The Long Position

Rarely do you have the right economics and conditions to be able to survive purely on carbon credits. Some companies have made it work, most can’t. Right now, biochar is the star child of the carbon markets, commanding premiums in the VCM and interest from offtakers. Given this interest, it might be possible for a company to stand on this single revenue stream.

But I firmly believe that carbon credits should be part of a revenue stack. How might this look like biochar-based companies? We use the examples of three biochar companies – American BioCarbon at Cora Texas in Louisiana, Lakeland Biochar at Alma, also in Louisiana, and Carboneyes across mills in Kenya – to build a spectrum for such businesses as they stand today.

Three revenue structures, one feedstock

Carboneyes is the pure-play carbon archetype. Its model is to heat a mill’s surplus bagasse into biochar and apply it directly to farmland around the mill, at no cost to farmers, funding the work entirely through carbon credit sales to removal-portfolio buyers. There is no commercial biochar product.

American BioCarbon is a commercial facility designed to produce over 100,000 tons a year of fuel pellets, a coal substitute, alongside biochar soil amendment and absorbent pellets, on top of CORCs sold through Puro.earth, scaling toward 175,000 to 240,000 credits annually. This amounts to four possible product lines. But according to CTO Erwin Bogner, speaking at the 2024 US Biochar Initiative conference, the project “was not built to optimise on biochar sale to ensure additionality, the proof that carbon finance is needed, instead relying on carbon credits.” The company has deliberately not maximized its strongest, most liquid commercial product, because selling too much of it would undercut the argument that its carbon credits represent finance the project actually needed. The company is choosing to bet on carbon credits but has the biochar commercialization within its scope, if there comes a need.

Lakeland Biochar is a clean revenue stack case. Its pilot unit converts 60,000 tons of Alma bagasse into 6,500 tons of biochar while generating 15,000 carbon credits, and both the biochar and the credits are sold, the biochar directly to farmers, gardeners, and soil remediation specialists. There’s no reported constraint on how much biochar the company is willing to sell. So these are two monetized revenue lines, functioning simultaneously.

The additionality asterisk: Considering the standards’ perspective

The three registries that dominate biochar crediting, Verra, Puro.Earth, and Isometric, define additionality, and each has arrived at a different mechanism for the same underlying concern: that a company earning enough from its commodity product no longer needs the carbon revenue to justify the project.

Verra’s VM0044 originally let waste-biomass projects lean on a “positive list”, processing an eligible waste feedstock into biochar was automatically deemed additional, no financial test required. That changed with the v1.1 revision: Verra added a mandatory investment analysis (its VT0008 tool) as a required step regardless of positive-list status, aligning with the Integrity Council for the Voluntary Carbon Market’s Core Carbon Principles (ICVCM CCP). In practice, a project now has to show, with real financials, that carbon revenue was necessary, not just that its feedstock was waste.

Puro.Earth also runs a form of financial additionality test. If a facility generates “significant cost savings, without projected CORC revenues,” the activity can be deemed non-financially additional and denied credits. Puro also spent years excluding retail biochar sales, bags sold direct to consumers, from CORC eligibility entirely, over traceability concerns: once biochar leaves the facility for a home garden, there’s no reliable way to confirm it wasn’t burned or discarded rather than applied durably. That only changed in a December 2025 methodology update, which opened a path for retail sales under strict labeling and chain-of-custody safeguards. The platform said: retail channels “strengthen project economics where credit revenue alone may not yet sustain scale.” The registry explicitly acknowledges that diversified revenue helps a project, provided the traceability problem is solved separately from the additionality problem.

Isometric has the most direct language of the three. Its Biochar Production and Storage protocol requires projects to demonstrate financial additionality by evidencing that removals are “the main purpose and only source of revenue,” or by running a full IRR-based investment analysis proving economic barriers would otherwise block the project. Beyond that initial test, Isometric requires additionality to be reviewed on an ongoing basis, specifically triggered by, among other things, “decreases in the effective cost of producing biochar due to increased revenue from co-product sales.” If a later review finds a project has become non-additional, it loses eligibility for future credits. Not retroactively, past issuances stand, but the door closes going forward. So, a company that gets too good at selling its biochar commercially can talk its way out of its own future crediting.

There’s a rough practitioner heuristic that captures the same idea from the buy side: if 60% or more of a project’s revenue comes from carbon credit sales, buyers generally treat additionality as likely; below 20%, they’re advised to scrutinize whether the project would have happened anyway.

Where other known biochar players sit on this spectrum

Treating the three cases above as archetypes rather than one-off examples, here’s how other prominent biochar companies bucket against the same lens.

Archetype	Companies
Active multi-revenue	Novocarbo (Germany), Pacific Biochar (United States), Lakeland Biochar (United States)
Diversified, capped for additionality	American BioCarbon (United States)
Pure carbon	Exomad Green (Bolivia), Varaha (India), Carboneyes (Kenya)

It’s interesting to see how the companies here are also backed, because it has implications for how the business model gets designed and how much they can fully rely on carbon credits or not.

For example, Exomad Green sits in the pure-carbon row by revenue structure, but it’s a division of Exomad, Bolivia’s largest wood exporter, a profitable operating parent uncorrelated to carbon markets. That cushions it in a way Varaha and Carboneyes, both standalone and carrying the full exposure their revenue structure implies, are not. Given the parent company’s resilience in a commodity market, Exomad Green’s existence will be affected by the additionality test differently.

American BioCarbon is a similar situation: it is wholly owned by the Earth to Energy Fund, an investment vehicle that owns and controls its assets outright. In contrast, Novocarbo, Pacific Biochar, Lakeland Biochar, and Varaha are all standalone, founder-led or independently VC-backed, with no operating parent or controlling fund behind them.

My read, as an investor

Revenue concentration, not the presence of a self-imposed constraint, is the risk I’d underwrite against here. A company that chooses not to fully exploit a strong second revenue line, because a registry’s additionality test punishes it for doing so, is in a fundamentally different position from a company that never built a second revenue line at all.

Ranked by that lens: Lakeland Biochar-type companies have the cleanest structure, two live revenue streams, no artificial ceiling on either. American BioCarbon-type companies sit in second, because the optionality is real capital efficiency sitting in reserve, not a paper claim. If carbon markets soften, American BioCarbon has an existing commercial pellet business, existing customer relationships, existing production infrastructure, to lean into. Carboneyes-type companies cannot make that decision at all. There’s no dormant commercial channel to activate, because the entire business model was built around not having one, and there is no parent balance sheet standing behind it either.

Any biochar investment memo must be aware of this spectrum and must test the company’s resilience against it to ensure that a currently frothy and hyped carbon market does not throttle your investment if a 2023-type cannon event repeats itself.