Evaluating sugarcane bagasse-based biochar as an economically viable catalyst for agricultural and environmental advancement in Brazil through scenario-based economic modeling

TL;DR

This study assesses the economic viability of sugarcane bagasse-based biochar in Brazil using scenario-based modeling, finding it feasible mainly for large farms and under certain economic conditions, with land application being most profitable.

Contribution

It introduces a comprehensive economic viability analysis of biochar in Brazil, filling a gap with scenario-based modeling and detailed economic assessments for different farm sizes.

Findings

Biochar is economically viable for large farms with funding, breaking even in 7.5 years.

Land application of biochar is the most profitable scenario.

Feasibility depends on carbon credit prices above $120 USD/tCO2e and biomass availability over 60%.

Abstract

The increasing global demand for sustainable agricultural practices and effective waste management has highlighted the potential of biochar as a multifaceted solution. This study evaluates the economic viability of sugarcane bagasse-based biochar in Brazil, focusing on its potential to enhance agricultural productivity and contribute to environmental sustainability. While existing literature predominantly explores the production, crop yield benefits, and carbon sequestration capabilities of biochar, there is a notable gap in comprehensive economic modeling and viability analysis for the region. This paper aims to fill this gap by employing a scenario-based economic modeling approach, incorporating relevant economic models. Findings include that biochar implementation can be economically viable for medium and large sugarcane farms (20000-50000 hectares) given the availability of funding, breaking even in about 7.5 years with an internal rate of return of 18% on average. For small farms, biochar can only be viable when applying biochar to the soil, which in all scenarios is found to be the more profitable practice by a large margin. Sensitivity analyses found that generally, biochar becomes economically feasible at biochar carbon credit prices above $120 USD/tCO2e, and at sugarcane bagasse availability percentages above 60%. While the economic models are well-grounded in existing literature, the production of biochar at the studied scales is not yet widespread, especially in Brazil and uncertainties can result. Reviewing the results, the land application scenario was found to be the most viable, and large farms saw the best results, highlighting the importance of scale to biochar operation. Small and medium farms with no land application were concluded to have no and questionable viability, respectively.