Biochar Is Dominating the Carbon Removal Market — But No One Seems to Care

Low-tech carbon removal is all the rage these days. Whether it’s spreading crushed rocks on fields or injecting sludgy biomass underground, relatively simplistic solutions have seen a boom in funding. But there’s one cheap, nature-based method that hasn’t been able to drum up as much attention from big name climate investors: biochar.

This flaky, charcoal-like substance has been produced and used as a fertilizer for millennia, and its potential to lock up the carbon contained in organic matter is well-documented. It’s made by heating up biomass such as wood or plants in a low-oxygen environment via a process called pyrolysis, thereby sequestering up to 40% to 50% of the carbon contained within that organic matter for hundreds or (debatably — but we’ll get to that) even thousands of years. Ideally, the process utilizes waste biomass such as plant material and forest residue left over from harvesting crops or timber, which otherwise might just be burned.

The United Nations Intergovernmental Panel on Climate Change says biochar could store about 2.6 billion metric tons of CO2 per year. And by some metrics, this ancient method of carbon removal is already leagues ahead of the rest. Last year, biochar accounted for 94% of all carbon dioxide removal credits that were actually fulfilled, according to CDR.fyi, which tracks the CO2 removal market. That means that while corporate buyers are purchasing carbon credits that use an array of different removal methods, biochar has thus far dominated the market when it comes to actually making good on these purchases.

Some of the largest corporate buyers of CO2 removal credits have biochar in their portfolios. Microsoft, by far the most prominent player in this space, has bought over 200,000 tons of biochar credits — part of its quest to become carbon negative by 2050 — although that’s still a mere fraction of the over 6.6 million tons of CO2 removal the company has bought overall. JPMorgan Chase, which aims to match every ton of its operational emissions with carbon dioxide removal credits by 2030, has bought nearly 19,000 tons of biochar credits, representing about 26% of its CO2 removal portfolio.

But despite its technical maturity, biochar has yet to generate the same level of excitement or venture capital investment as more complex methods of carbon removal such as direct air capture, which garnered $142 million in investment last year. By comparison, biochar companies raised a cumulative total of $74 million in 2023. While that’s no small change, it doesn’t compare to the amount of capital VCs and other climate tech funders have poured even into other similarly elemental carbon removal technologies.

For example, Frontier, a collaborative fund for tech companies to catalyze emerging solutions in this space, recently announced a $58 million deal with Vaulted Deep, a startup that injects wet biomass from food waste to poop deep underground. And at the end of last year, Frontier inked a $57 million deal with Lithos Carbon, a company pursuing enhanced rock weathering. This involves spreading crushed up rocks onto fields, which react with the CO2 in the air to form bicarbonate; that’s eventually carried out to sea, where the carbon remains permanently sequestered on the ocean floor. In other words, it’s just an acceleration of the natural weathering process, which normally takes hundreds of thousands of years. VCs backing Lithos include mainstream names like Union Square Ventures, Greylock Ventures, and Bain Capital Ventures, while big-time climate tech VC Lowercarbon Capital led Vaulted Deep’s seed round.

The questions around biochar’s durability — that is, how long it can actually lock away carbon — are potentially unanswerable, and that’s at least partially driving investor reticence.

“Biochar falls in this very interesting middle ground - you create it, and then it is constantly degrading,” Freya Chay, program lead at CarbonPlan, a nonprofit that analyzes different carbon removal pathways, told me. She said that we just don’t have the scientific know-how “to predict, really clearly, how much is going to still be in your soil at 100 years or at 1,000 years.”

Frontier, for its part, only considers carbon removal “permanent” if it can sequester carbon for at least 1,000 years. Some studies indicate that a large proportion of biochar can achieve this, but it’s hard to definitively prove, and we’re far from a scientific consensus. Thus far the fund has steered clear of investing in biochar, noting that detailed protocols must be developed to measure its durability under a variety of soil and weather conditions.

Measurement, reporting and verification is often the downfall for nature-based solutions (see: the hoopla around bogus forest carbon credits). And while it is simple to measure how much of the carbon in biomass ends up sequestered in biochar, “it's where you draw the project boundaries in terms of where the MRV falls apart,” Annie Nichols, director of operations and project management at Pacific Biochar told me. For example, one might want to ensure that trees aren’t being cut down or crops aren’t being grown just for the purpose of creating biochar, and this often falls outside the scope of traditional measurement protocols. Pacific Biochar, for its part, sources its waste biomass from forests in high fire risk areas of California, where the excessive accumulation of woody debris poses a danger.

Pacific Biochar ranks as the world’s third largest supplier of carbon removal, with over 28,000 tons of credits delivered. Biochar “got a lot of attention before there was actually much utility,” its CEO, Josiah Hunt told me, referring to the period in the late 2000s when Al Gore was heavily hyping its benefits. In his 2009 book “Our Choice,” Gore called biochar “one of the most exciting new strategies for restoring carbon to depleted soils, and sequestering significant amounts of CO2 for 1,000 years and more.” But at that time, Hunt said, “There weren't really carbon markets ready to work with it yet.”

Prior to 2020, Pacific Biochar’s revenue relied solely on biochar fertilizer sales to farmers. It was only when the carbon credits market picked up that the company was able to scale. Today, Pacific Biochar sells most of its credits directly, as opposed to on an independent exchange, though it works with the carbon credits platform Carbonfuture to deliver credits to customers and perform the necessary verification to ensure the company’s carbon removal data is accurate.

Pacific Biochar’s credits sell for $180 per metric ton, cheaper than nearly all other removal methods and far below the weighted average of $488 for CO2 removal. That’s because producing biochar via pyrolysis requires much less energy than something like direct air capture. It’s also a more mature process than most emergent nature-based solutions such as enhanced rock weathering, meaning that comparably less money needs to be spent demonstrating that the process works as intended.

A number of biochar companies told me they think biochar has been overlooked in favor of more novel technological solutions. “There's this fixation on trying to find the high tech solution, the SaaS app that's going to solve climate change,” Thor Kallestad, CEO and cofounder of Myno Carbon, told me. By comparison, biochar can seem like a relic of an earlier era that never quite reached its potential.

Myno, founded by oil and gas veterans, is self-funding the buildout of a large-scale biochar and electricity co-generation facility in Port Angeles, Washington, which will source its fuel from the copious timber waste in Washington State. It’s still in the initial design phase, but the ultimate goal is to produce about 70,000 tons of biochar per year alongside 20 megawatts of power. That amounts to about 100,000 carbon dioxide removal credits, which Kallestad hopes to sell for less than $100 per metric ton. Ideally, he said, the plant will serve as a proof of concept that will help drive future investments.

While there haven’t yet been any major scandals in the biochar-sourcing world, the BBC ran an exposé in 2022 on a biomass-fueled power station in the UK that was logging old-growth forests to create wood pellets that were then burned for power. The company, Drax, had previously claimed that it was only sourcing sawdust and waste wood. While Drax maintains that its biomass is “sustainable and legally harvested,” further reporting indicates that as of last year, the company was still sourcing from old-growth forests. The worry is that something similar could happen with biochar production as demand ramps up.

Chay says the cost-benefit analysis for making biochar gets even thornier when taking into account the “counterfactual of how we otherwise could have used biomass.” After all, biomass can also be burned for energy, and if the emissions are captured and stored, that’s a carbon removal strategy too. And with many looking towards biomass-based fuels as a way to decarbonize industries such as aviation and shipping, demand for waste biomass appears set to increase alongside uncertainty regarding its best use case. “Zooming forward to 2050, I'm not sure there is anything such as waste biomass,” Chay told me.

But in the short-term at least, there’s enough to go around. A recent Department of Energy report noted that “available but unused” biomass such as logging and agricultural residue could contribute around 350 tons to the nation’s supply every year. That’s about as much biomass as the United States uses for bioenergy today

“Certainly biochar has a place,” Chay said. She’s not convinced that it will ever make sense to conceptualize biochar production as “permanent carbon removal” though. “Maybe we just let it be this kind of interstitial durability. We figure out how to value that while also optimizing for agricultural co-benefits.”

Investors may remain wary of a solution that occupies this hard-to-define space between short and long-term CO2 removal, but Hunt’s not too worried. “I don’t think that’s horribly detrimental,” he told me. He sees biochar’s strong performance in the carbon credits marketplace as enough to sustain the industry for now. “I do think the buying community is what drives our growth. And even if we’re not the unicorns, even if we’re just the work mules, that’s fine with me. I don’t mind being the mule of climate change action.”