(Bloomberg) -- Microsoft Corp is making a big move into Brazil’s voluntary carbon market with a deal to buy credits from a large-scale project to reforest degraded parts of the Amazon.

The US technology giant has agreed to purchase as many as 1.5 million carbon removal credits through 2032 from Brazilian startup Mombak Gestora de Recursos Ltda., which is planting more than 100 species of native trees on deforested farmland in the Amazon. 

Financial terms weren’t disclosed, but Microsoft spent two years doing due diligence and advising on the project before agreeing to buy credits and it’s the company’s biggest deal to date for nature-based carbon credits.

“We try to build the markets that we buy from,” Brian Marrs, senior director of energy and carbon removal at Microsoft, said in an interview. “We hope this is a model for the future. We want to see it in jurisdictions in and beyond Brazil.”

Mombak is tapping a shift in voluntary carbon markets where buyers are willing to pay more for projects that actually remove carbon, rather than so-called avoidance offsets that, for example, generate credits by keeping existing trees standing.  

The Sao Paulo-based company expects Brazil to become the world’s biggest exporter of carbon-removal credits because of the vast amounts of deforested tropical land available in the Amazon, where trees grow faster than in colder climates. Each credit represents a ton of carbon removed from the atmosphere.

Microsoft’s agreement is part of a project to grow more than 30 million trees in Para state in the Amazon basin. The forests will cover about 70,000 acres, or five times the size of Manhattan, and are part of Microsoft’s plan to become carbon negative by 2030. The announcement coincides with the COP28 climate talks in Dubai, where Microsoft and Mombak are both participating. 

In a market that’s earned a negative reputation from projects that weren’t scientifically defensible, or even fraudulent, the agreement with Microsoft gives Mombak an important stamp of approval that will help it to raise money for more re-forestation projects in Brazil, according to the carbon-removal startup’s top executive. 

“We have one of the five most valuable companies getting their largest nature-based supply of carbon removal in Brazil,” Mombak Chief Executive Officer Peter Fernandez said in an interview. “That will be strategic for our business. It will allow us to raise more money for reforestation.”

Mombak has brought in investors including the Canada Pension Plan Investment Board and Capital Partnership Strategies for a reforestation fund. It’s the end buyers of the credits — Microsoft, in this case — not the investors that use them to offset emissions. 

For Microsoft, the startup’s use of cloud technology, machine learning and drones to pick out the most appropriate sites for forestation was particularly appealing. 

“Mombak has cracked the code on nature-based solutions in a way that many other providers can’t,” Marrs said.

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