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

2. Collison & Associates Limited 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 2

3. Collison & Associates Limited 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. 3

4. Collison & Associates Limited 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 4

5. Collison & Associates Limited Unmanured, continuous wheat Continuous wheat: FYM PK+144 kg N 1st wheat in rotation: FYM+spring N Best NPK fertiliser Red Rostock Broadbalk (Rothamsted) yields, varieties & major changes Source Prof Ian Crute, Growing Our Future Food - Supply is too important to leave to chance Red Club Squ. Master Red Standard Squ. Master Cappelle Desp. Flanders Brimstone Apollo Hereward Introduction of: liming fungicides fallowing herbicides

6. Collison & Associates Limited 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, CO 2, methane, NOx, smell, dust - the food chain is a major global polluter 6

7. Collison & Associates Limited 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 7

8. Collison & Associates Limited 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

9. Collison & Associates Limited 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? 9

10. Collison & Associates Limited Agriculture in the East of England 75% of the regions 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 10

11. Collison & Associates Limited Agricultural & Food Output 11 SectorEstimated regional employment Estimated GVA £bn Farming47,0000.7 Food processing37,0002.0 Wholesale and logistics 27,0001.2 Food retail150,0002.2 Catering150,0002.1 Total401,0008.2 Source: Defra 2007, EEDA 2007, EEDA 2008

12. Collison & Associates Limited Agricultural Output 12 EnterpriseArea (ha)£mOutput per hectare £ Cereals614,000491800 Oilseed rape130,00098754 Sugar beet *77,0001061,377 Potatoes *34,0002176,382 Other arable-100- Field vegetables *30,0002237,433 Fruit *4,0006115,250 Glasshouse (food crops)41158141,119 Pigs-198- Poultry-325- Milk, beef, lamb-135-

13. Collison & Associates Limited Potential for Growth in East of England Agriculture With some of the Worlds 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 13

14. Collison & Associates Limited Environment Agency water resource availability status (March 2007), classified according to water resource management units

15. Collison & Associates Limited 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 CO 2 reasons Many of the constraints on productivity relate to the management and performance of agricultural soils 15

16. Collison & Associates Limited 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? 16

17. Collison & Associates Limited Biochar Benefits – Conclusion 3 Rubens 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 17

18. Collison & Associates Limited 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 18

19. Collison & Associates Limited Biochar Scale of Production How much biomass do we need to produce biochar? 19 Biochar processBiochar yield as % of raw biomass Raw biomass needed for 10tonnes per ha Raw biomass needed for 40tonnes per ha Gassification10113 million tonnes452 million tonnes Fast pyrolysis1575 million tonnes301 million tonnes Slow pyrolysis3532 million tonnes129 million tonnes Source: DEFRA (land areas) and calculated by Collison and Associates limited

20. Collison & 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 20

21. Collison & Associates Limited Agricultural Output 21 EnterpriseArea (ha)£mOutput per hectare £ Cereals614,000491800 Oilseed rape130,00098754 Sugar beet *77,0001061,377 Potatoes *34,0002176,382 Other arable-100- Field vegetables *30,0002237,433 Fruit *4,0006115,250 Glasshouse (food crops)41158141,119 Pigs-198- Poultry-325- Milk, beef, lamb-135-

22. Collison & Associates Limited Potential Benefits to Agriculture Potatoes: small yield increase, water stress, easier cultivations, fertiliser: 22 factorRegional avg.With biochar Output per ha (£) – biochar +5% yield, +3% quality 5,4455,889 Total variable costs – biochar -10% fertiliser, but +5% grading and sundries ( yield) 3,0103,003 Gross margin2,4352,886 Fixed costs – biochar -5% (reduced cultivations) 1,8851,791 Profitability £ per hectare5501,095 Source: Nix (2008), and calculated based on modest biochar improvements

23. Collison & Associates Limited 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 23

24. Collison & Associates Limited Wider Economic Impact 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 24

25. Collison & Associates Limited Wider Economic Impact 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 25

26. Collison & Associates Limited Wider Economic Impact 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 26

27. Collison & Associates Limited 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 27

28. Collison & Associates Limited 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 28

29. Collison & Associates Limited 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 29

30. Collison & Associates Limited Thank you Any Questions Martin Collison martin@collisonassociates.co.uk (01553) 828 405 30