Techno-economic feasibility of biochar production in Europe - A business model for a circular bioeconomy in the province of Cádiz
- Biochar production is currently recognized by the Intergovernmental Panel on Climate Change as a necessary negative emission technology to deploy large-scale carbon dioxide removal (CDR). Biochar's most prominent application is soil amendment for boosting sustainable agriculture practices where carbon can be long-term stored rather than being used as a fuel. The type of technology used and the plant size, as well as the possibility to sell by-products of biochar production and monetize externalities (for example, trading carbon credits), are also very important variables affecting the techno-economic feasibility of biochar businesses.
The literature on financial models for biochar production that demonstrate key financial parameters under consideration of current policy measures is scarce, especially for the European region. Despite remarkable European regulatory advances, the economic feasibility of biochar businesses still must be analyzed case by case, according to the technology selected, the size and site of the plant, the impact of current regulations, and the final application of the product. Use-cases that demonstrate feasibility are extremely important, as they can serve as models that can be extrapolated to other regions and thus build stakeholder trust.
The research of this work is framed in a use-case that geographically limited to the province of Cádiz in Andalusia (southern Spain). Overall, Andalusia is a European region significantly exposed to climate change risk and soil degradation with an industrial agriculture economy. Cádiz offers unexploited and diversified biomass resources from its forests and from agriculture activities like orchard biomass and vineyard pruning from the large-scale production of sherry wine in the area. Moreover, the region is experiencing unprecedented amounts of seaweed biomass waste from an invasive species, representing an environmental problem.
Finally, the techno-economic assessment of pyrolysis, gasification, and hydrothermal carbonization technologies is performed based on the discounted cash flow methodology. Different scenarios are modeled according to the plant size, type of biomass converted, type of obtained byproducts, and sell of CDR credits. Key financial parameters are computed for every scenario (break-even prices, net income, net present value, payback period, and internal rate of return,) and the risk of loss for the business and for investors is calculated by conducting Monte Carlo simulations on the net income and the net present value.
The results of this work contribute to fostering biochar business models for regional development and environmental management in Europe based on a circular bioeconomy approach targeting CDR deployment and soil restoration.