Biochar is gaining traction in the voluntary carbon market but project quality is vital to unlock its potential as a climate solution.
In addition to the urgent need to reduce emissions, addressing historical and residual emissions through carbon dioxide removal (CDR) is essential in the fight against climate change. The key difference between CDR projects and other carbon offset initiatives is that CDR actively removes carbon dioxide from the atmosphere, while other offset projects merely compensate for emissions that have already been released or are expected to be released.
One of the most accessible and effective CDR methods available today, as acknowledged by experts, is biochar.
What is biochar?
Biochar, also known as biological charcoal, is produced by heating biomass residues in a low-oxygen environment through a process called pyrolysis. This prevents the carbon in organic matter from being released as carbon dioxide into the atmosphere, effectively sequestering carbon for centuries. It provides a stable form of carbon with a wide range of co-benefits.
The size of the biochar market was estimated to be 430,000 tonnes in 2024. Supercritical, a leading carbon marketplace, forecasts a 30-fold growth in the biochar market over the next few years, with capacity set to rise to 2.86 million tonnes by 2026, and a projected 13 million tonnes by 2028.
With an average CDR credit spot price of US$ 176, biochar is the most cost-effective carbon removal method after nature-based solutions, which average US$27. This affordability has sparked considerable interest from both buyers and new suppliers, which explains the 30-fold growth forecast.
Scaling up biochar production could potentially remove up to 6% of global emissions or 3 billion tonnes of carbon dioxide annually. The International Biochar Initiative, a platform that brings together key stakeholders, reports that biochar is leading the charge in providing durable carbon dioxide removal, accounting for 94% of all CDR deliveries in 2023, with a compound annual growth rate of 91% from 2021 to 2023.
A broad range of biochar end-use applications
Beyond carbon sequestration, biochar is a versatile and innovative material that has numerous applications. Its climate impact in agriculture largely depends on how it is integrated into the systems where it is applied. Biochar can enhance soil health by improving water retention, microbial activity and nutrient availability. It also functions as an effective carrier in fertilisers.
In construction, biochar offers substantial decarbonisation potential. Incorporating just 1% by mass of biochar into concrete mixes could sequester 0.5 gigatonnes of carbon dioxide annually, potentially reducing the carbon footprint of cement-based industries by up to 20%. Furthermore, biochar could partially replace coke in steelmaking, although challenges such as availability and cost remain.
The European Biochar Industry Consortium has identified a broad range of applications across various industries, including biogas, food preservatives, batteries – particularly lithium-ion – high-tech carbons, waste treatment, pollutant removal, steel, livestock, polymers, paints, medicine, and bioplastics.
What is the carbon credit market?
The global carbon credit market enables companies and individuals to offset their emissions by purchasing credits from entities that remove or reduce emissions such as biochar producers.
Carbon markets, including both compliance and voluntary, have remained stagnant, reaching US$1.4 billion in 2024.
According to Ecosystem Marketplace, the voluntary carbon market saw transactions valued at US$723 million in 2023, a significant 61% decrease from 2022, amid negative press that questioned the additionality and governance of certain carbon credit projects, particularly initiatives aimed at reducing deforestation, known as REDD+. Additionality is crucial in carbon projects as it means that emission reductions or removals must result directly from the project’s implementation.
As quality continues to be a key challenge, buyers are placing greater emphasis on projects that are of high quality and have positive environmental and social impacts. Businesses are increasingly recognising that achieving net zero is a strategic imperative and that purchasing CDR credits is vital to reaching this goal. This trend is reflected in the 78% growth of the nascent CDR market, with total purchases nearing 8 million tonnes. Notably, 80% of these purchases were made by major buyers such as Microsoft, Google, and Frontier, revealing a highly concentrated market, as shown in Figure 1.
Figure 1: Top 10 durable CDR purchasers 2024
Source: CDR.fyi
Biochar’s dominance in durable CDR deliveries
Data from CDR.fyi, an open-source project that aims to accelerate carbon removal, shows that biochar remained the primary source of durable CDR deliveries in 2024, as illustrated in Figure 2 below. The Global South plays a crucial role in biochar carbon removal (BCR) production and delivery, with Exomad Green and Aperam Bioenergia leading the way in South America.
Exomad Green, based in Bolivia, is the world’s largest biochar producer. The company’s recent sale of 32,000 tonnes of CDR credits to Microsoft, renowned for its rigorous due diligence process, sent a strong signal to the market. These credits are managed by Carbonfuture, a carbon credit marketplace, and comply with Puro’s carbon removal standard, a leading standard for engineered carbon removal methods in the voluntary carbon market. Aperam Bioenergia, based in Brazil, also contributes to this growing sector. These examples highlight Latin America’s significant biomass potential for biochar development.
Entrepreneurs like Martin Ciarfaglia, CEO of EcoGaia, a developer active in Latin America and the Caribbean, are confident that the region can bridge the gap between the high demand for and short supply of high-durability carbon removal credits due to its abundant residual biomass availability. In discussions with DevelopmentAid, Ciarfaglia stated that the challenge lay in ensuring “projects have traceability and rigorous methodologies, as well as effective integration into international value chains”.
Figure 2: Top 10 durable CDR deliverers 2024
Source: CDR.fyi
Biochar industry challenges
A survey conducted by the International Biochar Initiative has revealed that revenue from the sale of biochar carbon credits in the voluntary carbon market is the second-largest growth driver for the biochar industry. However, over 50% of global biochar production does not currently generate income from carbon credits. This is primarily due to the additionality requirements in carbon credit methodologies, as well as complex certification processes and associated costs that may prevent certain projects from earning carbon removal credits.
Another key challenge identified by suppliers is the development of high-quality markets for physical biochar. Low-quality projects also pose risks of inconsistency and may damage the industry’s reputation within the voluntary carbon market. In addition, the UN’s Intergovernmental Panel for Climate Change (IPCC) warns that in the long term, competition for biomass could limit biochar’s growth. Many feedstocks used for biochar production can also be utilized for bioenergy with carbon capture and storage (BECCS), a technology that combines electricity generation with carbon removal. BECCS plays a significant role in some net-zero scenarios and may be prioritized over biochar production.
Final thoughts
According to the latest reports by the IPCC, we must remove 10 billion tonnes of CO2 from the atmosphere each year by 2050 to stay below a 1.5°C rise. To achieve this, the CDR market must expand by 14,000 times over the next 26 years. Biochar, with its affordability and high technology readiness level, plays a key role in this market, offering a promising and scalable solution for carbon removal.
As the market evolves, an emphasis on high-quality projects will be vital to unlock the full potential of biochar as a climate solution.
