In a significant development towards carbon dioxide removal (CDR) initiatives, Microsoft has entered into a substantial and long-term contract with Heirloom, a pioneering Direct Air Capture (DAC) company. This agreement entails the procurement of a remarkable 315,000 metric tons of CO2 removal over an extended multi-year period.
This deal follows Heirloom’s DAC Hub selection by the US Department of Energy for up to $600 million in matching funding. Project Cypress, to be located in southwestern Louisiana, was one of just two hubs to qualify for the highest levels of funding.
Microsoft Senior Director of Energy and Carbon Brian Marrs said “Microsoft’s agreement with Heirloom is another important step in helping build the market for high-quality carbon removal and supports our path to become carbon negative by 2030. As an investor in and customer of Heirloom, we believe that Heirloom’s technical approach and plan are designed for rapid iteration to help drive down the cost of large-scale Direct Air Capture at the urgent pace needed to meet the goals of the Paris Agreement.”
Additionally, the deal between Microsoft and Heirloom represents one of the first bankable carbon dioxide removal agreements. This opens up a crucial funding mechanism for Heirloom to finance future Direct Air Capture facilities, similar to how other large-scale infrastructure projects have been financed for decades.
Heirloom CEO Shashank Samala said, “Microsoft has been an incredible supporter of Heirloom, helping us scale one of the world’s most cost-effective Direct Air Capture solutions. Bankable agreements of this magnitude enable Heirloom to raise project finance for our rapid scale-up, fuelling exponential growth like what we’ve seen in the renewable energy industry.”
Given the need for substantial investments in durable carbon removal solutions with gigaton-scale potential, some companies are supporting CDR scaling alongside renewable energy and other green technologies. JPMorgan Chase, for example, is targeting $2.5 trillion for sustainable development and climate action by 2030.
“It is incredibly encouraging to see agreements of this magnitude because corporate buyers, like Microsoft, can unlock a significantly lower cost of capital for Direct Air Capture companies that are seeking to finance infrastructure projects, such as future carbon dioxide removal facilities,” said Robert Keepers, Managing Director, J.P. Morgan Green Economy Banking.
The deal between Heirloom and Microsoft also advances the U.S.’ climate leadership globally by uniting domestic buyers and sellers to advance net-zero commitments under the First Movers Coalition, an initiative launched by the Biden Administration to harness the purchasing power of private companies to create early markets for innovative clean technologies that enable both reductions and removals.
The CO2 removal credits purchased as part of this agreement will be generated at Heirloom’s next two commercial deployments in the U.S. and will support Microsoft’s goal to be carbon-negative by 2030, as well as its ambition to remove all of the CO2 the company has ever emitted by 2050.
