Has Microsoft just given CDR a knockout blow?

A lot’s going on with Net Zero right now—with some even arguing that the Iran War and associated fossil fuel supply disruptions are prompting a pivot to renewables and EVs that decades of policy might not have managed; Pakistan, we are told, has basically gone the whole hog here, for example.

That’s on the positive side of the decarbonisation front. But a fair few commentators were troubled by a somewhat unexpected decision by Microsoft, the world’s current fourth biggest company by market capitalisation, to pause any new purchases of Carbon Dioxide Removal (CDR) credits as it reviews its climate strategy.

The company was quick to point out that existing CDR contracts and already-signed deals will continue to be honoured, that it is still committed to be carbon negative by 2030, and that it’s not ended its carbon removal programme but has instead adjusted the pace of its procurement for now. But as MSFT was the industry’s largest buyer—responsible for roughly maybe 90% of all demand in 2025—the move for sure creates significant uncertainty for suppliers, and all new deals are currently on hold. 

Putting this into a carbon context

If you’re not familiar, when we say, ‘the CDR market,’ we mean a mix of nature-based and technological (and indeed, combinations thereof) approaches to removing excess CO₂ directly from the atmosphere and durably store it in geological, terrestrial, or marine reservoirs, or in products. It’s different from emissions reduction, which focuses on preventing new greenhouse gases from being released, as it’s all about what’s already in the air. 

Methods range from nature-based approaches such as reforestation, soil carbon storage, and wetland restoration to engineered solutions like direct air capture machines, bioenergy with carbon capture and storage, and mineralisation processes that lock carbon into rock.

While cutting emissions must happen to limit the damage from all our centuries of fossil fuel progress, many sectors, including ones we’d really like to keep going like aviation, heavy industry, and agriculture, are expected to continue producing some emissions that will need to be balanced by removing carbon from the atmosphere.

In terms of dollars and cents, by the way, this is still a very small market, but one that, at least up until this, was growing very fast. OK, then: let’s call it a pause, and it could well be a temporary one.

Nonetheless, there’s been a lot of commentary that this is some kind of fatal blow to the whole CDR market. And it’s not an unnatural one: if one of the most influential corporate buyers in the voluntary carbon market is stepping back, does that represent a setback for CDR as a whole?

By using its purchasing power to help scale nascent solutions and send demand signals to developers, Microsoft has undoubtedly played a significant role in legitimising early-stage carbon removal markets. So, any reduction in that level of engagement naturally raises concerns about momentum, financing certainty, and long-term viability for the sector.

But a better way of looking at all this isn’t that CDR is weakening, but at least arguably maturing. One of the persistent misconceptions around carbon dioxide removal is the idea that it represents a single technology pathway or investment category, when in reality, it is a broad ecosystem spanning nature-based solutions, engineered removals, mineralisation, direct air capture, bioenergy with carbon capture, and emerging hybrid approaches. Let’s see why.

Market dynamics 101

Without a doubt, corporate buyers entering the space in the early stages—particularly large technology firms—played an important role in creating initial demand. However, reliance on a small number of high-profile buyers was never going to be a stable long-term foundation for the sector.

But as procurement strategies evolve, it is natural that some organisations will recalibrate their approach, diversify their climate investments, or shift emphasis toward internal decarbonisation, but that does not invalidate the underlying need for durable carbon removal capacity at scale. After all, even if individual corporate commitments fluctuate, the structural drivers behind carbon removal are not changing. 

Multiple governmental and regional bloc Net Zero commitments, regulatory pressure, and physical climate realities continue to point toward the same conclusion: residual emissions will need to be addressed, and not all of them can be eliminated at the source.

What is changing is the shape of demand. Instead of a small number of anchor buyers driving early markets, the sector is moving toward a broader base of participants, including:

• Governments exploring compliance-grade carbon removal pathways
• Energy and industrial players trying to integrate carbon removal into their wider decarbonisation strategies
• Financial institutions are developing carbon-linked instruments and risk frameworks
• A wider set of corporates distributing climate investments across multiple solutions.

There is strong evidence in all this that the CDR market is becoming more diversified and less dependent on any single corporate actor—even if that has been such a good player as MSFT.

Time to start looking beyond CDR?

A key takeaway for any ESG leader reading this is that carbon removal is not a technology bet, but a systems challenge. No single method will scale fast enough, cheaply enough, or broadly enough to meet global climate requirements, so a multi-pronged approach is what is called for.

Nature-based carbon overload solutions will continue to play a role due to scale and cost advantages, maybe even the overwhelmingly dominant one for the foreseeable. Still, these solutions face durability and verification challenges. That’s why some innovators are looking to another card to play, carbon capture and utilisation (CCU).

Carbon removal and storage matters, but CCU in many ways represents a robust set of technologies that can be deployed today at scale in specific industrial contexts. Why: unlike purely storage-based approaches, CCU turns captured CO₂ into usable inputs for fuels, chemicals, construction materials, and industrial processes. 

While not a universal solution, it has a critical role to play in sectors where emissions are hard to abate and where circular carbon use can be economically viable. For ESG teams looking for immediate impact pathways, CCU could offer a pragmatic complement to longer-term CDR development – particularly a proven and mature model, like that offered by our innovative friends over at Remediiate.

Summing up, we think the theme with CDR isn’t retreat, but recalibration. Early-stage markets often rely on a small number of aggressive pioneers. As the ecosystem matures, leadership naturally diffuses, and capital allocation becomes more selective and integrated into broader sustainability and procurement strategies.

And that transition is healthy, as it forces the market to move beyond dependency on flagship buyers and toward a more resilient structure with multiple demand sources and technology pathways. 

We have every confidence that dealing with carbon is not slowing down because one major player changes direction. The problem has not gone away, and neither has the need for scalable solutions. The ideal response is to build a diversified, investable, and operational ecosystem that can support multiple technologies in parallel—from engineered removals like CDR to CCU and beyond.

Indeed, let’s invent a few more for good measure: Mother Earth will thank us. And maybe all of humanity will, too, by and by.

PS You might be interested to learn that, as of the start of the year, we have been helping a very interesting CCU player which is winning real business on several fronts, Remediiate: find out more, here.