BELEM, Brazil (Reuters) -Google has agreed to finance restoration of the Amazon rainforest in its biggest deal yet for carbon removal credits, as Big Tech hunts for high-quality credits to offset emissions tied to energy-hungry data centers.
Google and Brazilian reforestation startup Mombak told Reuters the deal would offset 200,000 metric tons of carbon emissions. That is four times the volume of a pilot offtake agreement in September 2024 with Mombak, Google's sole provider of forestry carbon credits.
Both companies declined to comment on the value of the deal.
The agreement highlights how Big Tech is looking for ways to soften the climate impacts of its huge investment in power-intensive data centers for AI, driving demand to offset carbon emissions through Brazil's nascent reforestation industry.
Last year, Alphabet's Google committed more than $100 million to an array of different carbon removal technologies, from enhanced rock weathering and biochar to direct air capture and a project changing river acidity.
But when it came time to double down, it was hard to beat the efficiency of planting trees.
"The most derisked technology we have to reduce carbon in the atmosphere is photosynthesis," said Randy Spock, Google's head of carbon credits and removal, citing the process by which plants use sunlight, water and carbon dioxide to produce oxygen and glucose.
Brazil, which is hosting the United Nations climate summit known as COP30 in the Amazon city of Belem this month, has touted the talks as the "Forest COP" to promote conservation efforts such as a proposed new fund for tropical forests.
Norway, Indonesia and Brazil have committed $5 billion to the Tropical Forests Forever Facility, officials announced on Thursday.
PUSH FOR CREDIBLE OFFSETS
Much of Google's greenhouse gas emissions come from the electricity it buys for its data centers and offices. Those so-called market-based scope 2 emissions more than tripled from 2020 to 3.1 million tons of CO2 equivalent last year, according to the company's latest environmental report.
Google has steered clear of REDD credits, Spock said, which reward developers for preserving parts of the forest that would otherwise be destroyed. That market has been rattled by alleged fraud and ties to illegal loggers in Brazil.
"The reason we quadrupled down on Mombak is they've got a very credible approach," he said.
Mombak, which turns degraded pastureland back into jungle, is benefiting from a "flight to quality," its co-founder and Chief Executive Officer Gabriel Silva said.
"Buyers were previously buying carbon credits but didn't know what they were buying. So they got involved in poor-quality, sometimes fraudulent projects," he said.
To raise the bar for nature-based carbon removal, Google joined forces last year with Meta, Salesforce, McKinsey and Microsoft, the biggest buyer to date, creating a group of buyers called the Symbiosis Coalition.
The coalition, which said on Thursday it had expanded to include Bain & Company and REI Co-op, has vowed to contract over 20 million tons of nature-based carbon offsets by 2030 that meet its more rigorous scientific standards.
That includes demands for conservative and transparent carbon accounting standards, long-term preservation and benefits for biodiversity and local communities. Of 185 projects reviewed by the coalition, Mombak's is the first to meet those standards.
Brazil is the country with the most projects seeking the coalition's endorsement, said Symbiosis Executive Director Julia Strong, adding that she expected more to clear the bar soon.
Still, a scarcity of credits meeting the highest standards - and the deep pockets of those willing to pay for them - have pushed up prices. While REDD credits can retail for under $10 per ton of carbon dioxide offset, Brazil's new reforestation startups have fetched more than $50 and even $100 per ton.
"Companies are getting more efficient, in terms of producing at lower prices. We are on that path," said Silva of Mombak. "But right now there's way more demand than supply."
(Reporting by Brad Haynes; Editing by Sonali Paul and Nia Williams)
