The biocharBiochar is a carbon-rich material created from biomass decomposition in low-oxygen conditions. It has important applications in environmental remediation, soil improvement, agriculture, carbon sequestration, energy storage, and sustainable materials, promoting efficiency and reducing waste in various contexts while addressing climate change challenges. More industry has spent years proving that permanent carbon removal is possible. Methodologies have matured, corporate demand for credits continues to grow year upon year, and projects are being deployed at an increasing pace. Yet despite this progress, the sector faces a fundamental challenge. We still don’t have a mature market for biochar itself.

This creates the industry’s Catch-22.

Most producers need biochar prices of around €500 per tonne to make projects financially viable. But at these prices biochar often costs more than the value it creates for the end user. Whether it is being incorporated into agricultural systems, forestry operations or construction materials, adoption becomes more difficult when the economics don’t add up.

At the other end of the spectrum, when biochar is available at prices closer to €195 to €230 per tonne, applications become commercially attractive and demand rapidly exceeds available supply. Large distributors can easily absorb tens of thousands of tonnes, but those volumes simply are not available today.

The result is a market trapped between affordability and availability. Biochar is often too expensive for widespread adoption, yet too scarce at viable prices to satisfy the demand that would exist. The industry tends to frame this as a production challenge. I would argue that it is increasingly a market development challenge.

The biochar sector spends a great deal of time discussing feedstocks, production technologies and carbon methodologies. All of these are important. But none address what may ultimately be the industry’s biggest constraint: developing end-use markets capable of absorbing biochar at meaningful volumes and sustainable prices.

Biochar is not just a carbon removal product

Biochar projects are still viewed primarily through the lens of carbon markets. Carbon credits are undoubtedly important, but they are only part of the equation. Under most leading carbon removal methodologies, biochar must ultimately be put to a beneficial use that supports long-term carbon storage. The growth of the carbon credit market is therefore inseparable from the growth of the applications market.

Put simply, there is no thriving biochar carbon removal sector without thriving biochar end-use markets. This means applications shouldn’t be treated as an afterthought. If we want biochar to scale, we need to think not only about how we produce more of it, but why customers want to use it in the first place.

Too often, biochar is viewed as a commodity whose value derives largely from carbon removal. But the long-term opportunity is much bigger than that. Biochar has the potential to solve real-world challenges across agriculture, forestry, construction and other sectors. If those applications create meaningful value for end users, they can drive demand in their own right, with carbon removal providing an additional source of value rather than the sole reason for adoption.

If we want to break the Catch-22, we need a shift in mindset. Developers need to move beyond thinking like a commodity producer and start thinking more like product developers.

The companies that succeed will not necessarily be those producing the most biochar. They will be those creating products and solutions that customers actively want to buy.

What makes an application scalable?

At A Healthier Earth, we focus on identifying applications with a credible path to large-scale adoption. While every market is different, we’ve found that there are several principles that consistently determine whether an application can move beyond pilot projects and reach commercial scale.

The first is price parity, where biochar products must compete economically with incumbent solutions. If a product depends on customers paying a substantial premium because it delivers environmental benefits, adoption will remain limited.

The second is performance. Whether the customer is a farmer, forester or manufacturer, biochar-based solutions need to perform as well as, or better than, the alternatives they replace.

The third is incentives. This is especially important in agriculture, where uptake often depends on who captures the value created. Where additional environmental benefits or revenue streams are generated, farmers should have the opportunity to retain a meaningful share of that value.

These principles guide every application we assess. The goal is not simply to identify promising use cases, but to create the demand needed to support larger facilities, lower production costs and drive greater market maturity.

Financing is the other half of the equation

Market development alone will not solve biochar’s growth challenge. The industry also needs financing structures that reflect the realities of the sector. Many biochar projects are still funded using approaches borrowed from venture capital, despite having far more in common with infrastructure assets which require significant upfront investment, generate returns over long periods and depend on predictable future revenues.

This mismatch is particularly evident in the use of short-term prepaid carbon credit agreements. While prepayments can provide valuable early-stage capital, forward-selling future revenues can make projects harder to finance at scale because those cash flows have already been committed.

The industry needs financing models designed for long-term deployment. That includes pay-on-delivery carbon credit contracts extending over ten years or more, creating the stable revenue streams that lenders and infrastructure investors look for. Scale also matters. Many individual biochar facilities are too small to attract institutional capital on their own.

Aggregating projects into larger portfolios can create investment opportunities that meet the requirements of banks, pension funds and other institutional investors. Our recently launched biochar platform reflects this approach, bringing production from multiple developers into a single governed operating model with shared standards, oversight and traceability. Creating greater consistency and scale across portfolios will be important if biochar is to attract the capital needed to grow.

Creating a virtuous cycle

The biochar industry has already shown that the technology works, now we must focus on creating the conditions for it to scale, and this will not happen through carbon markets alone. It will happen by creating measurable value in real-world applications and putting financing structures in place that support long-term deployment. As demand grows and production expands, costs can fall and new uses can become commercially viable, creating a virtuous cycle that continues to support broader adoption.

The future of biochar will not be determined solely by how much we can produce, rather how much value we can create. If we continue to view biochar primarily as a source of carbon credits, growth will remain constrained. But if we build applications that solve real-world problems and finance projects for long-term deployment, we can unlock a market capable of growing far beyond today’s carbon removal sector.

That is how we break biochar’s Catch-22. And it is how biochar becomes not just a carbon removal solution, but a widely adopted material that delivers value across multiple sectors while helping accelerate decarbonisation.