Truterra launches TruCarbon program with $20 per ton credits sale to Microsoft

Senior market development manager Nick Reinke says the negotiated sale is “related to, but independent from” a broader relationship with the software provider established after a competitive process last year.

Land O’Lakes subsidiary Truterra has launched its TruCarbon program with a sale of carbon credits to Microsoft at $20 per ton of CO2 sequestered.

The total sum of credits purchased by Microsoft and the full acquisition price was not disclosed.

Truterra senior manager for strategy and market development Nick Reinke told Agri Investor Microsoft’s purchase is “related to, but independent from” a broader relationship the company established with the tech giant after it became the only US agricultural carbon removal program among 26 selected following a competitive proposal process last year.

Indigo Carbon, Cargill, Nori and others were among companies that submitted proposals, according to a Microsoft white paper.

TruCarbon uses the same Insights Engine analytic platform that Truterra deployed in a 2020 pilot with carbon marketplace Nori, which marketed credits derived from agricultural practice changes by farmers enrolled in its program at $15 per ton of carbon sequestered.

Reinke said while the Microsoft sale marks the official launch of its propriety carbon platform, Truterra will continue pilot projects and collaborations with Nori and others.

“We don’t see these things as mutually exclusive. We’re building for scale, especially from the farm side,” he said, explaining that Truterra’s aim is to build a coalition of stakeholders conducive to millions – rather than tens of thousands – of farmland acres enrolled.

“To scale supply here requires direct-to-farmer support for practice adoption in what are  some complicated changes that they might look to make and direct agronomic support to these farmers, who need to understand both what their opportunity is from a stewardship standpoint, but also what the market opportunity is.”

The $20 per ton price paid by Microsoft is the result of negotiations with Truterra for credits that will be delivered this summer. Reinke said future buyers of carbon credits through the TruCarbon program could pay different prices depending on evolving market conditions.

He added that Microsoft’s focus has been on the quality of scientific modelling underlying the credits and the broader set of “co-benefits” that can come with a holistic approach focused on more than carbon removal.

“Part of it is just helping corporates understand the art of the possible and what can be tracked,” Reinke explained. “When we look at it, it’s stewardship encompassing comprehensive soil health, profitability, water quality impacts, soil erosion impacts. Frankly, I think there will be ecosystem opportunities that come out of those other impacts as well.”

The credits Microsoft acquired from Truterra contributed to 1.3 million metric tons of carbon removals achieved through a series of purchases by the tech company in 2020, which included investments in areas such as forestry, bioenergy, biochar and direct air capture.

Microsoft president Brad Smith explained in a January blog post how those purchases fit within the scope of the company’s 2020 pledge to achieve net zero by 2030 and negate historical CO2 emissions since its 1975 founding by 2050.

He also described Microsoft’s imposition of a $15 per ton carbon tax in internal accounting and plans to include progress towards sustainability goals as a factor in executive pay, starting from its next fiscal year.

“It’s imperative we move away from paying for carbon avoidance and focus on paying for carbon removal,” Smith wrote.

“Reflecting on the state of the market today and our immediate need for carbon removal, nearly all the climate removal solutions we are purchasing are short-term and nature-based. The small remainder come from medium-term blended or big bets on long-term technology solutions. If we look at this work through our moonshot analogy, this is not the rocket that will take us to the moon.”