By Nando Knodel
Last year was a promising year for permanent carbon removal, with 78% growth compared to 2023, and the release of EU’s Carbon Removals and Carbon Farming (CRCF) Regulation.
While high-to-low-tech biochar suppliers are still among the leading suppliers in the voluntary market, the EU framework will also include carbon storage in long-lasting products, such as energy-efficient building materials that serve as carbon sinks.
This is good news for the industrial hemp sector, as it reinforces the potential for stakeholders across the value chain to financially benefit from hemp’s net-negative carbon footprint and high CO2 absorption capacity.
Quality still wins the race
As the carbon market evolves and regulations emerge, the demand for high-quality, permanent carbon removals continues to drive sales. As awareness of this complex and growing industry increases, repeat buyers accounted for 91% of total sales in 2024.
Quality labels, like certification from the International Carbon Reduction and Offset Alliance (ICROA), are becoming increasingly important for credibility, though the Alliance currently covers only 15 specific carbon offsetting and reduction methodologies.
Industrial hemp suits the methodologies of biochar and building materials, whereas carbon farming is to be seen separately as it comprises a whole set of techniques that include general farming practices and growing cycles, and goes beyond just industrial hemp. Although there are high-quality methodologies that are ICROA-certified, for example, the Global Artisan C-Sink Guidelines by Carbon Standards International for artisan biochar, or the Biobased Con- struction Materials by Riverse, there aren’t many known hemp projects yet.
Removal for 100 years
Although industrial hemp clearly has the potential to fit into these methodologies, it remains challenging to build a carbon removal supply chain as an income side stream, because meeting the quality parameters is not an easy task.
To be competitive, a Carbon Dioxide Removal (CDR) credit must meet key criteria: it should ensure CO2 removal for at least 100 years, be irreversible, and achieve a strong net-negative impact, meaning it removes more CO2 than it emits. This requires a thorough life-cycle assessment. Double counting must be avoided, especially when biochar or building materials are involved. Lastly, verification should rely on comprehensive digital reporting, measurement, and validation tools, ideally free from conflicts of interest.
Complex and expensive
Following all these requirements when developing a project and building a financially sustainable carbon credit income is complex and needs time and resources. These resources are well spent, as neither the industrial hemp sector nor the carbon credit market can afford a loss of image. Long-term recognition and the ability for stakeholders to benefit from their positive climate contributions depend on maintaining a strong reputation.
The main challenge for hemp farmers focused on components other than the stalk, which holds the most carbon, is that selling hurd in bulk may offer better financial returns than using it for biochar in carbon removal projects. Additionally, high-tech biochar projects require significant investment and complex planning, making them viable only for large-scale operations processing thousands of tons per year. These setups typically use dust as input and benefit from the excess heat generated during pyrolysis.
Artisan . . . biochar
Artisan biochar production using low-cost, easy-to-deploy methods such as Kon-Tiki kilns or soil pits offers a great starting point for operations involving smallholder farmers, and can create an additional income stream alongside their main crops. The biochar can be produced, mixed, and applied directly on the same farm, providing benefits within the local ecosystem.
These projects have important co-benefits, especially for farmers in regions like Africa, Latin America, and Southeast Asia, who are disproportionately impacted by climate change. As these initiatives expand, they can gradually adopt more advanced technologies, turning small-scale biochar production into mid-tech operations that professionalize the supply chain and open up new revenue streams.
Given the current market dynamics, using high-quality hemp hurd for biochar is unlikely to be more viable than its use in building materials unless hurd prices drop significantly. However, for building material manufacturers with climate-neutral operations, developing a carbon-removal supply chain can be financially viable. Factories still dependent on fossil fuels could use the CO2 uptake of hemp as offsets, but only net-negative carbon certificates can be sold.
To achieve net-negative production, manufacturers must follow standardized life-cycle assessment guidelines to better understand and improve their operations.
Who gets the credit?
Achieving a net-negative supply chain requires collaboration among many actors, yet it’s unclear how carbon benefits should be fairly distributed. Farmers provide raw materials with CO2 absorption potential — an aspect that has historically not been factored into prices. If manufacturers turn this material into a carbon sink, it adds value but also increases costs, making the products less competitive.
Consumers also play a role, as the carbon credit depends on the material’s full usage phase. If the building material is later deconstructed and disposed of, the credit may lose its value. The manufacturer currently bears the cost and responsibility for project development, carbon-sink management, certification, and ongoing expenses, and thus typically receives the financial return.
However, it’s important to incentivize farmers to supply raw materials with a high net-negative carbon balance. Manufacturers and farmers need to engage in conversations to align incentives in supply contracts, ensuring long-term collaboration in the fight against climate change.
The author is the Co-Founder and Co-Managing Director of CarbonConnect GmbH, Hamburg.
As the carbon market evolves and regulations emerge, the demand for high-quality, permanent carbon removals continues to drive sales. Read More
