Shree: Hello, and welcome to this Argus Carbon podcast on Negative Emissions Technology. I am your host today, Shree Balaji Shanbagaraj. I am a senior carbon reporter on the Argus Carbon desk. And today, I have the pleasure to have with me Kavin Kumar Kandasamy, CEO of ProClime. Hi, Kavin, how are you?
Kavin: Hi, Balaji. Thanks for having me. I am well, thanks, and how are you?
Shree: Great, all good. So we are here to discuss on the biochar markets and the topic today revolves around the test of biochar as a scalable carbon removal technology. With demand for durable carbon removals rising, biochar has gained traction for its ability to lock carbon into stable forms while generating co-benefits across agriculture and waste management. But scaling remains a challenge from feedstock availability and standardisation to measurement, reporting, and verification. When people talk about carbon removal, biochar is often treated as a niche or emerging solution. But in reality, it's one of the few pathways already delivering verifiable removals at scale today. So where does biochar really sit in the CDR stack right now?
Kavin: That's a loaded question. Firstly, removals is the only way that we can create permanence in meeting our climate targets, right? And biochar is a tried and tested and verified removal pathway. And when you look at biochar, yes, it is fair to call it niche, but not anymore. But there are a lot of developers out there who have been able to build products of scale. And the technology is also becoming more commonly available in terms of ensuring that they're able to deliver more reliable projects. The first challenge that any project developer might have in the biochar space is feedstock availability. And when you look at feedstock availability from agri residue or anything of a similar nature, where supply chain planning is more intense, and more, you know, sort of large, then the reliability also comes down.
And that is where ProClime has positioned itself uniquely in looking at invasive species. We spent the last two and a half years mapping invasive species across India, Sri Lanka, and a few other South Asian countries. And now we are working with the governments in these regions, which they enable us to, and they give us a mandate to...they've given us a mandate, if I may, to remove these invasive species and use them as feedstock in our biochar. And we're proud to say that we're working across eight states in India, and we've secured the mandates across six now and two more in the near future. And where we'll be using all these invasive feedstock over the course of the next 7 to 15 years, based on availability as feedstock for our biochar. So I'd say, feedstock problem can be solved with more planning and, you know, efficiency.
And again, where would I place biochar in the removal stack? I would put it right up there because one, it is reliable, two, it is scalable, and it's reached a point where, you know, it has become the go-to technology for anybody looking for CDR credits in the space. There are a few others in the space, but I feel biochar is right up there.
Shree: Great, great. So we see no shortage of pilot projects and proof points in biochar, but scaling beyond that is a very different challenge, from feedstock availability and fragmented supply chains to standardization. What does it actually take to move from pilots to repeatable scalable delivery?
Kavin: So I would say the biggest challenge for biochar is enabling, you know, the dispersal of the biochar itself, not the feedstock. A lot of people are stuck in the feedstock problem, right? It's in the ability to get the biochar back into soils and to have it mixed with fertilizers. Again, most people just disperse it, most developers just disperse it on farmland and account for it as, you know, infused it to soil for permanence. I feel working with institutional players is the only way that you can scale biochar, you know, demand, fertilizer companies and certain other companies who see value in biochar as part of their supply chain. I think that's the only way to make sure that there's constant demand for biochar and it goes into the soil as part of, you know, the removal strategy.
Having said that, why pilots and why are they not scaling? That's because people look at immediately just setting up the plant rather than the whole supply chain. The biggest challenge today for biochar is feedstock availability. Soon it will be the demand for biochar itself, and that is what ProClime has solved across the value chain where we've solved the feedstock problem, and we've solved the off-grid problem where there is steady supply of feedstock and there is a steady demand for biochar being infused in a strong formulation into the soil. So if you have, you know, a sum of whole approach, then I think you would be able to ensure that there is funding for your projects and you're able to scale beyond pilots.
Shree: So there's a lot of talk about demand for durable carbon removal, yet supply often seems ahead of committed buyers. Who is actually purchasing biochar carbon removals today, and what's still holding broader demand back?
Kavin: Okay, and two years back it was, let's say, a coalition of exploratory buyers, if I could use that word, right, who wanted to support the market early on from Japan to Europe to the Americas. And now, it has moved past that, and I can confidently say that early adopters have taken the risk in terms of showing that this can be done and such projects are bankable. Now there's a whole stream of aggregators working on behalf of end buyers who are piling up their portfolios with durable CDR credits, and most of them coming from biochar of course and then followed by ERWs, Enhanced Rock Weathering, and similar projects. And I see even BECCS is getting up there, right, where biochar is. So there is a strong demand for all of this and, sooner or later, the demand pool will increase and the supply pool will also match up. But currently, I see a sort of a mismatch between the aspirations of the demand side versus the supply side, but supply is catching up. And as that catches up, I strongly feel demand will also rise significantly.
Shree: So we've seen that large tech companies have been one of the prominent buyers when it comes to carbon dioxide removals as well as the wider DCM. And a few days ago, there was a news that was circulated in the media that one of the prominent buyers, Microsoft, was planning to pause its purchases. So did that impact your negotiations in any way? Anything that you could share on those end?
Kavin: Not at all. I mean, Microsoft is not the only company out there with a climate pledge. There are so many companies out there who all are looking to create a pro-climate world. And you know, having an entire industry's bankability on the narrative set by one company is unfair to that company as well. I think they've done their bit. They've shown enough promise in supporting early-stage projects and coming in and creating more adoption in the carbon removal space, and it is now time for the other companies to step up and meet their commitments as well. So I don't see that as a sign of a downslide, but I feel that this is the moment that other players rise up to prominence. And we are in negotiation with almost, you know, seven different companies, from aggregators to off-takers, and all of them have similar volumes to what Microsoft has committed as well. It's just that they haven't taken the early adoption as much as Microsoft has done, and I think we should be thankful for that. Microsoft has shown some tremendous courage in supporting such projects across the world.
Shree: So maybe you could move to the pricing side of things. So biochar pricing is often explained in terms of production costs, but that's only part of the story. So how do factors like MRV rigour, delivery guarantees, and counterparty risk really shape pricing in this market?
Kavin: So the first thing to look at from you know a supply side would be to see if it is artisanal or industrial. And carbon leakage plays a very important role in ensuring if there is permanence or not. Industrial has a greater guarantee of, you know, lesser leakages or close to nil, but there is always leakage. So that ensures that there is enough, you know, confidence in the biochar with the carbon credit coming from a said production time, and that will limit its pricing at scale. Having said that, yes, DMRV plays a vital role. But as I mentioned before, streamlining your entire supply chain makes it already all the more accountable in terms of delivery. And beyond that, every other data point that you can support, you know, let's say intervention with...if you're using biochar for production of coal burning or if you're using biochar in the built environment, every other data point makes it even more, you know, easy for the off-taker to understand the permanence that has been created by such an intervention, and that also adds to the pricing. So based on the quality I feel the pricing is going to vary, and I feel there are more than five or six positions the entire market has taken from low-end biochar all the way to very high-end biochar, and you can see the pricing reflect every single position that the developers have taken.
Shree: So you mentioned an interesting point about the artisanally producing biochar, and we've been seeing that lots of carbon dioxide removal-focused standards like isometric, pure earth, and in fact the emerging rainbow as well have promoted distributed production of biochar. So a distributed production of biochar versus industrial when it comes to quality and integrity, how is the market sentiment towards such projects? So are distributed projects emerging and giving a tough time to centralized industrial projects, given the load of core benefits that they have when it comes to community, small-holder farmer engagement? So what are your views on that?
Kavin: I see both of them solving the problem, you know, differently again. Artisanal biochar is the calling to power of the community at large at that point, and I wouldn't say it's wrong, but just that it is not as measurable as industrial biochar right. And industrial biochar turns out to be more bankable because you know that there is a streamlined way of doing things, it's efficient, and the delivery is more guaranteed, and just the whole planning that goes into an industrial biochar, you know, shouts accountability. In artisanal, the narrative is much better and the community integration is much better, but the guarantee of continuity is not so high, so it has its pros and cons. But having said that, Proclime is not going to do any artisanal biochar. We've integrated community benefits with our industrial biochar projects themselves. For example, in Himachal, where we are collecting forest residue, it is done by the community from that region. They collect the forest residue from there and we share a portion of our revenue with the government, which again feeds it back into, you know, community benefits within the region. And similarly, in some of our projects across Kerala or Punjab, where we are, again, removing invasive species, the community is at the core of all these projects, from the process of sourcing and removing it all the way to dispersing it in certain cases. So community is at the core of industrial projects too. So I would say the benefits of the narrative that comes with an artisanal biochar can now be found in an industrial biochar since all the negatives where the continuity is not guaranteed in artisanal.
Shree: Great, thanks for that. So maybe we could head to our final question, which is on contracting structures. So what are the different contracting structures that you see in the biochar market today? So are buyers more willing for a long-term off-take contract, and how does that help on the producer side, or is the market is too evolved to move towards spot contracts and short-term deals as well?
Kavin: So the way I see it, anything to do with technology-based removal, I mean, it's just not the removal as a commodity, you should have other byproducts too. The way we designed our projects and the technology and the research that has gone into our projects, we produce more commodities like biochar, bio-oil, and [inaudible 00:13:53.269], and just not the CDR, just not the carbon credits, right? So the carbon credits accounts for about 30% to 40% of our revenue, but then the remaining 60% comes from the commodity that gets produced out there, which is sale of biochar to, you know, institutional fertilizer companies. Bio-oils, there are enough off-takers for bio-oils in a market like India. Now, all of these we have secured off-takes, making our products more bankable. So again, the reliance on carbon credits alone to sustain the project goes down. But having said that, we always prefer long-term off-takes. And I feel most projects in the market, to secure funding, need long-term off-takes. And long-term off-takes are the only way that guarantees that these products will be around and delivering the climate impact over the lifetime of the project. Spot markets alone create significant volatility from a price point and from a delivery point. So I would say long-term off-takes is where the market is going to position itself, but most biochar companies will have to look at other sources of revenue to make sure that the climate impact is there, along with the carbon credits.
Shree: So maybe we are at the end of our podcast today. So any data or analysis provided by me today is created using the Argus Carbon service. You can request a free trial or more information by visiting www.argusmedia.com/carbon. Thanks for your time, Kavin.
Kavin: The pleasure is mine. Thanks for having me, Balaji.
