Explore the significance of biochar in carbon reduction, its role in the voluntary carbon market, and why top corporations are investing. A must-read for policy makers, environmental consultants, and construction professionals.
Greenhouse gases, particularly carbon dioxide (CO2), are leading causes of climate change. With the urge to combat this challenge, various carbon removal strategies have emerged. Among them, biochar stands out for its potential, affordability, and nature-based approach.
Biochar, derived from waste biomass like crop residues or sawdust, is an effective way to capture and store carbon. The International Panel on Climate Change (IPCC) in 2022 acknowledged biochar as a vital solution for carbon removal.
Leading companies, including Microsoft, Google, and Facebook, are setting ambitious carbon reduction targets. Microsoft's goal is to become carbon negative by 2030, and they've even set aside a $1 billion "Climate Innovation Fund" for new climate innovations. In a collective effort, tech giants like Google, Facebook, Shopify, Stripe, and McKinsey established Frontier, committing almost $1 billion for carbon removal up to 2030. One key strategy they're looking at? Investing in biochar.
Biochar carbon credits are increasingly being traded in the voluntary carbon market. Platforms like Puro.Earth and Carbon Future offer biochar producers a venue to sell their credits. Much like organic certification for produce, selling biochar credits requires adherence to third-party certification systems.
For those considering the carbon credit route:
The price for biochar carbon credits can be referenced on platforms like Puro.Earth. As of May 2022, one ton of biochar was valued at around $105 US Dollars. Additionally, the revenue from carbon credits doesn't restrict the sale of biochar for other purposes, like soil enhancement.
The buildup of greenhouse gases in the atmosphere, including carbon dioxide (CO2), contributes to climate change. As a result, governments, international agencies, and major corporations are prioritizing its removal from the atmosphere. There are two options for carbon removal: one uses technology (such as "direct air carbon capture") and the other method includes "nature-based strategies," which are the focus of this fact sheet. Research shows that biochar, a nature-based strategy, has enormous potential to remove CO2 from the atmosphere as part of an overall climate change mitigation strategy (Lehmann et al. 20061). In 2022, the International Panel on Climate Change (IPCC) highlighted a variety of promising strategies to remove CO2 from the atmosphere2 with biochar cited as a very important pathway3.
Made from waste biomass such as crop residues, sawdust, or forest slash piles, biochar removes carbon at a significantly lower cost than technology-based options.
Though some governments are following a compliance model, investment through the voluntary market is on the rise, which is the focus of this document. Companies like Microsoft4 have ambitious goals to become "carbon negative" by 2030. In addition, the company has pledged to further offset all CO2 emissions dating back to the organization's founding by 2050. To achieve this goal, Microsoft established a $1 billion dollar "Climate Innovation Fund"5 to "accelerate technology development and deployment of new climate innovations through equity and debt capital." Google, Facebook, Shopify, Stripe, and McKinsey recently created a joint venture called Frontier and committed nearly $1 billion to pay for carbon removal6 through 2030. Companies are also purchasing biochar carbon credits as part of their strategies to become carbon neutral. This relatively new interest in biochar carbon credits is driving new investments in biochar companies.
Currently, biochar producers have two options to sell into the voluntary market: Puro.Earth7 or Carbon Future8. Other voluntary carbon programs are under development through Verra and the Climate Action Reserve. In general, voluntary carbon programs share some similarities with "organic certification." You may grow vegetables and not use any pesticides or herbicides during cultivation. At the end of the growing season, you may be 100% confident that you grew the crop organically. And you are probably correct. However, if you want to sell your vegetables and use an organic label, you cannot get that stamp of approval unless you have followed rules, procedures, and protocols established by an outside, third-party organic certification program. To become organically certified, you must register your product with a recognized organic certification body and pay the required product listing and administrative costs of setting up an account. The next step in the organic certification process will involve paying for a third-party certifier to visit your farm to make sure you have followed all the rules and procedures of organic production. When you can demonstrate that you meet all the organic certification requirements, you are given the approval to label your products as organic. Then you can sell your organic produce in the marketplace.
Carbon credit certification is very similar. To sell your biochar carbon removal credits to interested buyers in the voluntary carbon market, a biochar producer must enroll in a recognized third-party certification system. Before investing time in biochar carbon revenue potential in voluntary carbon markets, consider the following: • Participating in the carbon market has fixed costs associated with the certification process. Biochar must be of sufficient scale to cover those ongoing costs. In general, an annual production of at least 100 tons of biochar makes the carbon market feasible. • Current programs require biochar producers to report air emissions (including methane), operating temperature, and proof that up to 70% of the heat energy is for a productive use, e.g., displacing the need for fossil fuel. Hence small-scale biochar production systems are typically not eligible. • Most feedstocks used for biochar are eligible for carbon crediting. However, the raw feedstocks must be "biogenic" like forestry residues, wood chips, agricultural residues, and straw. Non-biogenic materials like tires, plastics, or municipal solid waste are not eligible.
Puro.Earth has various price indices for different types of carbon credits or "CORCs" on their website9. Carbon Future does not currently have a publicly available price index for biochar carbon credits on their website. However, they do provide individual project volumes available from biochar projects10. Puro.Earth has a price index instrument called "CORCHAR" (see graph below). The index provides up-to-date information on the price of biochar carbon removal credits. The Puro CORCHAR index is updated every 30 days. If interested, you can check the index periodically to understand the prices for CORCHAR. As of May 1st, 2022, the CORCHAR index price was 100 Euros per ton of biochar (about $105 US Dollars).
According to Puro.Earth publicly available biochar project records11, the number of CORCs per ton of biochar produced varies by biochar type and company. One CORC is equivalent to one ton of CO2. For wood feedstocks, the range of carbon credits per ton of biochar is 2.57 to 3.26, with an average of 2.83. Various factors influence the carbon credits from one ton of biochar produced, including the amount of fossil fuel inputs via fertilizers used to grow the feedstocks. Fertilizer inputs are typically associated with agricultural residue feedstocks but are not typically a factor for forest or mill residues. If a biochar producer listed on the Puro.Earth website is credited with 2.5 tons of CORCS per ton of biochar produced, and each CORCHAR credit sells for $100 per ton, then a third-party approved seller can generate $250 of CORC revenue per ton of biochar produced. Carbon credits are in addition to revenue from selling the biochar CORC buyers are purchasing the "carbon removal" benefit associated with the biochar product only. In other words, the CORC buyer is not physically taking possession of the biochar product itself. The biochar producer can still sell their product into the market (for example, to a farmer as a soil amendment). So CORC sales are an additional source of revenue for biochar producers above revenue from selling the biochar product. Certified biochar producers must provide documentation that the biochar they sell is going to an approved use (such as being added to compost or sold as an agricultural product). Biochar suppliers cannot sell CORCs if the biochar is diverted for use as charcoal or other energy production purposes (fired in a biomass boiler).