Biochar sits at the intersection of soil health, waste management and carbon removal. Produced by pyrolysis of biomass under limited oxygen, it stabilises carbon for decades to centuries when applied to soils. With the rise of carbon removal credits and new MRV frameworks, biochar projects are exploring stacked revenues from soil services, tipping fees and carbon markets. This brief explains how those stacks work in practice.
What You'll Learn
- 1. Biochar Basics: Production & Properties
- 2. Soil & Agronomic Benefits
- 3. Carbon Removal Potential & Permanence
- 4. Revenue Stack: Tipping Fees, Products & Carbon Credits
- 5. Economics: Cost Structure & IRR Drivers
- 6. Quality & MRV: Making Biochar Credits Bankable
- 7. Devil's Advocate: Risks & Market Skepticism
- 8. Outlook to 2030: Biochar in the CDR Portfolio
- 9. FAQ: Questions from Project Developers & Buyers
1. Biochar Basics: Production & Properties
Biochar is typically produced via slow pyrolysis of biomass at 350–650 °C with controlled residence times. Key levers include:
- Feedstock type (wood, crop residues, manures, organic waste).
- Temperature and heating rate (influencing porosity, stability, ash content).
- Gas handling and energy integration (co-generated heat and syngas use).
Stable Carbon
A significant share of biogenic carbon is converted into aromatic, recalcitrant forms with long residence times in soil.
Soil Function
Porous structure and surface chemistry can improve water holding, nutrient retention and microbial habitat.
Waste Valorisation
Enables upcycling of residues (shells, husks, sludges) into long-lived soil amendments.
2. Soil & Agronomic Benefits
Biochar performance is highly site-specific, but benefits often include:
- Improved water retention in sandy soils.
- Better nutrient use efficiency and reduced leaching.
- Potential yield gains, especially in degraded or acidic soils.
Indicative Agronomic Impacts (Meta-Analysis Style)
| Soil Type | Biochar Dose (t/ha) | Typical Yield Change | Key Drivers |
|---|---|---|---|
| Sandy, low organic matter | 5–15 | +5–15% | Water holding, nutrient retention |
| Degraded tropical soils | 5–20 | +10–25% | pH buffering, CEC increase, microbial activity |
| Temperate loam with good management | 3–10 | 0–5% (often within noise) | Benefits harder to monetise; focus may shift to carbon value |
3. Carbon Removal Potential & Permanence
Unlike many "avoided emission" projects, biochar is widely recognised as a durable carbon removal (CDR) pathway:
- Portions of biochar carbon can remain in soil for centuries or longer, depending on production conditions and environment.
- New MRV frameworks (e.g. Puro, Verra, Gold Standard pipelines) are formalising how to quantify and credit this durability.
Simplified Carbon Retention Over Time (Illustrative)
Indicative fraction of initial carbon remaining in soil over 100 years for a high-quality biochar system.
4. Revenue Stack: Tipping Fees, Products & Carbon Credits
Biochar business models often rely on stacked revenue streams rather than a single product margin:
- Tipping fees for incoming biomass residues or organic wastes.
- Sale of biochar products into agriculture, landscaping, filtration or construction materials.
- Carbon removal credits sold to corporates seeking durable CDR.
Illustrative Revenue Stack per Tonne of Dry Biomass
| Source | Example Value (€/t biomass) | Notes |
|---|---|---|
| Tipping fees | 0–40 | Depends on waste type and local disposal costs. |
| Biochar product sales | 40–120 | Higher for speciality products; lower for bulk agronomic char. |
| Carbon removal credits | 60–200 | Highly variable; depends on crediting scheme and permanence assumptions. |
Revenue Stack by Project Type (Illustrative)
Indicative contribution of tipping fees, product sales and carbon credits for different biochar project archetypes.
5. Economics: Cost Structure & IRR Drivers
On the cost side, major components include:
- Capex for pyrolysis units, gas handling and biochar handling.
- Opex for labour, maintenance, feedstock logistics and certification.
- MRV and verification costs for participating in carbon credit schemes.
Relative Cost Components (Illustrative)
Indicative breakdown of levelised cost per tonne of biomass processed for a mid-scale biochar facility.
Case Study – Mid-Scale Biochar Project with Carbon Credits
Consider a project processing 10,000 t/y of dry biomass residues:
- Biochar yield: ~ 30% (dry), 3,000 t/y char.
- Carbon removal credits: 2–2.5 tCO2e credited per tonne of char.
- With credit prices in the €100–200/tCO2e range and additional product revenue, equity IRRs in the mid-teens are achievable under favourable assumptions.
6. Quality & MRV: Making Biochar Credits Bankable
For carbon removal buyers and financiers, not all biochar projects are equal. Critical quality dimensions include:
- Feedstock additionality: ensuring biomass would not have decayed similarly anyway.
- Char stability: production conditions that support long-term carbon residence.
- MRV robustness: transparent measurement, sampling and long-term monitoring.
7. Devil's Advocate: Risks & Market Skepticism
Key challenges and critiques of biochar include:
- Over-claiming benefits: assuming yield increases or permanence levels not supported by local data.
- Small and fragmented projects: high transaction costs relative to credit volume.
- Market saturation risk: if supply grows faster than high-quality demand in voluntary markets.
From a risk management standpoint, scaling biochar should prioritise high-quality, well-documented projects over pushing volumes at any cost.
8. Outlook to 2030: Biochar in the CDR Portfolio
By 2030, biochar is likely to be a core pillar of the carbon removal toolkit alongside DAC, BECCS and other engineered solutions:
- Particularly strong fit for agricultural regions with biomass residues.
- Can be deployed at moderate scales close to feedstock sources.
- Delivers co-benefits for soil and water retention that other CDR routes lack.
Developers that can articulate a credible, transparent revenue stack and deliver robust MRV are best positioned to attract long-term offtake and institutional capital.