Microsoft and Swedish energy company Stockholm Exergi announced today a 10-year offtake agreement with Stockholm Exergi providing Microsoft with more than 3.3 million tonnes of carbon removal certificates from its planned bio-energy with carbon capture and storage (BECCS) at Värtan, Stockholm.

The agreement marks the largest-ever engineered carbon removal deal in the world to date, according to the companies.

Stockholm Exergi received an environmental permit for its BECCS facility earlier this year. The facility aims to bring together a bioenergy-based combined heat and power plant fueled by residues from forestry, sawmill and pulp and paper production, with a carbon capture and storage process that captures CO2 in the plant’s flue gases, and cools and compresses it into liquid form, for transport and permanent storage in sedimentary bedrock below the North Sea floor, where the liquid CO2 mineralizes over time.

According to Stockholm Exergi, the company aims to reach a final investment decision on the BECCS plant in Q4 2024, with construction of the carbon capture unit, liquefaction and intermediate storage planned to begin in 2025.

Once in operation, the plant is expected to capture 800,000 tonnes of carbon dioxide annually.

Stockholm Exergi added that it intends to seek complementary state aid and additional private carbon removal deals through the Swedish aid program for BECCS, and to sign additional removal agreements, building on the new deal with Microsoft, to reach financial close on the project.

Anders Egelrud, CEO of Stockholm Exergi, said:

“The agreement with Microsoft is a huge step forward for our BECCS project, Stockholm Exergi as a company and the climate. It is the strongest possible recognition of the significance, quality and sustainability of our project and takes us an important step closer to a final investment decision in Q4 2024. I believe the agreement will inspire corporations with ambitious climate objectives, and we target to announce more deals with other pioneering companies over the coming months.”

Deliveries of carbon removal certificates to Microsoft are anticipated to start in 2028, and the new agreement includes criteria for sustainable sourcing of forest biomass, in addition to conservative quantification of net removals and comprehensive monitoring, reporting and verification (MRV).

The new agreement marks the latest in a series of announcements by Microsoft to support and participate in the carbon removal market, forming part of the tech giant’s initiative to become carbon negative by 2030. Microsoft noted that it follows a reductions-first strategy, complemented by building a portfolio of carbon removal offtake agreements. Over the past several months, Microsoft has announced a series of carbon removal deals spanning a wide range of technologies and approaches including reforestation, direct air capture (DAC), ocean-based carbon removal, and biochar-based projects.

Brian Marrs, Senior Director, Energy & Carbon Removal at Microsoft, said:

“We are extremely proud to announce this carbon removal offtake with Stockholm Exergi from its pioneering Värtan BECCS project. Leveraging existing biomass power plants is a crucial first step to building worldwide carbon removal capacity. In this case, we are pleased with the efficiency of recovering heat from carbon capture and adding it into district heating networks. Finally, it is crucial to sustainably source the biomass for BECCS projects and we were impressed with Stockholm Exergi’s commitment in this regard.”