UC Merced

This thesis explores the diverse aspects of biochar production, its economic assessment, and its importance in mitigating climate change while supporting sustainable regional economic growth. Biochar, a carbonaceous biomass product, is gaining increasing prominence as an effective solution for curbing greenhouse gas emissions stemming from conventional agricultural practices. This research adopts a comprehensive approach that covers various dimensions of biochar. First, it emphasizes the necessity of shifting from the environmentally harmful practice of crop residue open burning to the more sustainable avenue of biochar production. Through a techno-economic analysis, the study reveals the range of production costs under uncertainty. Results from the first study show a probable range of biochar production costs between $448.78 and $1,846.96 (USD) Mg−1, with a 90% probability that costs will range between $571 and $1,455 Mg−1. A sensitivity analysis shows that production costs are most responsive to biochar production rates. Second, showing the significance of regional economic assessments for biochar projects. Recognizing the lack of a dedicated industry classification for biochar, innovative methodologies are employed to estimate the direct, indirect, and induced economic impacts of biochar production in Central Valley, California. Results suggest that depending on the biochar price and conversion rates, biochar would create between 16.56 to 17.69 new full- and part-time jobs per year that would contribute between $1.2 to $5.75 million per year to labor income. Biochar production would add to the Gross Domestic Product (GDP) about $106,295 ($5.2 million) per year with a conversion rate of %15 (%35) and a biochar price of $280 ($2,512) per metric ton. Similarly, biochar’s impacts on gross output would be positive, regardless of the biochar conversion rate and price, which suggests the need for more investment in the sector. We find that all regions would benefit in terms of employment, labor compensation, value addition, and gross output though Madera County would have the least economic returns. Meanwhile, Fresno County with the most biomass would have the most economic impacts suggesting that policy should be directed at encouraging biomass production and marketing in areas with the most biomass. Third, highlighting the critical importance of selecting the appropriate discount rate when evaluating biochar projects, particularly with a focus on climate change mitigation potentials. Two novel environmental-economic discounting models are used, one rooted in a modified Ramsey formula and the other in the Consumption Capital Asset Pricing Model. The first model yields a discount rate of 1.7%, while the second model suggests a declining rate of 5.96%. We recommend incorporating both rates in the biochar cost-benefit analysis and conducting a sensitivity analysis for a more comprehensive assessment. In summary, this thesis addresses biochar economics from different perspectives, namely, its economic evaluation, its vital role in addressing climate change, and its regional impact. The outcomes confirm the feasibility of transitioning towards a circular bioeconomy, highlight the regional economic benefits associated with biochar production and propose a nuanced discounting framework to ensure precise project evaluation. This research contributes to the development of sustainable practices, economic growth, and the simultaneous resolution of pressing environmental concerns.