Microsoft is the first customer for the Biden administration’s carbon removal hubs

Microsoft is helping to fund one of the US’s first hubs for pulling planet-heating carbon dioxide out of the air. It struck a deal with California-based startup Heirloom, which says it will capture up to 315,000 metric tons of CO2 for Microsoft over the next decade or so.

The partnership fits into Microsoft’s climate goal of becoming carbon negative by 2030, meaning it plans to remove more carbon dioxide from the atmosphere than it emits as pollution. The company has made other deals with startups breaking ground on new industrial facilities that filter CO2 out of the air, called direct air capture (DAC) plants. Now, it’s also involved in the Biden administration’s push to build big hubs for DAC plants across the US.

Heirloom says it will capture CO2 for Microsoft at two new commercial facilities in the US, including one it plans to build in Louisiana after being selected for up to $600 million in funding from the Department of Energy (DOE). The Louisiana project, called Cypress, was one of two locations the DOE picked to fund the first hubs for DAC plants in the US.

The emerging technology is still prohibitively expensive, and clustering the plants in hubs is supposed to cut down costs since they’ll be able to share infrastructure like pipelines to move captured greenhouse gases and underground wells to store them. The Bipartisan Infrastructure Law passed in 2021 includes $3.5 billion to develop at least four DAC hubs across the US.

Microsoft didn’t disclose how much it spent on those deals or how much carbon dioxide it would pay to capture. But the going rate for this new kind of service has been around $600 per ton, and The Wall Street Journal estimates that Microsoft’s newest commitment probably comes out to around $200 million. This is the first deal to purchase carbon removal credits from one of the government-funded hubs, WSJ reports.

Heirloom says it’s one of the biggest carbon removal deals yet and will help the company raise more money to build its DAC plants. The startup raised another $53 million last year, including investments from Bill Gates’ Breakthrough Energy Ventures and the Microsoft Climate Innovation Fund.

Microsoft’s buy-in is a big vote of confidence for an industry that doesn’t yet exist at scale to meaningfully tackle climate change. To put things in perspective, Microsoft is paying Heirloom to remove up to 315,000 metric tons of CO2 over roughly a decade — but the company produced close to 13 million metric tons of the greenhouse in its 2022 fiscal year.