1PointFive, the Direct Air Capture (DAC)-focused subsidiary of energy giant Occidental (Oxy), announced today that it has signed an agreement with Microsoft to deliver 500,000 metric tons of carbon dioxide removal (CDR) credits over six years, marking the largest-ever DAC-based CDR credit purchase agreement.

DAC technology, listed by the IEA as a key carbon removal option in the transition to a net-zero energy system, extracts CO2 directly from the atmosphere for use as a raw material or permanently removed when combined with storage. According to the Intergovernmental Panel on Climate Change (IPCC), scenarios that limit warming to 1.5°C include carbon dioxide removal methods scaling to billions of tons of removal annually over the coming decades, with DAC positioned to potentially account for a significant portion of the total.

Most solutions that capture and store CO2 are early stage and currently limited in scale, including DAC. 1PointFive is currently constructing STRATOS in Ector County, Texas, which it expects to be the largest DAC facility in the world to date, designed to capture 500,000 tonnes of CO2 per year when fully operational. STRATOS is anticipated to be commercially operational in mid-2025.

The CDR credits under the new agreement with Microsoft will be enabled by STRATOS. Under the agreement, the CO2 captured will be stored through subsurface saline sequestration and will not be used to produce oil and gas.

Michael Avery, President and General Manager of 1PointFive, said:

“A commitment of this magnitude further demonstrates how one of the world’s largest corporations is integrating scalable Direct Air Capture into its net zero strategy. Energy demand across the technology industry is increasing and we believe Direct Air Capture is uniquely suited to remove residual emissions and further climate goals.”

The transaction marks the latest in a series of large-scale carbon removal purchases by Microsoft, forming part of the tech giant’s initiative to become carbon negative by 2030, including the largest-ever CDR transaction announced last month with BTG Pactual Timberland Investment Group (TIG) for 8 million tons of nature-based carbon credit. Microsoft has built up a carbon removal portfolio spanning multiple solutions and technologies including, ocean-based carbon removal, and biochar-based projects, in addition to other DAC agreements.

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

“To achieve the gigatons of removals needed this century, first-of-a-kind projects like STRATOS are essential to move from pilots to scale. DAC plays an important role in Microsoft’s carbon removal portfolio supporting our broader goal of becoming carbon negative by 2030.”