Why are companies rushing to lock corn and wood underground?

BlackRock Chairman Larry Fink yesterday issued his annual letter to investors – days after news that Republican state investment funds had withdrawn $13.3 billion from the world's largest asset manager. Although the withdrawals add up to roughly 0.1 percent of BlackRock's assets under management, Fink went out of his way to stress that he is no green fanatic. Instead, he urges “energy pragmatism.” Read our colleague Brooke Masters' full summary here.

Meanwhile, in today's bulletin, we look forward to a new push to use agricultural waste profitably. Highly publicized efforts to produce biofuels from them in the 2000s didn't really work. Now, startups want to use this waste in systems to permanently remove carbon dioxide from the atmosphere.

As we noted in a recent edition, decarbonization will be a crucial part of global efforts to achieve net-zero emissions, according to the Intergovernmental Panel on Climate Change. But if biomass-based schemes are to play a major role, they will require close monitoring of land management in remote areas. As the saying goes, the mountains are high and the emperor is far away.

Thanks for reading.

Carbon removal

What will the next biomass rush look like?

Biomass has had many false dawns. As we enter another boom period, the latest wave of entrants, many with close ties to the technology sector, have converged on a new use case: carbon dioxide removal.

Instead of processing corn, wood, or other plant material into a value-added commodity, these startups are competing to build businesses that they shut down to prevent the release of greenhouse gases.

Frontier, a coalition of technology companies that pay a premium to accelerate promising carbon solutions, has backed several startups — including Charm Industrial, which was founded in 2018.

Crops like corn pull carbon from the atmosphere as they grow, but release much of it after harvest, as the stalks and husks, for example, remain in the field and decompose. Charm uses portable pyrolysis machines—essentially oxygen-free ovens—to convert this waste into carbon-rich “bio-oil.”

Charm's original plan was to use this oil to produce hydrogen, Peter Reinhardt, co-founder and CEO, told me, but that application proved “economically uninteresting.” Instead, Charm has developed a way to store the bio-oil underground, where it will remain trapped for at least 10,000 years, according to the company.

The United States is littered with more than 100,000 abandoned oil and gas wells, many of which are leaking toxic chemicals. Charm's idea is to pump bio-oil into those wells for long-term storage, and sell the corresponding carbon credits to corporate buyers. Bio-oil is corrosive, so in addition to applying for permits, Reinhart told me, the company had to overcome engineering hurdles.

However, the Charm System is still in operation, albeit in modest quantities. Charm says that in the three years since bio-oil storage began in 2020, it has sequestered about 6,400 tons of carbon dioxide equivalent — roughly equivalent to the annual emissions of 430 U.S. residents. Frontier has been sold, at least: Last year, the technology initiative signed a long-term $53 million purchase agreement to buy credits from Charm.

Grow responsibly

There are potential risks of a biomass rush, said David Keith, a climate scientist and policy expert at the University of Chicago who founded rival decarbonization firm Carbon Engineering. Paying for corn waste increases the profitability of corn farming, which could stimulate more production of the crop, with negative environmental impacts, Keith said.

Beginning in 2005, U.S. biofuel policy stimulated a significant expansion of corn cultivation, which led to changes in land use, leading to impacts such as soil erosion and phosphorus runoff, according to a 2022 paper published in the scientific journal PNAS. The study found that lower retirement rates on farmland and increased use of nitrogen fertilizers led to increased carbon emissions.

A previous study specifically looked at the impact of corn stover — that is, the remains of the corn crop — and found that harvesting grasses could make corn farming more profitable. In turn, this could lead to intensification of maize farming practices, affecting soil and fertilizer use.

Isometric, a carbon removal standard and registry that Charm works with, aims to address this issue in its guidelines. For example, the law states that Charm must not produce a corn byproduct from the same field for two consecutive years. This is to avoid encouraging farmers to change crop rotation practices in ways that may harm soil health.

I asked Reinhart if he was concerned that the underlying economics of paying for waste could lead to land use change. “Not at the level we are now. There are much bigger drivers out there [crop] “Alternations,” he told me. “There is some minimal gradual impact.”

Charm's effects may be minimal at this early stage, but Frontier's goal is to help promising technologies get off the ground. If companies like Charm grow significantly, they could put upward pressure on a tightening market, according to Rudi Kahsar, who leads the decarbonization team at climate consultancy RMI.

Plant-based carbon removal companies “are all competing with each other for the same biomass,” Kahsar said. Experts disagree about the exact amount of global biomass consumption that can be sustained, without harming biodiversity and soil carbon stocks. But, he said, “we are hitting that level.”

The IEA said the maximum sustainable level of biomass consumption, which does not include biomass consumed as food, is about 102 exajoules per year. The International Energy Agency predicts that the world will approach this level by 2040 – even without including the production of biomass used to remove carbon.

Plants are in high demand

Carbon sequestration companies are not the only ones scrambling to acquire factories for clean technology projects. A new group of startups, such as Houston-based Sologen, is trying to produce petrochemicals from plants, replacing fossil inputs to the refining process, such as propane and ethane, with plant-based feedstocks such as corn sugar.

In the western United States, there are also growing efforts to use wood from forest thinning — the removal of trees and shrubs to reduce the risk of wildfires — as a feedstock for carbon removal. Rinehart said Charm has already tapped into the industry's “wildfire fuel reduction,” using wood removed from forests to sequester carbon.

Kodama Systems, another Frontier-backed startup that raised money from Bill Gates' Breakthrough Energy Ventures, makes safe forest management a core part of its business. The company plans to store timber harvested from California forests in vaults designed to contain greenhouse gases.

Part of Kodama's plan is that it is developing technology to automate the most repetitive parts of thinning operations, making the human workforce more productive as demand for forest management grows.

But as with agriculture, the test of a business will be whether it can scale responsibly. More companies are competing for limited supplies of biomass, Kahsar said. “Maybe you can find some additional waste to turn into bio-oil and isolate it in Kansas,” he added. “But if you try to scale up any of these approaches, you're likely to run into feedstock challenges.”

Smart reading

Iceland plans to grow more corn and rein in bitcoin miners, Andy Bounds and Alice Hancock report, as the government aims to reduce reliance on food imports and free up its supply of renewable electricity for energy-hungry cryptocurrency groups.