Locating the sweet spot for biochar carbon removal

Sep 1, 2025Locating the sweet spot for biochar carbon removalBiochar projects come in many shapes and sizes, but success depends on aligning cost, context, and co-benefits.By Poppy Russell

Today, biochar looks like one of the best — some say the best — methods for long-duration carbon removal¹. Feedstocks for making biochar are plentiful, because low-cost waste biomass can be used. Pyrolysis, its key technology, is proven and can be done in modular units. Between these two factors biochar can be produced almost anywhere.

Pricing makes it look even more attractive. Spot prices are currently around $150/tCO2, while other methods of durable CDR exceed $500 per tonne². This helps explain why offtake deals keep growing: Exomad Green has signed an agreement with Microsoft to supply over 1 million tonnes of biochar carbon removal to the software giant over the next ten years.

Deliveries of biochar dominate ~90% of total deliveries of CDR within the voluntary carbon market². Unsurprisingly, the number of project developers grows every year.

The promise is real. But our research shows that the economics of biochar really only work under relatively narrow conditions. These conditions are shaped by where projects are located. Geography influences costs for biomass feedstocks and the potential for co-product markets — which in turn influence unit costs and scalability.

¹ Biochar carbon persists from 100-1000s of years depending on the pyrolysis conditions. According to the UK and EU ETS durable carbon removal requires carbon to be stored for 200+ years.

² Cdr.fyi July 2025

Conditions for scale

We focus on two factors when trying to locate the sweet spot for scalable biochar carbon removal.

We have built a rough cost model to illustrate how these factors translate to commercial realities.

Costs and revenues for illustrative biochar production scenarios. Assumptions from industrial data and Counteract analysis. Carbon pricing varies for the different scenarios based on quality of the biochar carbon removal, accounting for carbon leakage and durability (European industrial @ $180tCO2, Artisanal @ $80/tCO2, and Tropical industrial @ $130/tCO2)

There are three hypothetical producers in this model, all based on real-world examples: a small industrial-scale producer in Europe, an artisanal-scale producer in the Global South, and a small-industrial scale producer in the Global South.

1. Small industrial facility situated in Europe utilising forestry residues and a well-established pyrolysis unit, producing 1000t biochar per year.

Due to higher labour and biomass costs, these developers need to tap into more premium credit prices (>$200/t) in addition to revenues from agricultural additives or other commercial products ($300/t). Premium credit prices can be reached by adjusting the pyrolysis conditions to ensure a high portion of durable carbon is produced. However, since credit prices are likely to decrease over time, developers will need to access higher value biochar markets or alternative revenue streams — by selling renewable heat, for example — to ensure a strong commercial model.

2. Artisanal biochar producer in Africa using a Kontiki kiln and crop residues.

This model relies on very low-cost equipment and can be sited directly next to the feedstock source, cutting transport costs. Therefore, costs are lower in this scenario than any other, but also harder to scale. Premium carbon credit pricing requires excellent measurement and validation standards, which can be achieved through adequate training and supervision. However, this model becomes increasingly difficult to uphold at larger scales — unless they consolidate and resemble the more centralised, small-industrial-scale project in Example 3.

3. Industrial operation in Sub-Saharan Africa utilising a semi-continuous system and woody residues, producing 1000t biochar per year.

This model has the clearest path to near-term profitability because it benefits from a low cost base and the potential to sell credits at the near-premium end of the range ($130/t). Not all producers will choose to invest in the pyrolysis equipment or MRV standards to guarantee that they sell credits at the top end of the range. But this is definitely a possibility. Cost of capital is a challenge in these regions and therefore producers might opt for less advanced but more robust machinery to reduce capex burden. Regardless, these producers will also need to realise additional value from physical biochar or other co-products as credit prices drop over time. Demand for the physical biochar will most likely come from agriculture, where it has the potential to reduce fertilising costs for farmers, as well as improve soil water retention and fertility.

These are of course illustrative scenarios; in practice each biochar project is unique in feedstock, logistics, market dynamics and ultimate unit economics. Pyrolysis technology comes in many varieties and projects select technologies best suited to their specific context.

Two sweet spots for biochar

As the scenarios suggest, there are two viable ways to scale biochar carbon removal.

Low-cost industrial production in the Tropics

Biochar carbon removal can thrive in tropical and lower income regions where:

Biomass is abundant, low cost and considered a nuisance that is left to decay or even burned
Labour costs are lower
Capex efficient machinery is crucial to avoid spiralling costs of capital
There is room for optimisation based on continuous pyrolysis tech development
Carbon credits can cover most or all of the revenue required for profitability

These regions not only have structurally lower production costs. They also have a need for physical biochar in agriculture. When applied to farmland — especially with acidic, poor soils — biochar helps soil retain water and reduces the need for chemical fertilisers (lowering costs for farmers).

Research has shown that tropical, drought-stressed soils show higher crop yields after biochar is applied. Presenting such clear benefits for farmers, biochar can scale in these regions faster as more farmland is made available for spreading it as a soil additive.

Many project developers have identified this opportunity. One of them we have seen ourselves: PyroCCS in Namibia. Through their project development arm PyroNam they operate biochar projects in a region that benefits in multiple ways from their presence.

Fast-growing acacia bushes are outcompeting native grasses. This phenomenon, known as bush encroachment, has degraded over 45 million hectares of grazing land in a country that depends on cattle. Removing acacias involves burning the plants or killing them with chemicals — both of which can damage the local environment.

PyroNam converts this “problem biomass” to biochar, creating a product that is particularly useful for the local environment. Namibia’s sandy, acidic, and drought-prone soils make it ideal for spreading biochar on farmland and helping the soil retain water. PyroNam have also re-enginered their pyrolysis equipment to be low-capex, robust, and simple to repair, making it well-suited to the realities of rural Namibia.

Pyrolysis units at PyroNam in Namibia, inspected on a site visit in February 2025 in Otjozondjupa region.

The low cost feedstock and equipment means, carbon offtake agreements priced at a reasonable ~$150tCO2 are driving early deployments. Meanwhile the team is building bottom-up demand for physical biochar through collaborations with farmers, local communities, and fertiliser supply chains, aiming ultimately to reduce carbon removal prices and reduce dependence on synthetic fertilisers.

Other developers are following a similar model but on a larger scale. Alcom works primarily in the Philippines with waste biomass from the rice industry, and Mash Makes is producing biochar as a soil additive in India and are now piloting using their bio-oils for decarbonising shipping with DS Norden. Both companies have sellable byproducts beyond carbon credits alone — products with clearly recognised value in the markets where they operate.

The tropical Global South is in some ways the sweetest sweet spot for biochar. Low operating costs and carbon credits fairly priced at $150/tCO₂ can sustain operations today, while longer-term success depends on developing local markets for biochar products. Soil additives are not the only byproduct that such companies can sell, and agriculture is not their only end-market. Companies like PyroGen are exploring uses for biochar in low-carbon cement. Construction is a growth industry in many of the regions where biochar’s biomass feedstock is abundant.

Biochar’s potential in construction materials and other industrial products also takes us to our second sweet spot in the Global North.

Building high-value co-products and markets in the Global North (and beyond)

Production costs in Europe and North America are structurally higher than in the Global South in terms of feedstock prices, capex, and labour — as the cost model above demonstrates. Scaling biochar in the Global North therefore depends on developing alternative revenue streams. Many of these revenue streams have very high potential over the long term.

Companies that succeed in this region will not depend on carbon credit sales; indeed some may choose to not enter the carbon markets at all. Nor will they necessarily target agriculture, as biochar producers do in the Global South. Rather, they will find innovative and scalable new use cases for physical biochar and also for pyrolysis co-products like bio-oil, syngas, and heat.

Our portfolio includes several of these innovators. EcoLocked is working to embed biochar in concrete, while Carbon Cell is doing the same for packaging. Their business model depends on creating carbon-negative materials that perform better than established products. Any revenue from carbon credit sales is, in a sense, a co-product or a co-benefit. It is secondary to the core product.

Corigin, for example, creates high-value biostimulants from the biochar pyrolysis process.

Rockwood meanwhile enriches biochar to enhance its ability to uptake phosphorus from polluted watercourses. This is a premium product in the UK, where nutrient neutrality regulations require developers to compensate for phosphorus removal. The remediation of phosphorus is enough to generate healthy margins without selling the physical biochar, much less carbon credits. Any credits revenue would represent pure upside.

Co-locating with industries that use pyrolysis products (such as waste renewable heat) can offer cost-savings for producers. Our portfolio company Adaptavate is exploring how to base its pyrolysis next to lime production sites, so that it can cost-efficiently produce its carbon-negative plasterboard.

In these contexts, biochar carbon removal becomes a byproduct of valuable industrial processes rather than the central product. This model needs more sophisticated technology and more robust markets. While both are nascent today, the model is better in the medium term for not relying on carbon finance. It was for these reasons that we invested in EcoLocked and Carbon Cell.

A non-exhaustive map of some of the biochar players operating globally. With low-cost high quality biochar, and innovators developing new products as our sweet spots.

Conclusions

Biochar carbon removal can indeed work almost anywhere. But in reality it can commercially succeed only in certain places and under certain conditions — at least over the long term.

→ In the Global South the opportunity lies in low-cost, high quality production of physical biochar combined with selling high-quality carbon credits, while at the same time offering benefits to local farmers and governments that accelerate buy-in for scaling biochar.

→ In the Global North, success relies on unlocking high-value, alternative markets for co-products. These create new revenue streams and reduce dependence on carbon finance.

If we had to pick one sweet spot over the other, it would — by a narrow margin — be the product-focused Global North model. Producers that fit this model are less reliant in the long run on the voluntary carbon market and are therefore better insulated from declining carbon credit prices. Commercial liftoff for these types of biochar producers also — in theory — frees up limited carbon finance to support lower-cost deployments in the Global South.

There are exceptions to the models shared above. Just because a biochar project meets some of these criteria does not guarantee its commercial success or even indicate that it is operating in a ‘sweet spot’. Ultimately there is no golden rule for scaling biochar, other than one that is increasingly becoming our mantra across carbon removal solutions: scale technologies where they make the most sense.