Biochar: digging for black gold

Stuck in a rut?

European farming is facing a triple dilemma: little to no profitability on unproductive land (that some argue should never have been cultivated in the first place), the requirement to decarbonise as a sector, and - particularly when traditional subsidies are removed (e.g. UK Basic Payment Scheme turning into Environmental Land Management (ELMs) - the real need to innovate and survive.?

Switching unproductive land to biochar production - via pyrolysis through a high quality, closed loop industrial system - may well represent a once in a generational opportunity to be profitable and be a core part of the sustainable agricultural revolution. For a global agri-food sector responsible for c.30% of greenhouse gas (GHG) emissions and 60% of lost nature around the world, it also offers a rare silver bullet. Owing to simultaneous high demand for quality carbon removal credits, a decarbonised farming sector could well benefit from the ￡ billions on offer from the likes of Frontier Climate, the carbon removal consortium funded by Stripe, Alphabet, Shopify, Meta, McKinsey. For those that don’t try something different, loss making territory post ELMs type reforms will likely become the gruesome norm.

Understanding biochar’s potential?

Biochar is a highly porous, stable form of charcoal produced through the process of pyrolysis, which involves heating organic biomass in the absence of oxygen. This technique results in a carbon-rich substance that can then be concentrated and permanently stored underground. With scientific rigor and robust processes - high grade equipment, the right feedstocks, temperature, particle size and heating - biochar can contain maximum quantities of CO2. The permanent storage repository stabilizes the biochar and prevents CO2 emissions, offering easy MRV (monitoring, reporting and verification) and preventing any collateral environmental impact. Whilst this industrial process can be decentralized and ‘on farm’, it varies hugely from traditional ‘Kon Tiki’ kiln biochar, often found in rural tropical conditions, and where small amounts of biochar can be produced, albeit storing less carbon. By incorporating biochar into agricultural practices - often creating significant clean energy as a byproduct - farmers can also enhance soil fertility, improve water retention, and sequester carbon differently, but in a similarly long-lasting manner. This lesser scientific biochar has given it a bad reputation in carbon sequestration terms, perhaps unfairly, and one asks if the main farming market has therein missed a trick.

Solving the carbon removal conundrum

To avoid climate catastrophe, carbon removal is now essential. But whilst carbon removal demand is robust, the supply of high quality, trustworthy CO2 removal credits (CDRCs) is scarce, and barely matches the ‘flight to quality’ seen in 2023 as large corporations scare away from perceived less trustworthy nature based offset. This unmet need could be solved through a vast, untapped supply of farming acres - with 10% of UK arable land, for example, representing almost 0.5 million hectares - and with these biochar credits, assuming robust scientific process is followed, becoming a gold standard (rather like the revered Woodland Carbon Code).

How would it work on large farms in practice??

A large farm might be able to take its least profitable land out of traditional production - in forums held by industry bodies, e.g. Agri-EPI, this is regularly estimated at 10% of any given farm - and instead plant feedstock, such as willow wood chips. For a sizable return, and to fully leverage pyrolysis capacity, this might cover 200 hectares, ? of which needs to be harvested each year (with annual feedstock amounts of approx 1300 tonnes). Alternatively, an existing mixed woodland area of around 500+ hectares could be thinned out annually and produce an equivalent high quantity of biomass. That feedstock would be planted, harvested, and fed into the pyrolysis machine weekly. This thermal decomposition generates both biochar and energy in the process, locking in CO2 into a stable form. An independent third party (e.g. Verra, if they can sort out their muddle) would then verify the carbon removals, before they are listed on an exchange, available for sale to a corporate buyer. The CDRCs are then recorded on a registry to guarantee fidelity and prevent double counting - see innovator and science platform Isometric as a good example of a neo CDR registry with the science know-how to drive transparency and real results.

How might the unit economics stack up for farmers?

1. Initial capex on equipment installation is expensive at circa ￡1-2 million, but has attractive financing options, and can fit inside an existing barn structure. Micro pyrolysis is inevitable at some point, too;
2. Carbon sequestration: biochar has the remarkable ability to store carbon in the soil for hundreds, if not thousands, of years (see Department of Energy Net Zero guidance). This is one of the most concentrated and most easily verifiable of all carbon mass-storage solutions, offering up to circa 50,000t CO2e stored per hectare on the example 200 hectare site.
3. In becoming active participants in carbon offset markets - through tested exchanges like Puro Earth - farmers might expect to earn ￡200 per CO2T for the credits alone (see latest JP Morgan deal pricing), with an average 200 hectare site being able to generate ￡200k per annum (assuming 1000 CO2t is created).
4. Derivative energy and waste management savings: biochar production creates electricity as a byproduct, and can also act as a viable solution to disposing crop residues, manure, and forestry waste. As farm vehicles electrify - and with charging sources often disconnected from remote farms - onsite generation and storage is optimal. On large farms, particularly with high value, fresh produce, these energy savings should be ￡100-150k per annum in addition.??
5. Biochar as a product: a potential organic replacement for synthetic fertilizer, biochar conditions the soil and enhances its chemical and biological properties, albeit this generates lower income and carbon storage than the former uses.?
6. As well as generating attractive new revenues, a biochar installation at a large farm should have a <7 year payback at current energy market prices (on par with the best of solar), and with a 20-25 year machine life.??

A bullish investment case for biochar adoption in farming

• Diversification of farm income: post ELMs, UK farming will be under pressure like never before. The same is true in Europe. Biochar adoption is a simple diversification strategy that will mitigate input price rises, commodity swings and other shocks to the system.?
• Biochar installation could follow the profitable template offered by Anaerobic Digestion (AD) biomass plant take up, with 1,000+ sites now across the UK (requiring 140,000 hectares for feedstock), and with many large farms who made this bold switch earning ￡ millions in profit post 2022 energy crisis price hikes.
• Access to government incentives: public money is moving away from industry support and being funneled into rifle shot, high impact climate change projects. Farmers may well be able to leverage various grants, subsidies, and tax incentives aimed at promoting biochar production.?
• Improved resilience: both on an individual farm P&L basis, as well as on European national net zero transition level, biochar production achieves a number of important macro and micro goals. By investing in biochar production, farmers can future-proof their operations and improve their ability to adapt to a changing climate.
• Unit economics: as shown above, these now stack up for farmers, even in high cost of production countries such as the UK.?
• Some pattern recognition now exists for a new biochar industry to emerge:?Solar has gone mass market in Europe and the UK (together with the software solutions to install, finance and monitor them, such as Enpal or Glowb). Biochar can emulate its design, finance, installation, aftermarket model;Marketplaces like Agreena are actively matching buyers with carbon credit projects on European farms, showing that farmer take up is possible;?Biochar itself has gone more mainstream, with robust demand on the exchanges for credits - see Klarna in Cambodia and JP Morgan’s latest purchases.

Other biochar start ups are fast emerging:

• Carbon Future (German end to end CDR marketplace platform)
• Carbo Culture (Finish converter of woody residues into biocarbons)
• ecoLocked (German green cement that uses biochar as a source)??
• Perpetual Next (Dutch producer of renewable carbon, biochar, green gasses and green hydrogen from residues)
• Climate Robotics (US autonomous robotic trailer - called a Pyrobot - that turns agricultural waste into biochar)
• Planboo (Swedish carbon removal company, tracking tropical Biochar)?
• Novocarbo (European trading platform for biochar, including derivatives)
• Supercritical (Lightspeed backed UK start up helping companies hit net zero though carbon removal, including Biochar)
• BeZero (a global carbon ratings agency, with a specific Biochar credit)

Can these technologies really make a significant difference to climate change?

Some critics push back against efforts to accelerate carbon removal technologies, saying that at best, it is only a partial solution, and at worst, it may impede a global transition to clean energy by allowing the fossil fuel industry to carry on polluting. By using less robust storage technologies, the biochar space has been further handicapped by criticism that it doesn’t always work in true decarbonisation terms. We know this is not true for the gold plated pyrolysis and burial method, and is therefore a true carbon reduction option. And in a wider context, most agree that we need to pursue multiple strategies to slow climate change. Indeed, the current net zero trajectory will leave us falling woefully short of all base targets by 2030, unless we triple down on carbon removal (and fast). Regardless of opinion, if the UK Government has a target to capture and store 20–30 MtCO2 (including removals) per year by 2030, it will go a long way if 500-1000 UK farms take up this technology and are each able to store 1000 CO2t per annum.

“There's gold in them thar hills”

The case for European farmers to embed biochar production into part of their operations is conclusive on a number of different levels. Ultimately, biochar represents a golden opportunity that sits at the intersection of two different ￡ multi billion industries - 1) farming and 2) carbon removals - and one that countries such as the UK are well positioned to capitalize on. As we understand more and more about high grade biochar production, and with the on unit economics now stacking up, it feels like a missed chance for large farms that don’t consider it, especially as the world lurches (temporarily?) away from offsets and clambers for triple A rated CCDCs instead.?

As ever, the key here will be scientific fidelity, and it simply won’t work unless the CRDC MRV component is beyond reproach, or indeed if this market appetite from buyers suddenly drops off. The climate alternative to not pursuing these sorts of carbon removals options seems bleak, as does the business opportunity cost of not diversifying revenues for the long term.?

Let’s dig for black gold (just not coal)!