First ever biochar rating: unleashing the potential of engineered carbon removals
BeZero has published an industry-first ex post engineered carbon removal rating. This rating, of a biochar project, reflects the maturing of the engineered carbon removal sector. Until now projects in this emerging sector have not been eligible for a BeZero Carbon ex post rating, most often due to limited project information in the public domain. The publishing of this rating is demonstrative of a move towards increased transparency in this sector.
In any net zero scenario, there is consensus that large-scale engineered carbon removal is necessary. Estimates suggest that by 2030, the annual demand for durable engineered carbon removal could reach between 40 and 200 million tCO₂ as of September 2023, total cumulative removal has reached 112 thousand tCO₂. Meeting climate targets requires near-term retirement growth in this sector. As it scales, more projects will deploy and retire ex post credits. Rating the quality of these carbon credits, and the likelihood that they achieve a tonne of CO2e removed, will improve transparency and enhance integrity in the market.
Biochar is leading the ex post engineered carbon removal market.
Our first engineered carbon removal rating is of a biochar project. To date, biochar has contributed to over 90% of ex post engineered carbon removal retirements. Biochar is the product of a high temperature, low oxygen biomass combustion process, called pyrolysis. During pyrolysis, the molecular structure of the biomass changes to more stable forms. As a result, biochar can store carbon for much longer time frames than its biomass feedstocks. The process can also produce waste gases that after combustion are used as waste heat in district heating networks. The produced biochar has multiple potential uses, including as a soil amendment, a feed additive, or an input to concrete production.
The first BeZero biochar rating is an ‘A’.
BeZero Carbon has assigned credits issued by this project an ‘A’ BeZero Carbon Rating. This is based on the opinions and reasons expressed in our rating analysis of publicly available information. Of the 350+ carbon projects rated on the BeZero Carbon platform, only 21 are rated an ‘A’ or higher (as of 19/09/23). Carbon credits rated ‘A’ provide a high likelihood of achieving 1 tonne of CO₂e avoidance or removal. This biochar rating assesses the project against our risk factors, as set out below.
Additionality:
To assess additionality, it is important to evaluate the role of carbon finance in a project’s financial analysis. Projects can receive revenue from the sale of carbon credits, the waste heat generated, and the biochar as a product. Projects have a higher likelihood of additionality when carbon finance plays a meaningful role in overall project financing. Further, we have evaluated the additionality of biochar production in the project region, as well as any policy and regulatory measures in place that either constrain or support additionality.
Over-crediting and leakage:
In assessing our carbon accounting risk factors - over-crediting and leakage - we have evaluated both the biochar methodology used and project-specific information. For over-crediting, variables used and assumptions made in a project’s credit quantification need to address all potential lifecycle emissions against the carbon removal tonnes issued for net credit issuance. To evaluate leakage risk, potential positive activity leakage, such as from reduced methane or nitrous oxide emissions when biochar is used as a soil amendment or from a new source of low-carbon heat supply from the pyrolysis process, needs to be assessed against any potential leakage emissions not accounted for in the project activity or likely to occur in the supply chain.
Non permanence:
For non-permanence risk, biochar has high durability compared to its feedstocks. The time frame during which the carbon remains stored is dependent on factors such as pyrolysis conditions, feedstock choices, and post-production storage (for example, biochar stored in soils has an associated biological decay rate). For engineered carbon removal projects more generally, the extent of this non-permanence risk is influenced by a project’s chosen commitment period for its credits - the time frame during which the greenhouse gas removals generated by the project are committed to being removed. Evaluating the project’s chosen conditions allows us to assess the overall non-permanence risk.
Learn more about the project and our detailed carbon risk analysis here. To learn more about engineered carbon removal and biochar projects, drop us a line at commercial@bezerocarbon.com.
What does the engineered carbon removal sector need to consider?
The engineered carbon removal sector is developing. New projects and developers are emerging monthly. As the sector develops and more methods and projects become eligible for ratings, developers should consider:
Commitment periods: These commit projects to CO₂e removal for a set time period. Our ratings evaluate the likelihood that carbon will be removed for the entirety of the project's commitment period, therefore we do not consider reversal risk that occurs beyond this time. Projects need to identify the commitment period of their credits so that the market can understand the carbon efficacy of these new methods over a comparable and feasible time frame.
Additionality: Whether the removal activity would be viable in the absence of carbon finance is the founding principle of a carbon credit project. For engineered carbon removal projects where alternative revenue streams are accessible, they need to demonstrate additionality not just by stating that the activity itself is additional, but also demonstrating this through their financial analysis.
Transparency: The sector has demonstrated hesitancy in disclosure owing to concerns around intellectual property, but there is an opportunity to enhance project transparency without sharing every detail. The more information available, the more the market can understand these nascent methods, their role in the market, and develop trust in their emergence. Published project documents, monitoring reports, and reported issuance and retirements are necessary first steps on this journey towards transparency.
What comes next?
In publishing the first ex post engineered carbon removal rating, this emerging sector is signalling early signs of maturing. To achieve net zero targets, the sector needs to scale. As such, at BeZero we are striving to enhance our ratings coverage in this sector. Ex post and ex ante ratings of engineered carbon removal projects are needed to improve understanding, enhance transparency, and develop trust for this nascent but necessary sector.