market,” said Lee Bostock, founding partner at Vuelta Carbon, a carbon markets trading and advisory firm. “I do believe that the market is evolving in a positive and encouraging manner, but sellers and buyers need to be realistic about the stage that market is in.”

For corporate leaders and investors, Microsoft’s shift highlights a broader governance challenge. Climate strategies built during periods of lower infrastructure spending may face increasing strain as AI investment accelerates.

The issue is not limited to Microsoft. Hyperscalers are committing enormous capital to computing infrastructure while also pursuing increasingly ambitious climate targets.

For the carbon removal sector, that creates both risk and opportunity. A market less dependent on one buyer would be more resilient. But until corporate demand broadens significantly, changes in Microsoft’s purchasing strategy will continue to shape project financing, technology deployment and confidence across the sector.