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Soil carbon credits are generated when farmers or landowners adopt agricultural or land management practices that increase the amount of carbon stored in the soil
Microsoft has purchased 2.85 million soil carbon credits to offset data centre emissions. (AP Photo)
As the world grapples with the accelerating impacts of climate change, soil is emerging as an unlikely but powerful ally. The renewed focus comes after technology major Microsoft signed a landmark deal to purchase 2.85 million soil carbon credits from Indigo Carbon. While Microsoft, the world’s largest purchaser of carbon removal credits, did not disclose the financial terms of the 12-year agreement, a person familiar with the deal said the price falls within Indigo Carbon’s historical range of $60-$80 per tonne, valuing the transaction at an estimated $171 million to $228 million.
The agreement is part of Microsoft’s broader effort to offset emissions generated by its rapidly expanding global data centre network, which consumes vast amounts of energy. More significantly, it signals a growing shift among large corporations towards nature-based solutions as they seek credible pathways to meet net-zero targets.
What Are Carbon Credits?
Soil carbon credits are generated when farmers or landowners adopt agricultural or land management practices that increase the amount of carbon stored in the soil or reduce carbon emissions from it. Carbon naturally circulates between plants, soil and the atmosphere, and these credits are designed to incentivise practices that strengthen this cycle in favour of long-term storage.
Techniques such as no-till farming, cover cropping, agroforestry and improved grazing management enhance the soil’s capacity to absorb and retain carbon. Other methods include direct seeding, changes in fertiliser application and increased tree planting. Each soil carbon credit represents a quantified amount of carbon dioxide that has been securely stored underground, preventing it from entering the atmosphere as a greenhouse gas.
Before credits are issued, projects undergo a rigorous verification process that includes baseline measurements, continuous monitoring and independent audits to ensure the carbon is genuinely sequestered and likely to remain locked in the soil over time.
Why Soil Carbon Credits Matter
The growing interest in soil carbon credits is rooted in the fact that soil holds more carbon than the atmosphere itself. Improving soil health therefore has the potential to deliver significant climate benefits. Beyond carbon storage, healthier soils improve water retention, strengthen soil structure and enhance nutrient cycles, making farmland more resilient to drought and erosion. Increased microbial and plant diversity also supports broader ecosystem health.
For energy-intensive operations such as data centres, investments in soil carbon credits offer companies a way to demonstrate measurable progress towards climate commitments, while also supporting sustainable farming practices and rural livelihoods.
However, the market is not without challenges. Measuring changes in soil carbon across large areas and over long periods remains technically complex. Concerns persist over the permanence of stored carbon and the risk of “leakage”, where gains in one location may be offset by losses elsewhere.
As demand from the corporate sector grows, standards and monitoring technologies are evolving. Advances in soil sampling, remote sensing and carbon modelling are helping to improve confidence in the integrity of verified soil carbon credits.
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January 16, 2026, 13:07 IST
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