A recent article from BioFlux makes a case that deserves serious attention from IBI members: that decentralised biochar production is not failing because of agronomic weakness, but because it has been poorly structured for finance. And that a new generation of distributed models is beginning to fix that.

The argument is worth examining carefully — both for what it identifies correctly and for the questions it does not yet fully answer.

The capital gap is structural, not narrative

Less than 10% of traded biochar carbon removal volumes come from decentralised projects, according to CDR.fyi data cited in the article. Industrial facilities dominate not because they deliver better agronomic outcomes, but because they offer simpler contracting, cleaner verification pathways, and more predictable delivery.

This is a structural problem, not a narrative problem. Telling better stories about smallholder biochar does not change a buyer’s due diligence process. What changes it is programme infrastructure: aggregation mechanisms, standardised operating protocols, auditable monitoring, and a single accountable counterparty.

The article argues that a new distributed model is emerging precisely to address this gap — one that retains direct farmer relationships and local soil benefits while meeting the institutional expectations of corporate buyers and development finance institutions.

That framing is useful. It shifts the conversation from “artisanal vs. industrial” to “how must distributed systems be organised to compete for serious capital?”

What the model proposes — and why it matters for project developers

The distributed model rests on five components, each of which directly addresses a risk that institutional buyers and financiers have historically cited as reasons to avoid decentralised projects.

Clustered governance. Farmers (typically 50–500 per cluster) operate under shared feedstock planning, standardised protocols, and unified reporting. The cluster is the unit of account, not the individual farm. A programme-level aggregator — the project developer — acts as the single counterparty to the market. This directly resolves the transaction cost problem: instead of contracting with hundreds of producers, buyers engage one entity with defined obligations and clear remediation pathways.

Endorsed technology. Rather than open or manually managed kilns, the model favours enclosed kiln designs that limit oxygen variability and reduce dependence on operator skill. Several designs cited have undergone third-party validation for biochar quality and emissions performance. From a financing perspective, validated technology reduces performance risk in ways that lender or buyer due diligence can assess.

Digital monitoring. The model moves from proxy-based documentation toward real operational data — temperature curves, production logs, and in some cases direct measurement of methane and process emissions. This is the MRV layer that standards bodies and buyers are increasingly requiring as a condition for offtake or investment.

Structured farmer integration. Participation agreements, training records, and transparent revenue allocation mechanisms allow co-benefits to be measured and attributed — not just claimed. This matters for buyers with supply chain sustainability commitments and impact reporting obligations, where unverified co-benefit claims create legal and reputational exposure.

Supply chain embedding. This is perhaps the most commercially significant feature. Positioning biochar not as a voluntary offset but as a supply-shed stabilisation tool changes the value proposition for companies with insetting strategies. Biochar becomes part of managing climate risk in sourcing geographies, not a parallel carbon purchase. The collaborations referenced — Cotierra with Louis Dreyfus Company, Planboo with Better Cotton Initiative — reflect a shift in how companies are thinking about insetting: less about carbon markets and more about agricultural supply chain resilience. This is where the most durable revenue models for distributed projects are likely to emerge.

Where the analysis is strongest

The aggregation argument is well made and directly relevant to project structuring. Carbon markets are not designed to transact with hundreds of individual producers. Consolidating credits within a single accountable entity changes the risk profile in ways institutional buyers can actually underwrite. It also aligns incentives correctly: the aggregator’s market standing depends on the robustness of the projects it represents, creating direct pressure to enforce quality and maintain transparency.

The standards landscape update is also relevant for financial structuring. Isometric’s first module for distributed small-scale biochar production, published in early 2026, and Rainbow Standard’s ongoing consultation on governance and verification represent meaningful developments. Until recently, CSI’s artisan methodology was effectively the only recognised pathway for farm-level projects. For project developers, methodological diversification creates more options — but it also requires clearer decisions about which framework best matches a programme’s design and target buyer base. Not all pathways will be equally valued by all buyers.

What the article does not resolve

The aggregator is now the critical financial risk point. The model solves fragmentation by concentrating accountability in a single programme-level entity. That is the right architecture. But it also means that when that entity fails — financially, operationally, or on governance — the entire cluster fails with it. The article does not address what happens to smallholder producers or issued credits when an aggregator exits the market. This is not a theoretical concern. Project developer attrition is a documented pattern in early-stage carbon markets. Buyers and development finance institutions considering distributed biochar need to assess aggregator financial resilience, not just programme design.

MRV is necessary but not yet standardised across providers. The article references real operational data capture as a distinguishing feature. This is accurate and important. But the sector does not yet have a common protocol for what “measured performance” means at farm level. Until it does, the gap between what different MRV providers report will remain significant, and comparability across programmes will be limited — which creates problems for portfolio buyers trying to assess relative performance across projects.

Yield figures are presented with more confidence than field evidence supports. The 10–20% average yield increase figures are real — but they are averages across highly variable contexts. The 40–50% gains cited appear in specific conditions: degraded soils, nutrient-poor environments, low baselines. Project developers using these ranges for revenue modelling or investor presentations should anchor them to site-specific agronomic baselines, not sector-wide averages.

The smallholder business model is underdeveloped. The article makes strong claims about income diversification and reduced input costs. These outcomes are plausible and supported by field evidence. But the article does not address the upfront cost burden for farmers, the time lag between installation and revenue, or what happens to income streams when carbon prices fall. For programmes targeting populations below national poverty lines — where the developmental case for distributed biochar is strongest — these are project design questions, not footnotes. They also have direct implications for farmer dropout risk, which affects delivery reliability and credit integrity.

Questions for project developers and financiers

The distributed model as described is a meaningful step forward. It takes the right lessons from why early decentralised interventions failed and proposes a credible structural response.

But it also raises questions that the sector needs to answer clearly:

What contractual and financial protections should aggregation agreements include to protect farmers when a programme-level entity exits? How should buyers and investors assess aggregator financial resilience as part of due diligence — and what disclosure standards should apply? When MRV providers use different measurement approaches, how should buyers evaluate and compare performance claims across distributed programmes? And where supply chain embedding is the primary value proposition, how are revenue allocation and pricing structured between carbon value and agronomic value?

These are not reasons to avoid distributed biochar. They are the design problems that the next generation of credible projects will need to solve — and that IBI members are well positioned to help resolve.

Based on: “The Distributed Model for Biochar Production” — BioFlux, 2026. Shared for member discussion.

Are you structuring a distributed biochar project, working on aggregation models, or evaluating distributed projects as a buyer or financier? Share your experience and questions in the comments below.