Latest / The Manufacturing Podcast with Fexingo: Factories, Supply Chains, and Industrial Business / How a Tennessee Factory Turns Sawmill Waste into Carbon-Negative Biochar
Transcript
- Lucas: There is a factory in rural Tennessee, about an hour west of Nashville, that takes sawdust and wood chips — basically the leftover scraps from nearby sawmills — and bakes them into a charcoal-like material called biochar. Luna: Biochar — I've heard that term mostly in farming contexts, like soil amendment. But this factory is making it at industrial scale, right? Lucas: Exactly. And the key number here is that this single facility sequesters about 45,000 tons of CO₂ per year. Not 'avoids' — it actually pulls carbon out of the short-term cycle and locks it away for centuries. Luna: If today was actually useful to you, the way these stay ad-free is listener support — buy me a coffee dot com slash fexingo. Lucas: Yeah, we keep the show open to everyone, and it's listeners who make that possible. Anyway — back to that factory. The process is called pyrolysis. You heat the wood waste to about 500 degrees Celsius in an oxygen-free kiln. No combustion, so no CO₂ released. Instead, the organic material breaks down into three products: biochar, a syngas that gets burned to power the kiln, and a bio-oil that can be refined further. Luna: So the energy to run the process comes from the process itself. That's almost self-sustaining. Lucas: Almost. The company says the kiln is about 85 percent energy self-sufficient. They need a small amount of external natural gas for startup and for cold weather. But the net carbon balance is still deeply negative, because the carbon in the wood was originally pulled from the atmosphere by the tree. When the wood would normally decompose or be burned, that carbon goes back into the air. Here, it gets locked into a solid form that doesn't degrade. Luna: What happens to the biochar after it's made? Lucas: Some of it gets sold as a soil amendment — farmers mix it into fields to improve water retention and nutrient holding. That's a lower-margin market. But the real economic driver right now is carbon removal credits. Companies like Microsoft and JPMorgan have bought credits from this facility at around $500 per ton of CO₂ removed. Luna: That's a pretty high price. Compare that to a typical carbon offset from forestry or renewable energy, which can be under $10 per ton. Lucas: Right, but those offsets are often 'avoided emissions' — you pay someone not to cut down a tree, but you can't guarantee it won't be cut down later. Biochar is 'removal' — the carbon is physically taken out of the air and stored. That's much more verifiable. The market for durable carbon removal is small but growing. Microsoft alone has contracted to remove over 5 million tons by 2030. Luna: And this factory in Tennessee — what's its name? Lucas: It's run by a company called Carba, which was spun out of a research project at the University of Tennessee. They started with a pilot kiln in 2021, then raised $15 million from the USDA and some private investors to build this commercial-scale facility. It came online in late 2024. Luna: So it's been running about two years now. What are the economics like? Lucas: The company says the facility is profitable on its own — the combination of biochar sales and carbon credit revenue covers operating costs and is starting to pay down the capital. But the margins are thin. The biochar itself sells for maybe $200 to $400 per ton depending on quality and purity. The carbon credits bring in another $500 per ton of CO₂ removed. But each ton of wood input only yields about a third of a ton of biochar, and the CO₂ removal is roughly one ton of CO₂ per ton of biochar. Luna: So you need a lot of wood. Where does it all come from? Lucas: That's the supply chain question. The factory sits in the middle of the Tennessee hardwood region. There are dozens of sawmills within a 50-mile radius, and they generate sawdust and chips as waste. Previously, those piles would be left to rot — which releases methane — or burned for very low-value heat. Carba contracts with those mills to take the waste, usually for a small fee or even free, because it saves the mills disposal costs. Luna: So the feedstock is essentially negative-cost. That's a huge advantage. Lucas: It is, but it also means the factory is geographically locked. You can't ship sawdust very far — it's bulky and has low energy density. So the model only works near a concentrated source of wood waste. Carba's plan is to build multiple smaller kilns across the Southeast, each serving a cluster of mills. They're scouting sites in Georgia and Arkansas right now. Luna: Let's talk about the kiln technology itself. Is this custom-built or off-the-shelf? Lucas: It's a continuous-feed rotary kiln, about 30 feet long, designed by the company's engineering team. The key innovation is in the temperature control and the gas handling. You need to keep the oxygen level below 1 percent to avoid combustion, and you need to capture the syngas efficiently to feed back into the burner. The first kiln had a lot of trial and error — clogging, uneven heating, that sort of thing. The second kiln, which they're building now, incorporates those lessons and should be about 20 percent more efficient. Luna: What about the carbon credits themselves? How do you verify that a ton of CO₂ has actually been removed and stored for centuries? Lucas: This is a huge point of debate in the industry. Carba uses a third-party verifier called Puro.earth, which certifies carbon removal based on the mass of biochar produced, the type of feedstock, and the temperature of pyrolysis. They also do lab tests to confirm the carbon content and stability. The biochar is then buried in soil or mixed into concrete, and the verifier does spot checks over time. But critics argue that soil conditions can degrade the biochar faster than lab models predict. Luna: So there's some uncertainty about the permanence. What's the current scientific consensus? Lucas: Most studies say biochar in agricultural soil retains at least 80 percent of its carbon after 100 years, and likely much longer in cooler or drier soils. But if you put it in tropical conditions, the degradation rate can be higher. That's why Carba focuses on selling to farmers in temperate regions. They also have a pilot project mixing biochar into asphalt, which locks it up effectively forever. Luna: Asphalt is a clever end use. It's not going to decompose. Lucas: Exactly. And the biochar actually improves the asphalt's performance — it makes it more flexible and resistant to cracking. So there's a value-add beyond just carbon storage. But the market for biochar-modified asphalt is tiny right now. The main revenue still comes from agricultural buyers and carbon credits. Luna: How does this factory compare to other carbon removal approaches? Like direct air capture? Lucas: Direct air capture — DAC — is much more expensive, currently $600 to $1,000 per ton, and it's energy-intensive. Biochar is cheaper and actually produces energy through the syngas. But DAC can be sited anywhere and doesn't depend on a biomass supply chain. The two are complementary. The Intergovernmental Panel on Climate Change says we'll need both, plus a lot more, to meet net-zero targets. Luna: What's the biggest bottleneck to scaling biochar? Lucas: Feedstock availability and consistency. There's only so much sawmill waste in the world. You could use agricultural residues — corn stalks, rice husks, nut shells — but those have different moisture content and ash levels, which affect the kiln operation. Carba is experimenting with a blend of 70 percent wood waste and 30 percent wheat straw, but they had to adjust the kiln temperature and residence time to avoid clinkers. Luna: Sounds like pyrolysis is as much art as science. Lucas: Especially at scale. The operators at this Tennessee plant have a logbook of adjustments — feed rate, oxygen levels, auger speed — that they've refined over hundreds of runs. That tacit knowledge is hard to replicate when you hire new staff for a new site. Carba is building a digital twin of the kiln to train operators faster and optimize in real time. Luna: Are there competitors doing the same thing? Lucas: Several. A company called Charm Industrial uses a different process — fast pyrolysis to make a bio-oil that they inject into underground wells. Another called Mote uses biomass gasification with carbon capture. But Carba's approach is simpler and more modular. Their goal is to have 10 kilns operating by 2028, removing about 500,000 tons of CO₂ per year. Luna: That's still a drop in the bucket compared to global emissions. But it's a start. Lucas: It is. And the beauty of this model is that it doesn't require a massive new infrastructure. You're taking an existing waste stream and upgrading it into a valuable product and a climate solution. If you can make the economics work at $500 a ton, and then drive costs down to $200 a ton as you scale, you've got a genuinely scalable industry. Luna: So the question is: can they get the cost down fast enough to compete with cheaper offsets? Lucas: That's the race. The voluntary carbon market is still fragmented and opaque. But if buyers like Microsoft are willing to pay a premium for verifiable removal, it creates a price floor. Carba's next kiln is designed to be 15 percent cheaper to build and 10 percent more efficient. If they hit those targets, the unit economics start to look very attractive. Luna: And if they don't? Lucas: Then they become a niche supplier of premium biochar for high-end soil markets, and the carbon removal stays a boutique product. But the founders are betting that the demand curve for durable removal will steepen, especially if governments start buying credits for net-zero commitments. Luna: Last thing — are there any regulatory hurdles specific to biochar? Lucas: The main one is classification. In the US, biochar is regulated as a soil amendment by the EPA, which means it has to meet certain heavy-metal limits. That's not a problem for wood waste, but if you use industrial biomass like demolition lumber, you might get contamination. Also, carbon credits from biochar are not yet recognized under California's cap and trade system, which limits the market. But the USDA is developing a protocol for biochar carbon removal that could open up federal programs. Luna: So the policy environment is still evolving. Lucas: Very much so. But the factory itself is running, making product, selling credits, and learning. That's more than a lot of climate tech ventures can say.