Microsoft has extended a carbon removal agreement for bio-energy with carbon capture and storage (BECCS) firm Stockholm Exergi.

The revised agreement will increase the quantity of carbon removal credits from 3.33 million tons to 5.08 million tons. The credits will be generated by Stockholm’s BECCS project in Värtan, Stockholm. The revised deal comes almost a year to the day of the original agreement. The ten-year deal is still expected to start in 2028, following the commissioning of Stockholm Exergi’s biomass plant.

“The extension of our existing agreement with Microsoft is a huge vote of confidence in our BECCS project and Stockholm Exergi’s ability to deliver sustainable permanent removals. It is also a strong validation that climate frontrunners on the voluntary carbon market continue to stay focused on mitigating climate change and contribute to getting the removals industry off the ground,” said Anders Egelrud, CEO, Stockholm Exergi.

Stockholm Exergi initially installed a small carbon capture project at its 153MW combined heat and power plant in Sodermanland, Sweden. The pilot, announced in 2019, aimed to demonstrate the potential to capture up to 800,000 tons per annum from the plant.

Following the pilot, Stockholm applied for an environmental permit to deploy a larger unit, which was approved last March. Construction on the carbon capture unit, liquefaction, and intermediate storage is planned to start in 2025 and will be colocated next to the power plant. The plant is expected to be operational in 2028, and will cost an estimated $1.4 billion.

“Stockholm Exergi is executing against a bold vision to deploy new carbon removal technologies towards climate action. We are pleased to announce this expanded offtake, which in turn reflects our progress to meeting ambitious 2030 Carbon Negative goals,” said Brian Marrs, senior director for energy and carbon removal at Microsoft.

BECCS involves capturing and permanently storing CO2 from processes where biomass is converted into fuels or directly burned to generate energy. Despite its growing popularity, carbon capture and storage systems still face several hurdles, with general uncertainty around their business model and high costs from pilot projects raising doubts about their long-term viability.

Microsoft has signed numerous carbon capture offtake agreements to support its carbon removal agenda. In April, it signed an agreement with CO280, a Canadian firm that retrofits existing pulp and paper mills with carbon capture units to capture biogenic CO2 to purchase 3.685 million tons of credits over a 12-year period.

Microsoft has also signed several other carbon removal agreements this year. For example, last month, the company agreed to purchase 12,000 tons of CO2 removals from Enhanced Rock Weathering company Terradot.