The Urgent Need for Large-Scale Carbon Removal
The latest IPCC report emphasises that while decarbonising industry, transitioning to renewable energy, and adopting electric vehicles are essential, they are not enough. To limit global warming to 1.5°C, we must remove 10 billion tonnes of CO2 from the atmosphere annually by 2050. Achieving this goal requires scaling the carbon removal market by a factor of 14,000 over the next 26 years. This has led to the growing demand and urgency for cost-effective solutions to carbon dioxide removal (CDR) from the atmosphere or carbon capture, utilisation and storage (CCUS) of carbon dioxide emissions from industrial processes.
Introducing Biochar: A Promising Carbon Removal Solution
Biochar, a carbon- rich charcoal-like substance, has emerged as one of the safest, fastest and most durable ways to draw down carbon today. It is produced by heating organic biomass in low-oxygen environments. The carbon, which would otherwise be released into the atmosphere via decay, is now sequestered within the biochar permanently. There is also a significant value-added component of biochar that separates it from other technology solutions, with various use cases in agriculture, wastewater treatment and industry.
Market Landscape: Rapid Growth and Expanding Potential
Currently, the global biochar market is valued between $500 million and $2.2 billion, depending on the source. For context, Grand View Research estimates a market size of $541.8 million in 2023, while IMARC Group values it at $2.2 billion in 2024. These differences reflect varying definitions of the market and its segments.
Production is also scaling quickly — global biochar output rose from 96,320 to 352,304 tonnes per year between 2021 and 2023, representing a 91% CAGR, according to the International Biochar Initiative. If this growth continues, the industry — including equipment, distribution, and production — could reach a $3 billion valuation by 2025.
Key Drivers Accelerating Biochar Adoption
Growing awareness of biochar: As more companies develop innovative use cases for biochar and its benefits become increasingly understood, uptake for biochar will undoubtedly increase across many industries.
Carbon credit demand: The voluntary carbon credit market is dominated by biochar delivering 86% durable carbon dioxide removal credits. In addition, 80% of CDR credit buyers choose biochar, highlighting trust in the biochar market.
Demand from agriculture: Biochar’s soil enhancement and carbon sequestration benefits offer an environmentally friendly alternative amid restrictions on peat and synthetic fertilisers.
Government incentives and subsidies: Subsidies, especially for pyrolysis technology, are crucial to reaching economic viability, mirroring early support seen in wind and solar sectors.
Overcoming Market Barriers
Policy: Regulatory hurdles, including inconsistent standards and unclear end-of-waste criteria, significantly impact the market as uncertainty and a lack of harmonisation discourage investment and impact market growth.
Feedstock competition: Biomass is in high demand as sustainable aviation fuels, bioenergy, and bio-products all require biomass and land. Therefore, the expansion of the biochar industry is dependent on where the market sees the best use for these feedstocks, with this competition being pronounced in the biomass-abundant tropics.
Lack of awareness of biochar: Resistance to increased system complexity results from a lack of understanding of the value of the extra labour involved in producing biochar, with farmers instead opting for less laborious traditional alternatives. This is a potential barrier as it will impact biochar uptake, particularly among risk-averse low-income farmers.
Limited access to capital: Access to funding is a significant hurdle, especially in the global south where institutional support is weak.
Biochar’s rising role in the carbon credits:
With its measurable, cost-effective carbon removal, biochar accounted for 86% of carbon dioxide removal purchases by volume in 2024, according to the World Economic Forum. Its dominance continues to grow as corporate net-zero commitments increase
Microsoft’s Groundbreaking Biochar Agreement: Setting a New Standard
Microsoft’s recent announcement of the world’s largest biochar carbon removal agreement marks a pivotal moment in the corporate fight against climate change. The tech giant’s 10-year deal with Bolivia-based Exomad Green to permanently remove 1.24 million tonnes of CO2 is equivalent to taking over 260,000 cars off the road annually and represents more than just another sustainability initiative. It signals a fundamental shift toward permanent, verifiable carbon removal solutions that are reshaping the entire carbon credit market.
Supply and Demand: Scaling to Meet Corporate Commitments
Demand for permanent CDR from corporate net-zero targets is expected to reach between 40–200 Mt by 2030, and it is expected that there will not be enough supply to meet demand. This challenge is particularly acute given that if even 10% of the 10,731 companies with Science Based Targets initiative (SBTi) commitments started buying carbon removal credits today, the market would need to scale 25 times its current capacity.
The biochar industry, which already captures 80% of CDR buyers, is emerging as the leading solution to bridge this gap due to its combination of low costs and high delivery rates.
However, securing biochar production is not the main concern; instead, it is ensuring that the biochar being produced is of high quality. High quality translates into higher-priced carbon credits, and if prices stay in the region of $175-200/t, this will motivate higher participation in the biochar industry as producers can cover capex costs.
Ensuring Quality: Verification and Reporting Challenges
Biochar’s reputation as a reliable CDR solution and its high prices in the carbon markets depend critically on stringent crediting processes provided by platforms such as Puro.earth, Carboncritical, and Gold Standard.
MRV (Measuring, Reporting & Verification), a multi-step process that seeks to prove whether a project has sequestered carbon emissions, presents a significant hurdle for the biochar industry.
Challenges include measurement uncertainty due to the difficulty of precisely determining biochar’s carbon content and its long-term stability in various environments. In addition, the lack of standardised MRV methodologies across regions and registries further complicates the process, leading to inconsistencies and undermining market trust.
Microsoft’s partnership with Exomad Green, on the other hand, exemplifies the new standard for quality assurance. The project utilizes Carbonfuture’s MRV+ system to track every step from waste collection to carbon registration, while Exomad’s Forest Monitoring Center ensures biomass traceability and sustainability compliance. This comprehensive approach addresses another critical challenge: proving additionality, demonstrating that biochar production wouldn’t have occurred without carbon credit revenues.
Offtakes: the new market infrastructure
The introduction of multi-year offtake agreements is fundamentally reshaping how the biochar CDR market operates. These contracts provide suppliers with the financial certainty needed to scale production while offering buyers supply security and price stability in an increasingly volatile market.
An emerging trend as a result of the introduction of offtakes in the biochar industry is the idea that corporate buyers must buy now or be left out. 62% of high-quality biochar capacity has already been locked up in offtake agreements for 2025 and 28% in 2026. It highlights the importance of companies securing offtake agreements now, as those who continue paying spot prices for biochar carbon credits risk paying high prices or missing their climate targets due to constrained biochar supply.
The Road Ahead: Investing in Permanent Carbon Removal
For corporate leaders, the decision is clear: invest now in long-term, durable carbon removal solutions or face escalating costs and shrinking options. Microsoft’s billion-dollar bet on biochar underscores that half-measures are no longer sufficient to meet urgent climate goals.
Here at NovAzure we have worked with biomass technology companies pioneering the use of waste and biomass resources for the production of high grade biochar and Sustainable Aviation Fuel (SAF), where biochar is a by-product. This has given us a unique insight into the emerging technology solutions, use cases and business models for the commercialisation of biochar and its role in supporting the decarbonisation of industries such as data centres, aviation and other hard-to-abate sectors- cement, steel & petrochemicals.
