This is the full article by Myles Gray as referenced in the July 2024 monthly USBI newsletter.
Unlocking the Potential of Biochar: A Path to Value-Chain Emission Reductions
Back in April I had the privilege of participating in an AirMiners VCM webinar focused on using biochar as a tool to help companies reduce their value-chain emissions, even those hesitant to purchase biochar Carbon Dioxide Removal (CDR) credits. I’ve been thinking back to that discussion over the past few weeks, especially in the context of the evolving CDR industry, and also in the context of ongoing rule making at the Science Based Targets Initiative (SBTi). Several insights have emerged.
Biochar leading the way in CDR!
In the CDR space, following a very remarkable 2023, biochar continues to dominate the CDR landscape in 2024, representing 94% of deliveries of durable carbon removal credits based on cdr.fyi data. Interest in biochar and other CDR technologies continues to grow, yet the number of CDR credit buyers remains flat. Over half of all purchases are made by a single firm - Microsoft. Other major CDR buyers include tech companies, consulting firms, insurance companies, and a handful of others. Where are the rest that have made public climate targets and participated in SBTi?
The decarbonization challenge.
Many companies that have made public climate targets, like fertilizer manufacturers, food processors, concrete companies, box stores, chemical manufacturers – what are they all doing to achieve their decarbonization challenges? Many are focused on decarbonizing their systems and their value-chains at marginal abatement costs far far below $125 per ton of CO2, the typical cost for a biochar CDR credit.
Why does this matter? First, pricing in CDR is relevant. More than relevant really, it is crucial. You can see this in the fact that shovel-ready biochar leads the way in durable CDR deliveries compared to many VC-backed, high-technology CDR companies with credits at $500 per ton or more. We can see the price relevance show itself in the fact that the only companies buying durable CDR credits are those with high profit margins per unit carbon emissions and limited ability to cheaply decarbonize their value-chains.
Biochar, beyond carbon removal.
Biochar's value extends beyond CDR. The production of biochar represent the conversion of non-merchantable biomass into valuable carbon. Current CDR methodologies, the standards followed to qualify for carbon credits, account for all emissions associated with feedstock sourcing, the biochar production, and the shipping of the biochar. These credits are often sold separately from the physical biochar, resulting in carbon neutral biochar. However, the physical biochar offers further emission reductions by:
- Replacing high carbon materials like cement in concrete, peat in growing media, and carbon black.
- Reducing fertilizer emissions by reducing overall ferilizer application needs.
- Increasing crop yields, thereby reducing total carbon emissions associated with global food production.
- Reducing soil emissions of nitrous oxide, a potent greenhouse gas.
- Boosting soil health by increasing the accumulation of natural soil organic matter.
These benefits are almost universally undervalued and unaccounted for, either by the biochar industry or by the end-users. More importantly, the biochar industry needs act now to capitalize on this unique opportunity to engage with major corporate players who are focused on low-cost value chain decarbonization options rather than buying the more expensive high-tech CDR credits. These companies could easily be interested in using carbon-neutral physical biochar decoupled from its CDR credits.
Looking ahead: USBI's Insetting Guidance
To help facilitate this effort, our team at USBI is working on guidance for insetting biochar to reduce value-chain emissions, focusing on two key goals:
- Carbon Neutrality in Value-Chain Accounting: Establish that biochar sold separately from its CDR credit should be considered carbon neutral.
- Estimating Additional Carbon Benefits: Develop defensible estimates for the other carbon benefits of biochar such as reduced nitrous oxide and methane emissions, and increased soil organic carbon.
We will be rolling out this guidance this fall, so keep an eye out for this important content.
As always, we invite you to join us in exploring how biochar can be a foundational tool in your company's journey toward sustainability and emission reduction.
- Myles
Project Manager
US Biochar Initiative