The industrial biochar CDR market is tightening at an unprecedented pace. According to new data from the carbon removal market, 89% of biochar CDR credits have been committed by 2025, compared to just 62% in March.
The latest analysis shows that buyers are scrambling to secure high-quality credits as demand surges while supply lags behind expectations. This analysis monitors over 80% of global supply. Market offers for biochar rose 8% from Q2 to Q3 of 2025.
Biochar projects are currently trading at 10-20% above normal prices due to their reliability. Even 2026 biochar CDR credits have attracted early attention: 40% have already secured procurement agreements. This indicates intense competition, more than a year ahead of schedule.
Several key dynamics are driving this growth: Supply is tighter than expected. Biochar suppliers are operating at 23% lower capacity than anticipated, primarily due to delays in biomass pyrolysis project construction and financing difficulties. Biochar quality is more important than ever. Almost all high-quality projects are sold out, while 80% of biochar CDR credits for failed or low-quality projects remains unsold.
Why can Biochar Generate CDR Credits?
Biochar is produced by pyrolyzing biomass into a stable carbonaceous solid. Biochar production equipment converts naturally released CO₂ organic carbon into stable biochar. Therefore, biochar projects can generate CDR credits and are considered a high-quality, durable carbon removal method.
The basic formula for calculating the CDR (Continuous Demand) of biochar is: CDR tons = Stable carbon fixed in biomass – Project life cycle emissions (LCA).
Biochar has the potential to generate up to 920 million tons of negative CO₂ emissions annually. The average net cost per ton of CO₂ is $90.
To achieve established climate goals, mitigation strategies increasingly rely on negative emission technologies (NETs). Biochar is a technologically mature solution for achieving negative emissions. It can also improve soil fertility and crop yields.
Factors Affecting the Value of Biochar CDR Quotas
Biochar is a carbon credit obtained through carbon dioxide removal (CDR) technology. Its value is influenced by a complex system of factors.
Raw Material Factors
Biochar produced using agricultural and forestry waste is more sustainable, has better social acceptance, and is more valuable. Inexpensive and readily available raw materials can significantly reduce production costs and improve the economics of projects. This makes CDR credits more competitive.
Technological Factors
Temperature and Residence Time: The operation of biomass carbonization equipment directly affects the stability and carbon sequestration efficiency of biochar. Biochar produced under suitable conditions has longer carbon persistence and higher value.
Energy Recovery and Utilization: Advanced biomass pyrolysis equipment can capture and utilize the syngas and heat generated during the process. This can create additional revenue, reduce net costs, and thus indirectly increase the value of CDR credits.
Quality of CDR Credit
This is the core value that buyers care about most, and it directly relates to the value of CDR credits.
Carbon persistence is one of the most critical factors. Biochar with a longer expected retention time has a significantly higher credit value than products with uncertain persistence.
Projects that can clearly demonstrate additional benefits have higher carbon credit value. Does biochar, when applied to the soil, increase crop yields or improve water and fertilizer retention? This creates additional value beyond carbon credits.
Biochar projects with significant synergistic benefits often command a premium for their carbon credits. Buyers are willing to pay higher fees for a more comprehensive ESG (Environmental, Social, and Governance) performance.
Market Factors
Market and policy factors are external environmental factors influencing the supply and demand relationship and price of CDR credits.
Currently, the supply of high-quality, certified biochar CDRs is relatively scarce, and the supply-demand imbalance supports high prices. As more biochar projects come online, increased supply may put downward pressure on prices. However, this also reduces costs through large-scale biochar production.
