Collison & Associates Limited Regional Perspective on Biochar and Economics Martin Collison Collison & Associates Limited 1

Collison & Associates Limited

Regional Perspective on Biochar and Economics

Martin CollisonCollison & Associates Limited

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Outline Content

• Agricultural challenges to 2050

• Agriculture in the East of England

• Impact of Biochar on Agriculture

• Developing a Large Scale Biochar sector

• Business case for Biochar

• Economic Impact of a Regional Biochar sector

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Agricultural Challenges: Demand – macro level

• The Global Nature of Demand for food, feed, fuel, renewable materials has changed (particularly since spring 2007)

• Population will increase to 9.5bn by 2050 (World Bank) +50%

• Affluence increasing - developing World middle class will grow from 350m in 2000 to 2.1bn by 2030 – 6 fold increase in those able to buy consumer goods, cars, beyond basic housing etc.

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Agricultural Challenges: Demand – macro level

• Most of increase in ‘newly wealthy’ BRIC countries, and population growth (absolute) largest in India

• Big increase in the global demand for all agricultural products (food, feed, fuel, renewable materials) – doubling by 2050

• Gains in agricultural productivity have been slowing – now circa 1% per annum

• Meeting the production challenge will require new investment & technology to be applied

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Unmanured, continuous wheat

Continuous wheat: FYM PK+144 kg N

1st wheat in rotation: FYM+spring N Best NPK fertiliser

Red R

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Broadbalk (Rothamsted) yields, varieties & major changes Source Prof Ian Crute, Growing Our Future Food - Supply is too important to leave to chance

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Introduction of: liming fungicides fallowing herbicides


Environmental Constraints

But .... as well as delivering more output, we have to address:

• Climate change – both responding to the impacts & helping to address the causes – agriculture uniquely placed to sequester carbon in the soil

• Calls for ‘more environment’ i.e. wildlife, habitats targets

• Need to address externalities e.g. waste, CO2, methane, NOx, smell, dust - the food chain is a major global polluter

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Environmental Constraints

• Water a major issue in the East of England (& increasingly in other regions/ countries), addressing it is a priority but also an opportunity

• Food sector major issues with waste

• To achieve this whilst also increasing production demands much more sophisticated solutions & investment in new processes

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Constraints on World Agricultural Production

40% too dry : 21% too cold : 21% too wet : 6% terrain too rough 2% unsuitable soils

Source: Prof Robert L Thompson – November 2008:

Growing Our Future Food - Supply is too important to leave to chance


Conclusion 1

• We have to find ways to increase (double) production whilst reducing our environmental footprint

• Current average growth rate in productivity is well below the level needed to meet the production challenge

• Much of the World cannot help meet the production challenge: areas that can must play a part in meeting demand

• We need new disruptive technologies to be applied

• Can biochar be one of these disruptive technologies?

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Agriculture in the East of England

• 75% of the region’s land area is farmed

• The premier crop region – with particular strengths in arable and field scale horticulture (vegetables, salad, fruit)

• 25% UK pigs, 30% UK poultry

• Employs circa 50,000 on farms - output circa £2bn & growing

• Some of the highest average yields in the World – benign climate, good soils, World Class farmers

• Unparalled concentration of R&D centres linked to the sector

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Agricultural & Food Output

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Sector Estimated regional employment

Estimated GVA £bn

Farming 47,000 0.7

Food processing 37,000 2.0

Wholesale and logistics

27,000 1.2

Food retail 150,000 2.2

Catering 150,000 2.1

Total 401,000 8.2

Source: Defra 2007, EEDA 2007, EEDA 2008


Agricultural Output

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Enterprise Area (ha) £m Output per hectare £

Cereals 614,000 491 800

Oilseed rape 130,000 98 754

Sugar beet * 77,000 106 1,377

Potatoes * 34,000 217 6,382

Other arable - 100 -

Field vegetables * 30,000 223 7,433

Fruit * 4,000 61 15,250

Glasshouse (food crops) 411 58 141,119

Pigs - 198 -

Poultry - 325 -

Milk, beef, lamb - 135 -


Potential for Growth in East of England Agriculture

• With some of the World’s most productive farming is there scope left to grow productivity?

• Yields have plateaued (genetic base and current production techniques)

• Water stress major constraint in some years

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Environment Agency water

resource availability

status (March 2007), classified

according to water resource management

units


Potential for Growth in East of England Agriculture

• Soil carbon levels falling

• Nitrate Vulnerable Zones & IPPC are constraining fertiliser use

• Pressures to reduce cultivation costs - £ and CO2 reasons

Many of the constraints on productivity relate to the management and performance of agricultural soils

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Conclusion 2

• East of England agriculture is large and growing

• But could increase its productivity

• Soil performance and soil management improvements are critical to success

• Can biochar play a part in helping manage our soils?

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Biochar Benefits – Conclusion 3

Ruben’s paper – biochar maybe able to offer potential benefits in terms of:

• Water holding capacity

• Soil structure

• Nutrient availability, reduced leaching

• Soil carbon levels

• Soil micro fauna and flora and healthy soil ecosystem

We cannot ignore the potential of biochar to raise output & address the environmental problems associated with agriculture

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Economic Impact of Developing a Biochar Sector in the East of England

How much biochar do we need ?

Assumptions:•Need 10-40 tonnes per hectare•Regional ‘arable’ area is 1.13m hectares

• (plus an extra 20% if grassland was to be treated as well)

•Thus need to produce 11.3 – 45.2 million tonnes of biochar to treat all regional arable land

NB – as no plants have been built or large scale field trials of biochar use undertaken, the figures below are estimates: not based on exemplars

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Biochar Scale of Production

How much biomass do we need to produce biochar?

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Biochar process Biochar yield as % of raw biomass

Raw biomass needed for 10tonnes per ha

Raw biomass needed for 40tonnes per ha

Gassification 10 113 million tonnes 452 million tonnes

Fast pyrolysis 15 75 million tonnes 301 million tonnes

Slow pyrolysis 35 32 million tonnes 129 million tonnes

Source: DEFRA (land areas) and calculated by Collison and Associates limited


Timescale and Annual Biochar Production

Unlikely we could treat all land in 1 year !

If we assume a 20 year timeframe, annual biomass need is:

• 1.6million tonnes per annum (slow pyrolysis, 10tonnes/ha) – feasible with current feedstock

• to 22.6million tonnes per annum (gassification, 40tonnes/ha) – not feasible with current feedstock

Initially target higher value crops with greatest response

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Agricultural Output

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Enterprise Area (ha) £m Output per hectare £

Cereals 614,000 491 800

Oilseed rape 130,000 98 754

Sugar beet * 77,000 106 1,377

Potatoes * 34,000 217 6,382

Other arable - 100 -

Field vegetables * 30,000 223 7,433

Fruit * 4,000 61 15,250

Glasshouse (food crops) 411 58 141,119

Pigs - 198 -

Poultry - 325 -

Milk, beef, lamb - 135 -


Potential Benefits to AgriculturePotatoes: small yield increase, ↓water stress, easier cultivations,

↓ fertiliser:

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factor Regional avg. With biochar

Output per ha (£) – biochar +5% yield, +3% quality

5,445 5,889

Total variable costs – biochar -10% fertiliser, but +5% grading and sundries (↑ yield)

3,010 3,003

Gross margin 2,435 2,886

Fixed costs – biochar -5% (reduced cultivations)

1,885 1,791

‘Profitability’ £ per hectare 550 1,095

Source: Nix (2008), and calculated based on modest biochar improvements


Wider Economic Impact

The development of a biochar sector could create jobs in:

• Agriculture and the food chain through increased output

• Adding value to existing biomass wastes: collection & transport

• Construction and operation of biochar plants

• Spreading of biochar on farmland

• Monitoring & verification of biochar, carbon market values & sequestration

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The volumes proposed are large even to produce:

• 10 tonnes per hectare of biochar applied over 20 years

Assuming each plant processed 70ktonne per annum of biomass:

• 23 plants are needed to produce enough biochar if slow pyrolysis is used

• 53 plants are needed if fast pyrolysis is used

• Total investment would be at least £0.5bn (slow pyrolysis), with the adoption of fast pyrolysis implying maybe £1.5bn

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A 5% uplift in regional agricultural output (& the associated food sector) implies a potential 5,000 job uplift. In practice:

•The uplift should be seen as an improvement against business as usual – i.e. ongoing productivity gains still feature

•But if job numbers can be held static whilst productivity goes up then GVA per employee would grow

•The greatest economic improvement is likely in intensive crops

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The construction & operation of biochar plants job creation depends on:

Conversion process:

• Gassification / fast pyrolysis produces more jobs than slow pyrolysis

• ... but there is not enough biomass feedstock for the potential of fast pyrolysis to be realised

•Extra job range estimated at 460 (slow) -1,160 (fast)

•Transport of biomass & bicohar is estimated to create 190-350 jobs dependent on the conversion process

Construction of plants would create additional jobs

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Conclusion 4

Substantial job and economic gains are potentially available from biochar development

The data on economic impact is very sparse because of lack of plants & commercial exemplars globally and in UK conditions

Further work is needed to develop the economic analysis & commercial models for a regional biochar sector

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Overall Conclusions

• The next 40 years demands more production (double) & less impact from agriculture - we need new disruptive technologies to meet the challenge

• East of England agriculture is large, growing and productive, but could still increase its productivity

• Biochar appears to offer potential benefits in terms of both agricultural production & the environment

• A Regional Biochar sector offers the prospects of substantial economic growth whilst also addressing sustainability issues

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Overall Conclusions

But:

• Businesses need confidence to invest (particularly at the present time), and the lack of operational plants or farm trials of biochar limits development

• The region could take a lead in developing a UK biochar sector

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Thank you

Any Questions

Martin Collison

[email protected]

(01553) 828 405

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Collison & Associates Limited Regional Perspective on Biochar and Economics Martin Collison Collison & Associates Limited 1