Carbon removal suppliers scale up as AI data centers raise emissions

In short: Companies are planting more trees and selling more carbon removal credits, but suppliers warn they may not be able to keep up with the pollution linked to the AI boom.

What's going on

Chestnut Carbon, a US carbon removal company backed by investment firm Kimmeridge, says it has completed its largest tree planting effort so far. It planted nearly 24 million trees between November and April.

The company says this expansion doubles its land area to almost 70,000 acres used for new forests. It has now planted almost 50 million trees since 2022. Chestnut says its project area is about five times the size of Manhattan.

Chestnut sells “carbon removal credits,” which are certificates companies buy to claim they have removed a certain amount of carbon dioxide from the air. You can think of it like paying for a clean-up service after making a mess, although the clean-up can take years to fully happen.

Chestnut signed a large long-term agreement with Microsoft in January 2025. Over 25 years, Chestnut is expected to deliver more than 7 million tonnes of carbon removal credits.

Chief executive Ben Dell said demand is spreading beyond big tech firms. He said banks, retailers, consultancies, and industrial companies are becoming more active buyers.

What to watch

Dell also warned there are not enough “high-quality” credits available, partly because prices are weak. This matters because AI data centers need a lot of electricity, and much of the new power being built for them is expected to come from natural gas.

Global Energy Monitor estimates the US had almost 252 gigawatts of gas-fired power capacity in development last year, and more than a third of it was for data centers. The market could also face pressure after Heatmap News reported Microsoft paused future carbon removal purchases, and BloombergNEF said Microsoft made up 93 percent of purchases in 2025.

Source: Financial Times