Tech giant Microsoft (NASDAQ:MSFT) has entered into a multi-year carbon credit deal with 1PointFive, a unit of Occidental Petroleum (NYSE:OXY). The move is part of MSFT’s strategy to become carbon-negative by the end of this decade.
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MSFT’s Carbon Capture Deal
1PointFive is a carbon capture, utilization, and sequestration (CCUS) company. Under the deal, it will sell 500,000 metric tons of carbon dioxide removal (CDR) credits to Microsoft over a six-year period.
Notably, the agreement marks the largest single purchase of CDR credits via Direct Air Capture (DAC) to date. 1PointFive is currently setting up its first industrial-scale DAC plant in Texas, named Stratos, which will capture the carbon dioxide underlying the credits. Importantly, this CO2 will be stored through subsurface saline sequestration and will not be used to produce oil and gas.
Why It Matters…
Furthermore, Microsoft’s move highlights the promise of DAC projects in global decarbonization efforts and the tech industry’s increasing need for obtaining CDRs. Stratos is a first-of-its-kind project, and its successful operation could lead to wider adoption of DAC technology. On the other hand, the rise of AI and the growing prominence of data centers have led tech giants like Microsoft to consume vast amounts of energy. This trend is expected to accelerate in the coming years, prompting more tech companies to consider similar CDR deals.
What Is the Price for MSFT Stock?
Meanwhile, Microsoft’s share price is up by nearly 41% over the past year. Overall, the Street has a Strong Buy consensus rating on the stock, alongside an average MSFT price target of $500.55.
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