So much is happening in the world of biochar. It's both a physical product and can also be a more abstract concept called a "carbon removal". How is the industry balancing the divergent business logic of these two different markets, and what challenges and opportunities will it face?
In today's episode of Carbon Removal Newsroom, producer and guest host Asa Kamer interviews Myles Gray, the program director of the US Bicohar Initiative about their 2023 Global Biochar Market Report.
Biochar is responsible for a huge amount of currently delivered durable carbon removals. It's more shovel-ready than other forms of carbon removal, which have much higher CapEx requirements and are betting more on future cost-curves than present deployment. However, some participants in biochar production can face challenges from those concerned about additionality, among other issues.
The discussion covers the production scale, market dynamics, economic challenges, and the growing number of biochar producers, particularly in the Global South. Gray also highlights the importance of high-quality standards, the role of innovative business models, and the need for better market development for physical biochar to help scale the industry globally. Listen in to learn more.
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Resources
USBI's 2023 Global Biochar Market Report
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Full Transcript
Announcer: You’re listening to Carbon Removal Newsroom, a weekly show about current events in the world of carbon removal, from technology and innovation to policymaking and job growth. Brought to you by Nori, the carbon removal marketplace.
Asa Kamer: Hello and welcome to the June 11th edition of Carbon Removal Newsroom. So according to CDRFYI, in 2023, 94% of durable carbon removal deliveries were from biochar. Compared to other forms of carbon removal, biochar is technologically well understood, easy to access for a wide range of producers, and creates a useful final product. Production has taken hold in a wide range of geographies and economies, suggesting that a scaled-up CDR industry will lead to biochar being made all around the world. As biochar grows, industry groups like the International Biochar Initiative and the U.
S. Biochar Initiative are tracking that growth by surveying over 1,000 industry respondents. Welcome, Miles.
Myles Gray: Great. Before I get started, just thank you for having me. I really, really appreciate the opportunity to be on this podcast.
Asa Kamer: Absolutely. We’re very happy that you could join us today. Let’s start by taking a look at this report. Can you tell us a little bit about how the report was put together and what you were hoping to discover with this research?
Myles Gray: Yeah, absolutely. So the project was a collaboration between the United States Biotar Initiative and the International Biotar Initiative. And really we were hoping to do a few things, but key among those were to starting with developing high quality defensible estimates for global and regional biochar production. And really a part of this was to understand how many tonnes of CO2 are currently being removed from the atmosphere each year via biochar production. And we were really pleased. Towards the end of this project, we were able to collaborate with the authors of the state of the CDR report, which just came out earlier this week.
And so the data in that report for biochar derived from our market survey. Another goal was to better understand the key drivers of growth in the industry, key obstacles and key opportunities, really to hear from the biochar industry, but also other stakeholders engaged in the biochar industry. And then the final goal was really just to understand how we at USBI and IVI and some of the other regional biochar associations can better serve the biochar industry to reach the scale that we all believe it can. We’re trying to help the industry grow and we really need to know how best to do that.
And this survey provided a lot of information that we’re using in our plants. And the survey was done in a pretty straightforward way. We developed an online survey. It was about 15 minutes long, and it was a dynamic survey that routed respondents through different tracks. We spent a lot of time on front-end communications to really drive interest and participation, and that was pretty effective. We got over 1,000 respondents to a 15-minute survey, so we were really pleased with that. And if any of you listening responded to the survey, I just want to thank you and encourage you to participate again in the next version because we really hope this will become an annual survey.
Asa Kamer: Cool. And that’s actually a really interesting kind of segue to my next question, because I’m just thinking, you know, of all the quote unquote durable solutions, I don’t know if there are any other ones that could complete a survey with a thousand respondents, you know. So I think that says something about biochar, just how much of an established community already exists and has existed for a long time. And so to that point, how big of a share of global CDR is biochar? You mentioned that you guys were looking at that and you gave that information to the state of CDR report.
So talk about that big global share and why do you think that is?
Myles Gray: Yeah, I’ll most focus on durable CDR within the voluntary carbon markets. And that’s the type of data that’s tracked by CDR. FYI, which is the best repository I know for that kind of data. So based on 2023 numbers from CDR. FYI, Biofair represented 93% of deliveries in 2023, but only 7% of purchases. So this tells me a few things. First off, you know, Biofair is shovel ready. So it’s able to deliver credits today to purchasers who need those credits today. But I think it all, a little bit of the fact that the industry I think could do a better of really driving in biocharging.
And, you know, for instance, we would love to see that 7% of purchases number come up. A lot of those purchases. In 2023, we’re for novel CDR technologies for sort of long-term purchase agreements for credits that might not be delivered for five or 10 years. But we would love to see some organizations put some bigger bets on large-scale biochar production facilities to drive up those purchase numbers. And I will say that data from Q1 in 2024 from CDR. FYI shows that biochar production Continues to represent more than 90% of deliveries, but we’re also seeing Biochar account for 80% of sales in Q1 as well.
So we are starting to see that gap shrink. And within the durable CDR space, I think there’s a number of reasons why Biochar is performing really well. First off, it’s shovel ready, as I already mentioned. A lot of companies want to produce CDR credits today or procure them today. To offset their emissions. This is in line with sort of SBTI goals or other climate commitments. But there’s a lot of purchasers who need to be able to buy biochar today. Second, pricing for biochar, at least compared to other durable techniques, is pretty reasonable.
And it’s come down substantially in the past several years. And now we’re seeing prices for biochar CDR credits between about $125 and $175 per tonne of CO2. Now, that’s still very expensive compared to nature-based solutions, but it’s much cheaper than a lot of other novel technological CER technologies. And pricing does matter. I know there’s a lot of enthusiasm for... Driving dollars to some of these technological solutions to things like direct air capture, bioenergy with carbon capture and storage and others. Pricing matters. I’d be surprised if there’s all that many CDR credit buyers out there that are really ready to throw four or five, six, $700 a tonne at these different technologies.
So I think what this data shows me really is that pricing does matter and it’s going to continue to matter. Another piece is that biochar is gaining increased recognition as a long-term storage technology. There’s a lot of new science coming out showing that at least for industrial facilities, the majority of biochar is likely durable for at least 500 years, and in many cases, much longer than that, and at least durable enough over climate-relevant periods of time. Finally, Bioter provides a lot of co-benefits. A lot of CDR credit buyers are now interested in co-benefits and Bioter really leads the way on co-benefits for things like improved waste management, Can be incorporated into sort of biorefinery concepts that produce electricity or fuels.
And on the downstream side, biochar improves soil health. It improves crop yields, reduces fertilizer needs. It can also be used as a replacement for different high-carbon materials, things like peat and horticultural media. It can replace a portion of cement and concrete. It can replace carbon black in a range of products like plastics and inks. So, you know, there’s a lot of ways that biochar can have other benefits beyond CDR. And at the current point, I think biochar really sits in this sweet spot between being high quality, durable, low cost, and really available now.
Asa Kamer: That’s a great answer. And that was super thorough. Can I ask? This is a bit of a tangent, but why are the prices for biochar going down? I mean, it seems like it’s a pretty well understood thing how to make it. So what do you think is helping certain people bring their prices down?
Myles Gray: I think there’s a few factors. One of them is sort of sophistication of business models. So there are ways, there are at least three and oftentimes four revenue streams that a biochar producer can create. So they can sell biochar carbon credits. They can sell physical biochar, which is typically decoupled from the credit, usually sold to someone separately from the credit. Biochar facilities can also produce electricity or heat, which has value. Some of them are even moving into biofuels and sustainable aviation fuel production. And then the final potential revenue stream is actually waste management.
Some biochar companies are now able to get paid to Take waste feedstock that has a cost, that has a high disposal cost. An example is wastewater treatment plant biosolids. Wastewater treatment plants have to pay to get rid of those biosolids in many cases. And so there’s an opportunity to either get feedstock for free or even get paid to take it in some situations. So I think it’s monetizing these co-benefits makes it so that the CDR costs can come down.
Asa Kamer: Wow. That is pretty incredible. And you’re kind of leading me to some stuff we’re going to talk about a little later in terms of the market for physical biochar, which is, I think, a really interesting topic that we definitely need to get to. But sticking with the report and with voluntary carbon markets, reading the report, it said that the market for biochar credits is thriving, which is definitely a good word to see when we’re talking about carbon removal. So is demand outstripping supply right now? And are there biochar credits going unsold at R or is everything getting snapped up?
Myles Gray: Yeah, it’s a good question. I’ll start this answer by just first pointing out that I’m not an expert in CDR marketplaces or contracts for these credits, but I can provide some insight based on a lot of conversations I’ve had. Before I do that, I want to introduce this concept of industrial versus artisanal biochar production. So industrial systems are these highly engineered. They’re typically permanent systems. They’re centralized facilities where feedstock is either available in large volumes already or it’s shipped in. And they typically have, they produce very high quality biochar. They have very high quality MRV systems.
Artisanal biopair production is typically done in more place-based approach where a small farmer or timber crews out in the woods will produce biochar using these small kilns. Some of them are even mobile and portable, and they’ll typically produce them from feedstock available at a single location. And then the biochar itself will be spread at that single location. These are really cool systems, but they have some real deficiencies in terms of MRV. It’s hard to do really high quality MRV for some of these smaller scale portable units. So in the industrial systems right now, at least, CDR credits are the easy part of the business model for most biochar companies, particularly those with That meet additionality requirements and have really good MRB.
So I haven’t heard of any industrial biochart producers having significant problems selling their CDR credits. I have heard a little bit, uh, around artisanal producers that there is some difficulty around selling those credits, potentially because of MRB requirements. Um, And I think there’s probably a scenario in which these two different types of biochar production kind of diverge in the future into sort of different segments of CER.
Asa Kamer: Interesting. And we’ve had a few organizations and companies on the show over the past couple of years working on doing sort of decentralized MRV for artisanal biochar producers. So that’s sort of an interesting frontier in terms of Would you be able to bring income to places that might not necessarily be getting it or doing biochar otherwise, but at the same time you have to validate that the carbon removal is actually happening, which is more challenging than at a centralized industrial facility. So props to everyone out there working on it and we’ll keep covering it.
Miles, again, you’re kind of one step ahead of me here with the information you’re giving. But so my next question is, and this actually surprised me from the report, you found that a majority of producers of biochar don’t produce carbon credits. And I think it’s a slim majority, I think like 48% maybe like do. So it’s around 50-50. But why do you think that is that so many aren’t doing carbon credits? And is it possible to generalize like who is selling carbon credits and who isn’t? Or is it just all across the board?
Myles Gray: Yeah, I’ll start by saying I was really surprised that finding was not at all expecting that. I think there’s at least a handful of reasons. The first is related to additionality. So there are four current or existing CDR methodologies for biochar. All of them require that carbon finite, that is the purchase of CDR credit, was the reason that the action occurred. So that this biochar would not have been produced if there was not a carbon credit buyer. So that’s the financial additionality requirement. And what that means for biochar is a couple of things.
First off, biochar has been around since, oh, 2005 with a bunch of biochar producers starting in the around 2010. So there’s a lot of these companies that have been producing biochar for years, but the first biochar carbon credits were not developed until I believe 2018 or 2019. Wow. So any biochar company, a lot of these early adopters, and just to point out, all these early adopters were doing it for all the right reasons. They were doing it for climate change reasons, for sustainability reasons, for soil health reasons. Many of these early adopters are prohibited from selling carbon credits associated with that production.
So that’s one thing. And I have some serious problems about that. I think it’s an unfair system. And I think it punishes a lot of these early adopters who really grew the industry and did incredible service to the rest of the biochar industry. So I think that’s a problem. There’s also a decent amount of biochar that I consider to be biochar by accident. And this, this includes biochar produced by some of the biggest producers in the world. And what I mean by biochar by accident is that they’re extracting Biochar from existing biomass energy facilities.
So there’s a whole fleet of biomass energy facilities in the United States and elsewhere. A lot of them are burning timber waste. So wood chips, sawdust, bark, things like that. Those facilities are aiming to produce electricity. So the best case scenario is that they combust 100% of that feedstock, but no biomass energy plant actually combusts 100% of the feedstock. There’s always a small portion typically in this sort of one to 3% range that, that isn’t combusted. So a lot of this biochar, it is biochar. I mean, for all intents and purposes, it looks the exact same, performs the same.
It’s biochar, but there, a lot of those facilities are excluded from participating in the voluntary carbon markets again, because of additionality. Um, The second issue is just related to scale. The biochar industry has a lot of different scales all the way from those artisanal producers. There are some medium scale producers and there are the major industrial facilities that are producing 10,000 tonnes a year of biochar. So a lot of the small scale facilities, you know, there are transaction costs associated with CDR credits. There are MRV requirements, there are staff time and credit agencies and other costs.
And for the most part. Those credit agencies are really only looking at deal sizes of at least about a thousand tonnes per year or more. And there are many biochar producers that are far below that. So if you’re a small scale producer producing 50 tonnes a year, a lot of Harvard credit agencies today are probably not going to consider you for a CDR credit. There’s been a lot of progress in this space among these aggregating companies. So there are some intermediaries now that are working to aggregate biochar carbon credits into sort of bundled credits from a number of small scale producers.
So there’s a decent amount of progress there. And I’m really looking forward to more progress in that space to help get these smaller scale producers into the voluntary carbon markets. And then the final piece is probably just time. There’s been a large increase in biochar production. And in conversations I’ve had with some different producers who recently started production, it takes a bit of time after starting production before you actually start selling carbon credits. It can take six months, it can take 12 months. So I think there’s a decent number of respondents who probably saw that question that we posed in our survey and said, oh, I’m not actually generating revenue yet from biochar carbon credits, but it might be because they haven’t actually sold any yet.
They might be intending to and planning to and completely capable of selling them, but they just haven’t gotten the paperwork and transaction completed yet.
Asa Kamer: Interesting. Yeah. Wow. You said a lot there. And hearing, you know, describe it, it’s definitely helping me get a sense of what kind of issues as an industry group are. You know, where you guys probably come in terms of supporting biochar producers and kind of growing the industry and what some of these bottlenecks are and, you know, pointing out issues that producers have. And I do think that, you know, it’s really interesting hearing you describe the way the biochar producers that have been doing it for a while are excluded from carbon markets.
And I think some of that strictness around additionality is something that, you know, our host, the normal host of the show, Radhika, has brought up a lot. And I think that’s a tension she... is concerned about as well. And it’s kind of led to some interesting conversations on the show. So I definitely think that’s sort of a lurking issue in carbon removal. And to the folks that are maybe more the gatekeepers on the other side and having those strict requirements, I also understand where they’re coming from. So I personally haven’t seen it as much of a clear cut issue, but it’s definitely a tension, especially when You know, we’re seeing all these exposés of like these massive forestry projects that are sucking up a lot of the carbon offset money, just being completely not removing any carbon and, and being terrible in a lot of ways.
So it’s, it’s a shame that, um, to keep out folks who, like you say, are growing the industry and probably doing it really well since they’ve been doing it for, you know, 15 years. So anyway, that’s, that’s my tangent. Um, but we’ll get back to you. I want to talk some more about the, the physical biochar, you know, the actual Prada, because like you said, Companies can sell a carbon credit, but then there’s another revenue stream which is actually selling the biochar, which as you’re describing is maybe the reason a lot of people have been doing it since well before there was even an option for offset credits.
And I guess why people have actually been making biochar for thousands of years is because it’s a useful product. So your report identified that Developing high quality markets for physical biochar is an essential obstacle that needs to be overcome to scale the industry. So how do you think that need to happen? And what do you think will actually help increase demand for physical biochar?
Myles Gray: Yeah, absolutely. That was a finding that I was pleased to see, something that I’ve thought for a while, and I continue to believe that this is the number one obstacle dealing the industry. And just to relate it back to the CDR credits, as I mentioned before, it’s monetization of these co-benefits is really the pathway for biochar to be able to deliver these low cost, high quality credits. So I think there’s a couple approaches that can work. I mean, obviously there’s many, but I’ll focus on a handful here. I think first is to really take the focus off of biochar and refocus on developing high quality products with biochar as an ingredient.
To date, a lot of the biochar industry has been really enthusiastic, but they’ve been mostly enthusiastic about producing biochar. And around the benefits of biochar and things like soil health. And these are all good things, but most end users are not typically all that concerned about environmental benefits of products. They care a whole lot more about whether the product they’re purchasing is high quality and a good value for their particular end use. And I’m seeing a lot of motion here and a lot of good positive signs. The industry really is starting to move in that direction with products like biochar enhanced fertilizers, concrete additives, additives to inks and plastics.
So we’re seeing some good signs, but I think there’s a lot more work here. Another way we can do this is by engaging with large corporations to get them to start distributing biochar products and investigating and building product lines around biochar. You know, these large corporations, they have large well-established distribution channels. They have the ability to dramatically increase market demand for biochar, particularly in the agricultural space and also in the industrial space. And a lot of these companies in industry and agriculture, they’re aware of biochar, at least in their R&D departments.
But to date, a lot of these companies haven’t really engaged with the biochar industry because they haven’t had A credit worthy biochar producer that can produce large volumes of biochar to sit across the table from them. So it wouldn’t make a whole lot of sense for multinational fertilizer companies who have developed a biochar product line back in 2012, because who would they have bought that biochar from? And we’re starting to see that problem go away, both because the biochar industry is growing in scale, but also because we’re getting better quality standards.
And that brings me to my next point is really developing out high quality laboratory and material standards for biochar. It’s really a key obstacle. So there are existing standards. They’re hard to use in many parts of the world. They’re reliant on German laboratories. So right now a biochar producer in most parts of the world have to ship their samples to, to like a handful of labs in Germany. We’re working to establish an American national standard, which is an ANSI standard. So that’s a major focus of my time right now at USDI is to develop an ANSI standard for biochar, which is ANSI standards are ubiquitous in pretty much all other industries.
So we’re really looking forward to this. We think it’ll increase trust and help larger companies and smaller ones really build product lines around biochar. Next, we need to keep funding and implementing R&D and demonstration projects, particularly in some of these key market sectors. And the way we need to do this is a little bit of a break from the past. We really need to focus on the techno-economic viability of biochar in different end-use markets. There’s a ton of research on biochar. Many of it is very good. But only a very small fraction of that research really considers whether or not biochar is an economic solution in a given end-use.
So there’s, for years, been talk about how biochar can be used in dozens and dozens of different applications, but we really need to focus on not whether it can be used in applications, but whether it makes economic sense to use it in that application. That’s really the key question. And we’re working pretty hard to kind of bridge that gap between researchers and industry to make it so a lot of the work that gets done will really focus on that economic side. And then the final piece is related to the US a little bit more, which is to promote and facilitate certain conservation payments that are available from the US government.
So the Department of Agriculture has conservation payments that will provide farmers reimbursements for using biochar. That’s through the Natural Resources Conservation Service. Biochar was recently added to that program, and we’re really working to scale that program to get more farmers to be able to get cost share payments from the federal government, and that’ll make it so they can buy more biochar.
Asa Kamer: That’s interesting. I had not heard about that, but it’s interesting to see all the ways carbon removal is making its way into federal policy. That’s good to hear. That’s exactly what I was wondering is about the economic component and the green premium concept, which I’ve heard Bill Gates talk about, which is like, there’s a lot of great green products out there, but how much more are buyers going to be willing to spend for the green version of it? So hopefully... Biochar is very affordable or even cheaper than the current product in whatever the given industry is.
And that could be really helpful, but I hope that your efforts in that department are fruitful and maybe we can have you on again sometime to talk about that. Cause that sounds kind of like maybe the cutting edge of what’s going to need to happen for the, for the biochar industry.
Myles Gray: Yeah, absolutely. And it really is what we’re rebuilding you as the eye around that focus really to be focused almost exclusively on developing markets for physical biochar.
Asa Kamer: Cool. All right. Well, if you’re listening and you’re a buyer for Home Depot, let’s get some biochar in there. Okay. So, um, Across the globe, a wide variety of different techniques are used to make biochar, various scales. You kind of talked about the different categories there. So in this research from your report, did you identify ways to ensure that the industry can incorporate such a diverse set of producers as it matures and make sure everyone who wants to grow biochar is able to access funding through whichever way they’re going to do that?
Myles Gray: Yeah, for sure. I personally think this represents a growing challenge for the industry and for industry associations like USBI. And again, going back to this sort of bifurcation of the industry into industrial and artisanal producers, they’ve really got some different needs. Industrial producers are aiming to develop large scale production facilities that can deliver high quality, consistent biochar. And that’s the type of biochar that will be integrated into Agricultural and industrial value chains, you know, as ingredients to different products. On the other side of the spectrum, these smaller scale producers, as I mentioned before, they’re typically using biomass from a given site, producing biochar on that site, and then deploying the biochar on that same site.
So they’re not particularly concerned with markets for physical biochar. What they often tend to be concerned with actually are some of the other co-benefits And in particular, air emissions related to open pile burning. So in a lot of the world, agricultural residues are burned. That’s true in the United States. It’s true in India. It’s true all across the world. Agricultural residues are very commonly burned in open piles. In the United States, timber residue is limbs and branches. In the West, we call them slash piles. They have different names in different places, but that material is typically just combusted in giant bonfires.
Those bonfires release enormous amounts of particulate emissions. And particulate emissions, there’s growing evidence that these are incredibly damaging for humanity in general. So I think in some ways, those, the small scale producers, the artisanal producers, part of what they’re going after really has more to do with some of the co-benefits than the core benefits. You know, and at a high level, I just want to say that USBI and other biotaur organizations around the world really Appreciate the value of both of these types of biochar production, but I can see their needs diverging.
And, you know, I wouldn’t be surprised if we end up with some different organizations representing these different types of biochar production.
Asa Kamer: That’s interesting to hear. And, man, biochar can be put in concrete, put in rubber, and it improves air quality. Like, what can it do, right? It’s amazing. Yeah. Okay, so let’s talk a little bit about how this industry can continue to grow. So in that CDRFYI post that I mentioned, they published a post on the report, breaking it down, and they discussed the way that the Global South is taking the lead in biochar production with six of the 10 biggest producers in 23 being from that area. Can you tell us what you think of that finding and why you think it might be?
And is that a sign of things to come?
Myles Gray: Yeah, I think part of what’s going on here is that producers in the global south are able to develop profitable business models, both using industrial and artisanal approaches that rely entirely on CDR credit revenue to become profitable. So that current pricing of about 125 to 175 per tonne of CO2 is sufficient for these companies to be profitable, largely because they have lower feedstock costs and lower labor costs compared to producers in the global north. I think this is very likely to continue, and I expect a lot of the near-term growth, at least in the large production facilities, to occur in the global south.
And I actually think a decent amount of that will probably happen in areas like Latin America where there’s abundant feedstock supply. For the global north, this doesn’t mean there’s not viable biochar business models that are possible, but I think it requires those business models to be more sophisticated, and they need to do probably one or more of the following. One option is to increase revenue from the physical biochar, right? By developing these high value markets. It’s likely that higher value markets are going to exist in the global north where costs for everything tend to be higher.
So there’s an opportunity really there to develop these high quality product lines where biochar is an ingredient. Next is really focusing on increasing revenue from the pyrolysis gases that are not converted into biochar. Just quickly, the biochar process converts about 40 to 50% of the carbon into biochar, but the remainder of the carbon is emitted as a mixture of combustible vapors, things like hydrogen, carbon monoxide, methane, some logger chain hydrocarbons. In a lot of systems, these are combusted and used to produce heat or electricity, but there are some other likely more valuable end uses for these for making things like sustainable aviation fuel or industrial precursor molecules for things like plastics.
There’s a lot of potential end uses for pyrolysis gases that really are now just starting to be explored, but there’s a lot of potential there. And then the final way I think is to. Identify feedstock sources that are free or even generate revenue and tipping fees. I mentioned this briefly, but there really are some very hard to dispose of waste biomass feedstocks around. Things like waste water plant biosolids, construction and demolition debris, which is mostly wood. There’s even the ability to separate organic material from non-organic material from municipal solid waste.
So stuff that’s against the landfill, a lot of that material is organic. It could all be converted into biochar. Now, you might not want to use that material as a soil amendment, but there might be no problem at all around using that as a concrete additive. So I think there’s a lot of potential here to kind of develop these more sophisticated business models. But I think they’re pretty critical for global North biochar producers to remain competitive.
Asa Kamer: So that makes me wonder, why shouldn’t the company that collects my garbage have a biochar facility and have another revenue stream? Is that something we might see in the future?
Myles Gray: Absolutely. Something we might see, something I expect to see, and it’s something that different companies are working on.
Asa Kamer: That’s really cool. And maybe my garbage collection bill will go down.
Myles Gray: It could. I’m not sure about that, but...
Asa Kamer: Hopefully. So this is another tangent here, but so one concern I’ve seen about biochar, and I know certain buyers of carbon credits might even not buy biochar for this reason, but is the carbon efficiency. And this gets into some scientific details that are a bit beyond me, but... I’m interested to hear what you were saying about those other gases being utilized. Do you think that would alleviate the concern about carbon efficiency of biochar if all the off gases are being utilized?
Myles Gray: Yeah, I think it very likely could. And it and it points to one of the difficulties of the biochar industry or the biochar concept that is, which is that it’s complex. Biochar production doesn’t just produce biochar or carbon dioxide removal. It’s producing other benefits as well, which I’ve spoken to during this podcast. There are some buyers, folks like Frontier that, you know, they’re really interested on the efficiency of carbon because they’re looking at it entirely from the carbon removal perspective. They’re not that interested in the co-benefits. But one way to look at this.
Is that biochar is unlikely to ever score highest on any given single metric. If you’re only ever looking at a single metric, it’s going to be hard for biochar to ever score the highest. It will never be the most efficient from a carbon conversion perspective to CDR. It will never be the most efficient there. It will also not be the most efficient way to produce biomass electricity because half the carbon goes into biochar. I think it has to be looked at more holistically. And right now, the best metric, the best holistic metric I think we have, honestly, is CDR credit price.
So right now, the CDR credit price for biochar is much lower than a lot of other durable storage techniques, largely because there are the co-benefits that have value.
Asa Kamer: That’s really interesting. And speaking of business models and how that all works. So the report identified insetting as a promising way to generate revenue for biochar producers. So can you tell us what insetting is and why a biochar is a good option for that?
Myles Gray: Yeah, I’ll start by saying I have not yet seen like an official definition of insetting. So the definition I’ll use is implementing actions in a company’s value chain that reduce carbon emissions. So within that context, it’s very true that the vast majority of our climate mitigation need to come from insetting, that is reducing scope one, two, and three emissions. This is the core original programs, I guess, and ETI. Which only allow a small amount of offsets to be used to reach those targets. And for biochar, there’s a couple ways that it presents the opportunity.
At a high level, the production of biochar reduces atmospheric carbon in multiple ways. On the upstream side, on the feedstock side, converting biochar or converting feedstocks into biochar can reduce things like methane emissions. Especially from wet feedstocks like manure or biocell. So there’s a potential benefit there. The production of biochar produces carbon removal, which occurs when you convert biomass into biochar. And that’s the only thing that’s currently monetized in a CDR credit is the conversion of waste biomass from a labile form to a sequestered form of carbon. But biochar production can also produce electricity, heat, fuels, other things.
And then on the downstream side, there are a number of ways that biochar can impact carbon emissions. One is simple material replacement. Biochar can be used in place of other materials, and every material has some amount of embodied carbon with it. Next, biochar can reduce material input needs in things like agriculture. So you can reduce the amount of fertilizer you need. And fertilizer is a very energy intensive product. Most fertilizer is made from fossil gas. That’s where essentially all nitrogen fertilizer comes from. Another benefit is that biochar reduces things like soil nitrous oxide emissions.
So there’s a lot of benefits from biochar related to climate that are not currently monetized in carbon dioxide removal credits. So those can be monetized in setting. Another coin I want to make is that most biochar today is decoupled from its CDR credit. So the credit is sold to one company, but the physical biochar is sold to another. All those methodologies for the CDR credits, they require a producer to count all the emissions from feedstock sourcing, from biochar production, and even from shipping the material to the end user. So in that context, decoupled biochar, that is physical biochar that’s sold without its carbon credit, which is the norm, that biochar should be considered a zero carbon product in value chain emissions accounting frameworks because you’ve already counted all of the emissions from it.
You’ve sold off the negative attributes, that is the removal attributes, but you’re left with zero. So that’s kind of a baseline understanding for how biochar can conserve some that material replacement benefit. And so I think there’s just a lot of opportunities here to monetize some of those benefits that aren’t currently being captured in the CDR credits. But also there are some companies looking at actually buying the CDR credit and embedding it in their products, actually in concrete. There’s some concrete companies that are wanting to actually Buy the credit with the product so that they can get to a net zero concrete.
So in terms of insetting, I think biochar really has, there are enormous opportunities in the insetting space. And I think it’s also a way to engage with a lot of larger corporations that are really focused on value chain emissions much more than they are on CDR credits.
Asa Kamer: Wow, great. That’s really interesting. And a phrase you used near the top of the show is business model innovation. And I can see that’s where I really feel like a lot of the work that you’re doing, it sounds like, is focused on that. And that’s sort of a key part of growing biochar right now. It’s not necessarily the early stage stuff that we see for some other durable CDR. It’s very much... The people are ready to make it and how do we get them paid to do that? So that’s great.
And my last question for you, Miles, you know, you did this very comprehensive overview of the state of the industry in 2023. We’re now halfway through 2024. If you were to look back at the end of the year, how do you think we’re going to see the biochar industry in 2024 as different than it was in 2023? Yeah.
Myles Gray: Yeah. First, I’ll start by saying, I hope we continue to see the same amount of growth and I think we will. And I’ll also say, I think we’re going to see another survey come out this fall. So 2024 will be similar to 2023 in that respect, at least. Okay. But in terms of how it’ll be different, I think there’s going to be an increasing focus on incorporating biochar as an ingredient, as I said, into high quality products. I think we’re going to see some high profile partnerships between biochar companies and large corporations.
Both on the production side, but also on the use side. And we’re starting to see some of that. As I mentioned several times, and you just mentioned, increasingly sophisticated biochar business models, particularly those that incorporate biochar production into fuel production and likely sustainable aviation fuel production. There are a few companies jumping into this space now. Pyrolysis offers a pathway to produce that sustainable aviation fuel. And in that context, biochar might become a byproduct of SAF production. We’re going to see increased policy support for biochar production. And then I’m really hoping we see a dramatic increase in incentive payments from the U.
S. government to farmers to really incentivize farmers to get involved.
Asa Kamer: Great. Well, Miles Gray, this has been a great show. It’s been really interesting hearing you talk about the state of the biochar industry and where it’s going. And thank you so much for joining us.
Myles Gray: Great. Thanks for having me, Asa.
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