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Economics of Biochar

Economics of Biochar

The economic viability of biochar production and utilization is still a significant challenge. In general, the cost associated with the feedstock acquisition and transportation, capital, operations, and transportation of biochar to application sites significantly affects the economic feasibility of biochar. Also, the revenue streams from biochar, including sales, climate offsets, and energy subsidies, are less developed and could impede investments in biochar production. Without policy intervention, it is unlikely, at least in the near future, that biochar systems could out-compete bioenergy systems. Evidently, in the last decade, many biochar producers emerged and failed in the Great Lakes region, challenging the notion of biochar production as a financial opportunity.

Feedstock cost is the most critical component of the biochar supply chain and is largely responsible for determining economic feasibility. Feedstock alone can cost 45% to 75% of the total expenditure in biochar production. In general, studies have suggested that feedstock procurement for agricultural and forestry residues could cost $63 to $82 per ton. In addition, low-cost production technology is lacking and expensive, if available, challenging biochar systems' profitability. Larger production technology exists and provides some advantages with the economy of scale; however, this is negated by the necessity of longer feedstock haul. This has limited the procurement of feedstock (less than 50 miles) and product supply extent to regional markets (less than 100 miles).

The selling price of biochar varies significantly depending on the type, texture, and quality. The current average market price of biochar is about $9 per cubic foot when negotiated for the bulk price but can cost up to $42 per cubic foot in retail stores such as Lowes and Home Depot. The biochar market is growing and is expected to reach $3 billion globally by 2025.

More information on the Economics of Biochar Production and Use will be presented in a webinar with Raju Pokharel from the department of forestry, Thursday, Dec. 9 at 2 p.m. EST. This event is offered by the Great Lakes Biochar Network (GLBN), which is a newly formed initiative by Michigan State University Extension that will provide nonbiased, research-based information for practitioners of all levels and scales.

This is the last in a series of fall webinars. The recording of the first two webinars, the Introduction to the Great Lakes Biochar Network and Biochar Basics and Production of Biochar can be found at the GLBN website. The introductory webinar provides an overview of the goals and objectives of the network and how people can get involved, as well as information about the potential benefits of biochar and the effects on the bioeconomy of the Great Lakes region.

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