Microsoft and Danish energy provider Ørsted announced Monday an agreement for the purchase of 2.76 million tonnes of carbon removal, marking one of the largest-ever carbon removal offtake deals by volume to date.

Under the new agreement, Ørsted will capture and store biogenic carbon – emissions resulting from the combustion of biomass – generated at its Asnæs Power Station in Denmark over a period of 11 years.

The wood chip-fired Asnæs Power Station forms part of Ørsted’s “Kalundborg Hub” carbon capture and storage (CCS) project, alongside the Avedøre Power Station’s straw-fired boiler in the Greater Copenhagen area.  

Ørsted announced on Monday that it was awarded a 20-year contract by the Danish Energy Agency (DEA) for the CCS project, which it anticipates will begin capturing and storing biogenic carbon emitted from the plants in 2025, and to capture and store approximately 430,000 tonnes of CO2 every year from the beginning of 2026.

The new agreement marks the latest in a series of recent carbon removal deals for Microsoft, forming part of the company’s initiative to become carbon negative by 2030, and to remove all of its historical emissions by 2050. Microsoft recently announced Direct Air Capture (DAC)-based agreements with climate tech company CarbonCapture and with startup Climeworks, and in March the company entered its first agreement for ocean-based carbon dioxide removal, with ocean health company Running Tide.

Melanie Nakagawa, Chief Sustainability Officer at Microsoft, said:

“Our landmark long-term agreement with Ørsted for high-quality carbon removal supports Microsoft’s commitment to become carbon-negative by 2030, sends a strong demand signal to scale the market, and showcases the power of partnership and the technological innovation needed to help the world make the clean energy transition.”

Ørsted formed a collaboration in 2021 with Microsoft and carbon capture tech provider Aker Carbon Capture to explore the technological, regulatory, and commercial possibilities of developing carbon capture at biomass-fired heat and power plants. Aker will serve as the carbon capture provider for the new project, providing five of its “Just Catch” units to the CHP plants.

In a statement announcing the award for the new project Ørsted said that the deal with Microsoft will directly support the new project.

Ørsted said:

“The agreement between Ørsted and Microsoft also demonstrates the commercial value associated with carbon capture and removal. Given the nascent state of bioenergy-based CCS, Danish state subsidies and Microsoft’s contract were both necessary to make this project viable.”