NextFin News - On January 15, 2026, Rubicon Carbon, a California-based climate finance firm, formalized a nine-year agreement to supply Microsoft with two million tonnes of carbon removal credits sourced from Northern Uganda. The credits originate from Kijani Forestry’s Smallholder Farmer Forestry Project, which mobilizes tens of thousands of smallholder farmers to plant fast-growing trees on degraded farmland. This transaction marks the first executed under a joint carbon removal framework established by Rubicon and Microsoft, and the deal extends through 2035.
The project is among the first to be approved under Uganda’s new Climate Change Mechanisms Regulations, a legal framework designed to enhance transparency and credibility in the carbon market. The agreement is part of a broader structure enabling Microsoft to purchase up to 18 million tonnes of carbon removal credits from Rubicon-supported projects globally. Microsoft, which has committed to becoming carbon negative by 2030, views securing reliable removal credits from the Global South as central to its climate strategy.
Kijani Forestry’s initiative not only contributes to carbon sequestration but also supports rural livelihoods by employing over 600 full-time staff and partnering with approximately 50,000 farmers. These farmers benefit from initial income through carbon finance as saplings grow and later from sustainable timber and charcoal sales once trees mature. Uganda’s government estimates that about 80% of rural households rely on firewood or charcoal, making commercial woodlots a dual solution for forest conservation and legal energy sources.
Uganda has lost over half its forest cover in the past 30 years due to agricultural expansion and charcoal production. Northern Uganda, recovering from decades of conflict, presents degraded land suitable for restoration. The carbon market offers a rare financing opportunity for such restoration efforts, which traditionally struggle to attract investment.
Microsoft’s direct engagement with project developers like Rubicon and Kijani signals a shift from reliance on secondary carbon credit markets to more streamlined, bankable contracts that reduce risk for project developers and farmers. Phillip Goodman, Microsoft’s Carbon Removal Director, emphasized the importance of high-quality nature-based removals that deliver both climate and community benefits.
Despite the promise, financing remains a significant bottleneck for nature-based climate initiatives in Africa. The African Development Bank estimates a $200 billion annual climate finance gap on the continent. While carbon markets are not a substitute for concessional finance, deals like this demonstrate their potential to fill targeted gaps when well-regulated and linked to measurable social outcomes.
Uganda’s Ministry of Water and Environment regards the Kijani project as a model for how national policy and private capital can synergize to scale community-driven carbon removal programs. The success of this model could influence similar initiatives in East African countries with comparable land and poverty profiles, such as Tanzania, Malawi, and the Democratic Republic of Congo.
Looking ahead, the partnership between Rubicon Carbon, Microsoft, and Ugandan smallholders will be a critical test of whether voluntary carbon markets can support large-scale land restoration aligned with Africa’s climate goals. If the credits deliver verifiable environmental and social impacts, this deal could redefine how global technology companies engage with rural communities on climate action, potentially catalyzing a new era of inclusive, nature-based climate finance.
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