How an Australian biochar start-up inspired Microsoft’s negative carbon plan

The ECHO2 module at the Holla Fresh property in SA.

In the South Australian town of Tantanoola, just down the road from the Lake Bonney wind farm, a small herb-growing company called Holla Fresh is conducting a cutting edge experiment in carbon sequestration and off-grid energy generation.

Every so often a truckload of woodchips arrives at the property, where they are taken into a shed, fed into an air-tight pipe, heated, and turned into charcoal. The syngas created in the process is used to power the business, while the charcoal – or high-carbon “biochar” – is turned into compost.

Believe it or not, this obscure, small-scale technology, designed and built by Melbourne-based startup Rainbow Bee Eater and called “ECHO2”, has caught the attention of tech colossus Microsoft, which bought a large number of the project’s carbon credits over Finnish carbon removal marketplace

Rainbow Bee Eater founder Peter Burgess believes growing corporate demand for high-quality carbon credits could send demand for his ECHO2 technology soaring.

“The dream is to get dozens or hundreds of these things. We think we’ve got the best technology that exists at the moment to make low cost biochar,” he says. The company is currently scoping out its first potential capital raise in Europe.

The purchase was part of Microsoft’s pledge to become carbon negative by 2030. For a company that emits 11 million tonnes of carbon dioxide equivalent a year, that is not an insignificant promise. On top of that, Microsoft plans to neutralise all of its historic emissions by 2050.

The company is not satisfied just with credits from renewable energy projects. It also wants to invest in technology that actively and permanently removes carbon from the carbon cycle altogether. Biochar does that. In Burgess’s words, it’s like “putting coal back in the ground”.

The transaction was an unlikely pairing. Microsoft is the world’s third biggest company by market capitalisation. ECHO2, by contrast, is so small it has just one working biochar operation and no outside investors.

But Burgess, a metallurgical engineer who worked in the bauxite mining and aluminium smelting industries before moving to biochar, believes the technology he has developed – which creates both biochar and carbon negative energy – is unique globally, and has the potential to be scaled up. In a promising sign, economist and clean energy guru Ross Garnaut is backing Burgess’s technology.

How the technology works

Biochar is essentially charcoal made from waste organic material, such as crop or forest plantation residues. This material is heated in the relative absence of oxygen, which means the organic material does not catch fire. The result is a highly stable material that is 80 to 90 per cent carbon.

The lack of combustion is the key. When carbon heavy materials such as wood or fossil fuels burn, the carbon reacts with the oxygen to make carbon dioxide gas, which then enters the atmosphere, contributing to global warming. By keeping that carbon in solid form rather than releasing it into the atmosphere, it is taking carbon out of the carbon cycle.

Biochar is incredibly stable – it can stay in its solid form for thousands of years. That means it can  be safely stored in the ground, and can have benefits for soil quality. It therefore could have a place in the “soil carbon” policy the federal government has been talking up of late (a policy that it seems to prefer to imposing limits on emissions).

In theory, biochar could have an important role in climate change mitigation. Project Drawdown, an international group of scientists that have designed what they call “the most comprehensive plan every proposed to reverse global warming”, estimate biochar could reduce atmospheric CO2 by almost a gigatonne by 2050. But making biochar commercial is a conundrum, and that is what Burgess claims to have solved.

For Burgess, the impulse to contribute to carbon abatement innovation sprung from two sources: a desire to give back after working in the highly carbon-intensive aluminium industry, and a concern about the way the climate change debate was going in Australia.

“I decided to leave corporate life in the early 2000s, and was very concerned about the way global warming debate had been hijacked by the carbon-heavy industries, and decided to get on the other side of that,” he says.

He and his business partner Ian Stanley had a look at conventional renewable energy technologies, but decided biochar was a better option “as a way of putting atmospheric carbon back into the ground”.

“We had to come up with a way of capturing the energy and turning it into money. I went round the world and looked at all the existing technologies – the view we formed was there was no such technology that didn’t need large subsidies.”

What Burgess came up with is a “box” containing a long, mostly air-tight pipe. Organic waste is fed in one end, where it is heated until it becomes biochar. The byproduct, syngas, comes out the same end as the waste goes in, after being filtered through the biochar.

Holla-Fresh has an agreement with compost company Bio Gro, which supplies the organic material, and takes away the biochar in payment.

What’s in it for Holla-Fresh? The syngas created during the process powers its business, saving on energy bills. While the syngas does release some CO2 when burnt, when the carbon negative biochar is added to the equation, Burgess says the whole process is “hugely carbon negative”. That means it generates carbon credits, which can then be sold. It is these that Microsoft recently bought.

Burgess believes interest from the likes of Microsoft and Canadian e-commerce company Shopify, which has also bought credits, will make all the difference to the viability of the biochar business. While the cost of one of these boxes is high – $3 to $5 million – he says even under current low carbon credit price assumption it will pay for itself within five years. But he believes the carbon price will only go up.

“Essentially we now have a decent carbon price. Since the Microsoft [and Shopify] announcements, we’ve had inquiries through Puro from different North American and European banks, and certainly Shopify and Microsoft themselves, that would need a very large number of our modules. So from a carbon price point of view, we’ve got one.”

He says he has received hundreds of inquiries, has conducted around 30 mini feasibility studies, and is in advanced talks on six projects that would require a total of 13 units. Unlike with the Holla-Fresh unit, ECHO2 would likely own and operate these new modules, selling the energy to the business and the carbon credits and biochar to whoever will buy them.

One of the projects in train is with Ross Garnaut, who last year formed a new business called Sunshot Energy.

“Ross, in his other role as economist and large-scale thinker, was asked to advise a group of Central Queensland councils about four years ago to look at economic opportunities in and around Barcaldine in central and southern and mid-western Queensland,” says Burgess.

“There’s a project centred on Barcaldine that basically is looking at using large scale polar PV to make hydrogen and ammonia and potentially urea,” he says.

Garnaut has suggested ECHO2 to be part of the first stage of that project, building four of its modules. Burgess says the environmental ambitions of this particular project extend far beyond climate change mitigation.

“One of the problems in that part of Australia is there was a noxious weed introduced 50 or so years ago, a South African acacia called prickly acacia. It was someone’s bright idea that that would make stock feed during drought. And the problem is it’s gone nuts, and it’s taken over two million hectares of that part of Queensland,” he says.

“It would be ideal feed for our technology. So we would turn that into biochar.” That biochar, he says, could then have another environmental benefit on top of carbon sequestration.

“Biochar combined with a nitrogenous fertiliser like urea could go into the soils along the Great Barrier Reef and stop or minimise the amount of sediment and nitrogenous run off that goes out into the reef,” he says.

James Fernyhough is a reporter at RenewEconomy. He has worked at The Australian Financial Review and the Financial Times, and is interested in all things related to climate change and the transition to a low-carbon economy.

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