Financial feasibility of biochar production: A comparative analysis of business scenarios

Abstract

The climate crisis is a global challenge that demands action. Portugal is committed to achieving carbon neutrality; however, a recurring obstacle is wildfires. An effective way to prevent wildfires is the removal of excess biomass as the shrubs and other residual biomass from forestry operations (e.g., tree tops), which act as a vector for fire propagation. To stimulate operations of forestry management and maintenance through the valorization of residual biomass, an economic incentive is required. To address this, a technoeconomic analysis was developed to assess the economic potential of valorizing residual forestry biomass for biochar production. Three business scenarios were created, differing in revenue: 1 - Biochar and carbon credits; 2 - Forest management operations, biochar, and carbon credits; 3 - Forest management operations, biochar, carbon credits, and sale of surplus biomass. All scenarios assumed the use of an autothermal decentralized pyrolysis reactor. Economic viability was assessed using Net Present Value (NPV), Internal Rate of Return (IRR), and Payback Period (PP). Scenario 1 had a negative NPV of € −1,360,620. In contrast, scenarios 2 and 3 were viable, with NPVs of € 172,426 and € 685,234, respectively. Scenario 2 had an IRR of 7 % and a PP of 15 years, while scenario 3 achieved an IRR of 13 % and a PP of 8 years. Sensitivity analysis identified key variables influencing NPV. Results show that integrating the entire production chain significantly improves the financial viability of biochar production, offering a sustainable solution to forest management challenges while contributing to decarbonization efforts. • Biochar business models can be considered as strategies for wildfire prevention. • The biochar production chain, when integrated, can lead to economic feasibility. • Net present value was mainly affected by yield and forest maintenance operations.

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