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Recent reporting on Microsoft’s climate commitments has prompted a wider question for the carbon removal market: what happens when one of its most important early buyers appears to adjust the pace and shape of its procurement?
The answer lies in how new markets develop. They begin with pioneers. They mature when more participants join. And at industrial scale, they need a much broader voluntary market, complemented by regulated demand.
Microsoft has been one of the defining pioneers of carbon removal. I have admired the company and its leadership for a long time and continue to do so, not only for the ambition of its climate goals, but for its willingness to act while carbon removal was still an early, technically complex and relatively unfamiliar market.
At Climeworks, we observed that leadership up close. Microsoft was one of the first major companies to support direct air capture. Its Climate Innovation Fund helped finance our early plants in Iceland. Its leaders visited our facilities, engaged deeply with our teams and helped create confidence in a nascent market.
That mattered well beyond Climeworks. By making early commitments, Microsoft helped show that carbon removal was not just a scientific theory or a future policy option. Rather, it is a climate action tool that can be contracted, financed and delivered. Microsoft helped show the world that carbon removal is real.
Recent reports suggest Microsoft may be adjusting the pace of new carbon removal purchases as well as its clean energy matching goals, against the backdrop of data center growth. The company has been clear that both programs continue, even as their shape evolves. Indeed, we should expect companies to refine their approach to sustainability goals as their businesses evolve. The key question for the carbon removal market is what comes next.
The market has reached the limit of what any single anchor buyer can carry. That is not a sign of failure; it is the point at which a pioneer-led market has to become a broader one. The next phase will not be defined by one company making the next mega-deal. It will be defined by many companies across many sectors making serious, meaningful commitments – and by policy frameworks that build on voluntary action and help turn today’s momentum into industrial scale. That phase requires two transitions, running in parallel.
The first transition is the diversification of voluntary buyers. That shift is already underway, but from a highly concentrated starting point: Microsoft has accounted for around three quarters of durable carbon removal purchases sold to date. The encouraging sign is that new buyers are entering the market - more than 100 first-time buyers did so in 2025. The challenge is that most are still buying at relatively small volumes. The base of the market is broadening, but it is not yet deep. For the market to mature, many more companies will need to move from pilot purchases to commitments in the hundreds of thousands, and eventually millions, of tons.
For companies considering carbon removal, the reason to start now is not simply to secure supply early. It is to build the experience needed to buy well – understanding quality, durability, verification, delivery risk, portfolio design and contract terms before carbon removal becomes a larger part of climate strategies and regulation.
Companies that begin now do so against a more developed supply base, clearer standards and the institutional learning of the early buyers. But the market is still early enough for new buyers to shape what comes next – from quality standards and contract structures to the demand signals that give suppliers confidence to invest. They are also building carbon removal into their climate strategies while doing so is still strategic – before compliance pressure, scrutiny, or both make it reactive.
The next phase of market evolution will also put more emphasis on delivery. Buyers will not only ask what has been contracted, but what is being delivered, when and under what verification standard.
Voluntary demand is also doing what voluntary markets are designed to do: proving the technology, establishing price, surfacing quality and giving suppliers the confidence to make first-of-a-kind investments. The voluntary buyers who entered the market early have shaped its current standards. The buyers entering now can build on that progress – and still influence how the market develops from here.
At the same time, to move to industrial scale, the market will also need long-term, predictable demand. Voluntary markets will remain essential to the next phase of carbon removal, but over time, that voluntary demand will need to be complemented by regulated demand if the market is to scale with the predictability and depth required for industrial investment. The case for this complementary policy framework is not an industry preference. It rests on commitments governments have already made under the Paris Agreement – many enshrined in domestic law. The Energy Transitions Commission and the International Energy Agency reach the same conclusion: those commitments cannot be delivered without carbon removal at scale.
The logic is straightforward: net-zero commitments cannot be delivered by emissions reductions alone. Hard-to-abate sectors such as aviation, shipping, cement, steel and agriculture will retain residual emissions even under aggressive decarbonization, and those emissions will need to be balanced by permanent removals. Governments that have legislated net zero have therefore also committed themselves, whether explicitly or not, to scaling a removal industry. The question is whether the policy to scale it arrives in time.
Europe has the first opportunity to answer it.
By the end of July 2026, the European Commission will report to the European Parliament and Council on how carbon removals could be accounted for and potentially included in the EU Emissions Trading System.
This is one of the most important policy decisions the carbon removal market faces this decade, and the analytical case is strong.
A well-designed integration of durable removals into the EU ETS – one that creates clear and additional demand – could provide the next Microsoft-scale demand signal for the market. That does not mean it would meet Europe’s full removal need, but it could create an important foundation for scaling toward it. Europe’s own climate planning points to a much larger requirement, with permanent removals needing to grow from around 5 million tons in 2030 to around 75 million tons in 2040. But a predictable demand signal in the 50–100 million ton range over the 2031–2040 period could still be large enough to change the financing conditions for the sector.
The near-term cost to the ETS itself would be modest: roughly €1 per ton of allowance in 2031, €2.50 in 2035 and €6 in 2040. Put another way, the 2031 impact would be broadly equivalent to around 1% of the EU ETS market in 2030 – modest for the system, but material for a sector still moving from first-of-a-kind projects to bankable infrastructure.
For carbon removal, this would be the difference between a sector financed project by project and one financed as bankable industrial infrastructure.
This is what the next Microsoft-scale catalyst looks like. Not a single mega-deal from one buyer alone, but two shifts happening together: more voluntary buyers moving from pilots to commitments in the hundreds of kilotons, and regulation that creates predictable demand in volume and timing. Together, those signals can give the supply side the confidence to make the kind of capital decisions an industrial scale-up of this magnitude requires.
Microsoft helped establish the foundations of the carbon removal market. It gave the market confidence when confidence was hardest to create.
The next phase will be defined by what gets built on that foundation - by the buyers, the suppliers and the policymakers who recognize that the foundation alone is not the building.
