Microsoft is funding a bet on mud: Inside the race to rewet 23 square miles of North Carolina peat before it dries out and burns

Warblers and sparrows call across the treetops at sunrise. Deer browse the shrubs. Black bears turn over roots for insects. Above ground, this stretch of North Carolina's Inner Banks looks like farmland, cotton and soybeans and corn running to the horizon.

The reason scientists and investors have converged on this 60-square-kilometre tract is underneath it: dense, spongy peat, up to five metres deep, the Associated Press reported.

Decades ago, an abandoned farming venture cut 80 kilometres of ditches through the site and drained the water out of soil that had taken thousands of years to accumulate. That left it exposed to drought and fire, altered the habitat, and turned a carbon store into a carbon source. The site now emits about 130,000 tonnes of carbon dioxide a year.


"Our goal is for perpetuity to conserve these lands so they can't become oil and gas fields, so they're not mined for phosphorus or turned into parking lots and shopping centers," Tripp Wall, chief executive of the Colorado-based company Pantheon Regeneration, told AP. He described peatlands as underappreciated systems that had been climatologically resilient for 10,000 to 15,000 years "until we screwed them up."

Why peat matters more than forest

Peatlands cover roughly 3% of the planet's land surface. They hold close to a third of all soil carbon, which is about twice as much as the biomass of every forest on Earth combined, according to the UN Environment Programme.

The mechanism is simple. When peat is waterlogged, decomposing plant matter sits in an oxygen-starved environment and the gases stay trapped, while the vegetation on the surface keeps pulling carbon dioxide out of the air. Drain it and the process reverses.

That reversal is now a significant emissions source in its own right. UNEP's Global Peatlands Assessment put emissions from drained and degraded peatlands at around 4% of annual human-caused greenhouse gas emissions, from an area equal to roughly 0.4% of the world's land surface. The AP report cites a higher current figure of about 6% of the annual global total.

Two-thirds of temperate peatlands, mostly in Europe and the United States, have been dewatered. About 45% of tropical peatlands have been similarly disturbed. Boreal peatlands in Canada and Russia remain roughly 90% intact but face thawing permafrost, intensifying fires and pressure from mining and critical minerals exploration.

Only 17% of the world's peatlands sit inside a protected area, according to a study published in Conservation Letters, the journal of the Society for Conservation Biology, in February 2025. For comparison, protected areas cover 38% of tropical forests, 42% of mangroves and 50% of saltmarshes.

"This is the black gold"

Neal Flanagan pushes a metal tube down through roots and buried logs until it sinks about a metre, then pulls out a core packed with black soil. Near the top it is dry, full of dead fibres from wood fern and blueberry. The middle is crumbly and odourless, flecked with charcoal from old fires. The saturated bottom is half carbon and has the consistency of axle grease.

"This is the black gold," said Duke University ecologist Curtis Richardson, letting ancient peat ooze from his fist. Its "magnitude and importance cannot be underestimated," he told AP.

The North Carolina variety, called Pocosin peat, formed from coastal pine forests and evergreen shrubs decaying over millennia. Domed peatlands of this type exist only along the Eastern Seaboard. In North Carolina alone, 17,700 kilometres of canals drain peatlands into coastal estuaries, Richardson said.

Fires that burn underground for months

Saturated peat is close to fireproof. Only surface vegetation and a few inches of peat burn, releasing nutrients and regenerating seed banks.

Dry peat is a different proposition. Fire moves underground and can smoulder for weeks or months, drying out and consuming even the saturated layers below.

A 2008 fire that started during a drought burned above ground for three months and smouldered underground for four more, damaging over a quarter of the neighbouring Pocosin Lakes National Wildlife Refuge and dropping the ground level by several feet in places, refuge manager Sarah Toner said. Where water-level restoration had already begun, the fire burned less deeply.

A more recent fire burned about 800 hectares nearby four years ago, lowering the ground by half a metre in places. The North Carolina Forest Service and other agencies put it out in roughly three weeks by pumping water from nearby lakes.

"We'll lose 5, 6 feet of peat in a matter of weeks, which equates to millions of tons of carbon loss, ancient carbon loss that we simply can't ever get back in human lifetimes," Richardson said.

That risk is why Pantheon is prioritising drained sites over intact ones. "There's this urgency to start with what's degraded now," Wall said, "before it goes away."

The business model

The restoration itself is not novel. Pantheon plans to block the ditches to raise the water table, then remove invasive species and replant native grasses and flowers, an approach modelled on projects run by nonprofits and government agencies, including at the adjacent 453-square-kilometre Pocosin Lakes refuge, one of the largest peatland restorations in the United States. That refuge supports red wolves, yellow pitcher plants and Atlantic white cedar, and has become a stopover for migrating tundra swans.

What is different is how Pantheon intends to pay for it. The company plans to sell carbon credits to technology companies and other corporations offsetting their own emissions, then use the proceeds to restore and permanently conserve about 4,047 square kilometres of peatland from Virginia to northern Florida over the next decade. Microsoft is among the investors providing initial capital for land acquisition, Wall said. Each credit represents one tonne.

Carbon credits carry a reputational problem. Over the years, some programmes have been found to overstate how much carbon they captured, and others were outright fraudulent.

Pantheon says its credits will be scientifically verified, drawing on Richardson's decades of data on carbon loss at the site, continuous groundwater monitoring, a tower measuring gas absorbed and released, computer modelling and core sampling, with results checked by an outside third party.

What comes back

Steve Apfelbaum, a plant and animal ecologist running breeding and migratory bird surveys at the site, stops his SUV on a rutted lane to listen. He picks out prairie warblers, a species in decline.

"We heard hundreds of them today," he said. "What that tells me is that this ecosystem is really important" for their migration. He also hears Nashville warblers, which call from treetops but nest in cavities in the peat.

Native reptiles, plants, fish and insects should follow, said Vladimir Roosevelt, Pantheon's operations director. The company released a pair of red wolves two years ago that have since had pups.

All of it, Apfelbaum said, depends on getting the water back into the ground first, a solution he argued gets less attention than tree planting.

"We've all been bear-hugged and distracted by trees," he said, "when it's really soil and peat that hold the most carbon."

(With inputs from AP)