Bioenergy Byproduct to Soil Savior

Production and sale of biochar at biomass-using plants can result in significant financial gains, but the industry is still working at building its myriad of potential markets.
By Anna Simet | October 25, 2016

Greg Stangl is a power guy. Self-proclaimed and readily apparent to others, that title has been earned by the CEO of Phoenix Energy after a decade-plus of developing and building small-scale biomass electricity projects. While there may be hundreds of companies working in the smaller-scale bioenergy project space, Stangl has something that most of them don’t: biochar. And, he knows how to use it.
Perhaps more accurately, he knows its worth. But that’s not to say he always did. “We used to give our biochar away at two cents per pound, when we built our first facility in Europe,” Stangl says. “Our plans then were all about electricity—we sold that biochar to people using coal furnaces.”

Partnered up with GE Energy for numerous projects in various stages of development, including a 2-MW plant in North Fork, California, that will break ground in early November, it wasn’t until Phoenix Energy began working in the U.S. that a much different market began knocking on the company’s door to purchase biochar. “Farmers started contacting us for it,” Stangl says. “Now, if someone buys a bulk truckload, we charge 79 cents per pound, and people pay it. It’s an expensive product, but if you have high-value specialty crops with a high capex investment and it has to provide to you for 20 years, it’s well worth the investment.”

Based in California, where a once-thriving biomass power industry has plummeted the past few years, Phoenix Energy’s business model would look substantially different if it weren’t for the sale of biochar, Stangl says. And by different, he means unfeasible. “Imagine if you took 40 percent of our revenue away. If prices stay where they are in California, we will likely make more money from biochar than power in the next several years—it’s insane.”

That reality creates an interesting dynamic when it comes to plant financing. “We didn’t get a bank loan because we have a biochar machine—we got a loan because I walked in with a power purchase agreement from a Triple A-rated, publically owned utility,” Stangl says. “The banks don’t know about biochar, they don’t want to hear about it, and there aren’t forward contracts for it. We did sell our first forward contract this year, but that’s just one. It doesn’t suddenly make biochar financeable.”  

But how much biochar can a small-scale plant actually produce? For Phoenix Energy’s 2-MW plants, it’s about 10 percent of the fuel intake. “Around 300 pounds per hour, per megawatt, of softwood,” Stangl says, adding that there’s roughly 44 yards of biochar in a standard truckload. Weight varies by the feedstock used—a truckload holds 22 supersacks of biochar; when it’s made from hardwood it weighs in around 900 pounds, and when made from softwood, around 550 pounds. “We’ve built a plant based on peach pits—that stuff is very heavy, a supersack weighs more like 1,300 pounds, it’s much denser,” Stangl says.

While well aware of biochar’s capabilities and potential—evidenced or proven in thousands of research papers, field trials and real-world application by a growing market—Stangl admits he isn’t an expert on biochar best practices or application rates in the soil as a fertilizer, storm water remediate, odor controller, carbon sequestration tool, and the list goes on. But what he does know is that the farmers and others who are repeat-purchasing in bulk continue to benefit from its “amazing properties.” And, the word is spreading. “For example, someone has come back to us and said, ‘My neighbors trees died when there was a zero water allocation, but mine survived, because I put biochar in when I planted them two years ago,” he says. “Words like that get around, and then suddenly it’s hard to keep up with demand, which leads to a challenge. It doesn’t pay to make the stuff if you don’t know it’s leaving in a timely fashion. Pellet guys, for example, might have two years’ worth of pellets in bags out back. But with our small-sized plants, we can’t afford to sit on inventory.”

And biochar may be just the right fit a certain pellet plants, such as Confluence Energy in Kremmling, Colorado, which alongside several different wood pellet lines, manufacturers biochar, kitty litter, animal bedding, absorbents and other products. If conditions are right, offering up a byproduct like biochar could benefit some mills that have struggled to stay afloat during recent soft winters.

Pellet Plant Coproduct
Biochar entrepreneur Jonah Levine, development manager at Confluence Energy and cofounder of Biochar Solutions Inc., has seen the industry rapidly progress over the past eight years, and shift from a heavy emphasis on the concept of using biochar to gain carbon credits toward use as a soil insulator, stabilizer or fertilizer, uses that have quickly gained traction. “From 2009 to ’13, the industry was growing by about three times annually,” Levine says. “It tapered off a bit, but still grows about one and a half times each year, which is still an incredible rate.”

At Confluence Energy, which installed a system several years after its initial startup, wood residue is carbonized through a vertical, pyrolytic tube, after which it is sent through a horizontal tube and augured out of the active or hot zone. “At the very edge of the hot zone, it’s hit with hot steam, then with ambient water,” Levine explains. “The water quenches the material, and then that material is moved pneumatically through another tube, and into a packaging system that includes screens and size-adjustment capabilities, and then it’s sent into bulk totes. Once it’s in bulk totes, it goes into storage for a two-week holding period, and then at the end of the hold, before it goes to the market, we test with either or both a temperature measurement or carbon monoxide test, which is a good combustion test for safety.”

Not only does biochar diversify a pellet plant’s offering, but heat produced as a result of its production can be captured and reused at the mill. A pellet mill like Confluence Energy might use around 1 MW thermal per hour, and process around 200 tons of wood pellets in a 24-hour period. “During the same time, we can coproduce biochar, as well as about 1 MW of heat energy that fuel switches from the other MW thermal going into the plant,”  Levine says. “So that biochar is producing a consistent head load.”

And, existing assets are another benefit to add to the list. “You’re getting char, coproducing, which is good, and you’re getting heat value, which is really good, and at the same time, your administration and staff is the same, your forklift driver is the same, and the trucks loading and unloading are the same,” Levine says, adding that the existing packaging system allows the company to sell its product to Big Box retailers including Home Depot, Lowes, and Tractor Supply. “All of these shared assets change the economics. It fits into the framework—integrated production should be the future of the space. By putting char inside of integrated pellet manufacturing, or a coproduction of electricity and char, you start to look like a legitimate producer in the biomass industry. In my opinion, biochar only isn’t the most cost-effective approach toward an industry.”

And those working in the space since biochar began to gain momentum just under a decade ago have grown productive capabilities and brought down the cost per unit of material, Levine notes. “In 2009, we were producing [biochar] for 10 times the cost shipped in a barrel that was dry and dusty and couldn’t be handled—the cost of a barrel used was $32.50,” he says. “Now, the cost of a bulk tote is $12, and you can get four barrels’ material in it. This is just an example of the simple but critical changes the market has to go through to become an industry.”

What’s the going price of biochar? That varies with each producer, and it also varies by the quality of char and intended end-use. “The market range is between $500 per yard, being the high end, and $100 per yard. But the question is, what is the char doing, where is it going, how is it created in preparation for that use? An example of high end is activated carbon pricing, which can be anywhere from $1 and $5 per pound. The low end is $100 per yard, and there might be a wide range of ash present, of fixed carbon, and it’s sold via bulk truck delivery.”

One example of high-end, or upgraded, engineered biocarbon, is Google Ventures-backed Cool Planet Energy Systems, which currently has a production facility in California, and a Louisiana site it plans to build an additional plant on, potentially in 2017. 

Dubbed “Cool Terra,” it is a carbon-sequestering soil amendment that is engineered to enhance soil health by nurturing microbial life in the soil, and enhancing its water and nutrient-holding capacity, according to Jim Loar, Cool Planet president and CEO. The model is set up differently than most biochar producers today—Cool Planet actually buys biochar in its raw state and puts it through an additional, patented process, but Wes Bolsen, head of global business development, says there is a market for this kind of high-quality, upgraded biochar.

And the company has partnered with ag distributor giant JR Simplot to get the product into the market and in front of customers, the kind of agreement that Bolsen says will be key in growing the industry. “The distribution channel has the critical aspect driving this market, and that’s what we’re bringing,” he says. “We put consistency behind it—customers will know what they’re getting when they buy engineered biocarbon. Through distributor channels, we can reach out to thousands of growers. Individual power plants have some growers who buy it [directly], but that’s not an industry.”

So what does the U.S. and global industry look like today? According to Tom Miles, owner of T. R. Miles Technical Consultants Inc. and board member of both the International Biochar Initiative and the U.S. Biochar Initiative, trade groups focused on exploring cost-effective ways of converting biomass into biochar and ways of using it, right now—in most cases—an energy component is needed. Though production in the U.S. is on the rise, on a global level, China dominates in both production and use.

Domestic, Global Markets
“In the U.S., producers are small from an industrial point of view, but there’s a wide spectrum, anything from making it in a coffee can and using it strategically as a carrier for biopesticides and biofertilizers—you don’t need much, a little bit goes a very long way—to 10-ton truckloads of biochar going into horticultural activities,” Miles says. “Much of it is small, commercial producers making less than a dry ton per hour, but they aren’t necessarily small companies—wood pellet producers making a variety of products, companies combining biochar with nutrients and deformulated products, and some small power plants turning wood gas into electricity as byproducts. Biochar has the potential to help make these very small, 3- or 5-MW or less biomass plants feasible.

China uses a reported 500,000 tons of biochar a year, Miles says, and the industry there is growing at such a rate that the IBI is opening an Asian branch. “In the case of China, it’s being used it to remediate soils that have been damaged by pollution from their coal-burning power plants,” Miles says. “They’ve also been making granulated biochar products used in mainstream agriculture, a point that we haven’t gotten to in any significant quantity yet in the U.S.”

In fact, the U.S. only producer and uses a fraction of what China does, says Miles, who estimates production in the country likely being no more than 20,000 tons per year. But, surprisingly, the number of companies involved in making biochar or technologies is upward of 300, he says, and many that are making it are capable of producing much more. “The challenge here is an energy market in which nobody will pay you enough for electricity or heat to use biomass, and we know there is excess biomass in places like California and the Northeast, where [paid biomass power] prices are very low. So the  challenge is how do we do this, how do we integrate this smaller wood products companies and see the benefit of making biochar and using the offgas from its production in their existing boilers as a form of fuel?”

For companies like Terrachar, which is targeting roughly 40,000-ton biomass plants for the installation of biochar technologies of companies such as Karr Group, those high-value electrical markets such as in California and New Hampshire are an area of focus. “Cogeneration does very well with this process,” explains Terrachar’s Phil Blom. “If you’re using propane or natural gas for heating, that’s an expense we can help cut back on.”

But smaller companies are often capital constrained, and need to see the benefit of an installation that won’t cost a few million dollars. And the only thing that will fix that is maturation of the market. “Everyone’s kind of waiting for the market to develop, but somebody’s got to develop the market,” Miles says. “We need more participation from the organics recycling businesses, and more participation from the agronomics side, the soils people, more people need to discover how biochar can be used in particular situations to be able to gain value…people have been really good at developing the technology to make the black stuff, but they have very little experience in the marketplace and direct market applications. We also have to work with dairy and other animal waste folks to find out best use of chars made from animal waste.”

Miles reiterates that’s not to say the market hasn’t made great strides. “What we’ve learned over the past 10 years is that there are a lot of different qualities of chars that we can use in different ways in agriculture, forestry itself, and storm water and soil remediation—we’ve found a lot uses for the material, and the challenge now is sort of balancing that with where the char come from, what its properties and best uses, and what a company can afford to make.”

The other thing the industry has accomplished is an official definition accepted by the American Association of Plant Food Control Officials, which controls labeling and regulation of fertilizers and soil amendments for the U.S., Canada and Puerto Rico. That took about three years to accomplish. “Now, everybody in every state and province has a reference point,” Miles says. Biochar has gone from ‘What’s biochar?’ to a buzz, and this year it’s, ‘What quality of biochar do you have available and how much?’”

For Stangl and Phoenix Energy, the quality of biochar it produces is likely to remain as it has, but the quantity has potential to septuple over the next two years at its plants in development. “I do worry about demand—we should really be raising our prices because it is all leaving,” he says.  At conferences, others are talking about biochar research and application rates…but farmers are already buying this by the truckload, and they have been for years. People are out there using it now.”

But growing the market at the rate of plant development could be challenging, Stangl says, as the company is working to respond to California’s push toward small-scale, forestry- and ag-based plants. “We’ve got to grow [the market] fast enough to keep up with the expanded capacity out there, and that’s why I see the opportunity to go beyond ag and into other markets like activated carbon—it’s a $2 billion industry and we bring it all over from Asia in the form of coconut shell. The city of Los Angeles buys over 800,000 pounds of activated coconut shell at about 99 cents a pound, so that we can build houses right next to the wastewater treatment plant and nobody smells anything. Why can’t our municipalities buy it from our own citizens who are using California forest and ag residues?”

For Phoenix Energy, it all comes down to being a biomass plant developer with very valuable byproduct, Stangl adds. “We’re not soils guys—we’re an energy plus biochar company, and it doesn’t work one or the other. I’m not ashamed to admit, we wouldn’t be doing what we are doing today if biochar were not valuable.”

Author: Anna Simet
Managing Editor, Biomass Magazine
[email protected]