Abstract
Background
I co-founded Warm Heart Worldwide, Inc. with my wife, Evelind Schecter, in 2007. Today I co-direct it with her from the Warm Heart Foundation, our Thai headquarters. For thirteen years we have survived on donations from friends and family, email asks and crowdfunding. Fundraising preoccupies us and we have long dreamed of economic sustainability. Several years ago, I started our ‘Stop the Smoke’ campaign to use biochar production by the rural poor to rid North Thailand of the smoke that blankets us for months every year. 1 What I learned led me to a self-sustaining model for a value-creating project that we are translating into an economically sustainable approach for Warm Heart and developing world NGOs. This is the story of how we got from Warm Heart, a value-creating, donor-dependent NGO, to Warm Heart and Biochar Trust, a value-creating, self-sustaining, social enterprise. I tell it because many NGOs’ value-creation capacity remains at the mercy of undependable donors. I tell it, too, because it offers a low-cost, sustainable solution to large-scale CO2 removal from the atmosphere.
Warm Heart is a community development organization that believes strong communities make a better world. We are a ‘life cycle’ organization that serves children, their parents and their grandparents, providing safe housing and educational support, job creation, climate-smart agricultural training and visiting services for the abandoned elderly. Warm Heart does not pursue development as do governments and INGOs. We do not have pre-conceived solutions to community problems that we have defined. We begin from an assumption of ignorance and the motto ‘ask, don’t tell’. We serve our immediate community first but are not simply a local organization. We take our solutions, developed with local villagers to problems they have identified, to other poor communities around the world. Over the years, this has permitted Warm Heart to establish close ties with villages and villagers across the globe and led farmers to talk openly with us about their actual farming problems and practices.
Problem: The Burning Season
Every year, heavy smoke blankets North Thailand from February to April (the ‘burning season’). The loudest voices squawk from Chiang Mai city, all blaming forest fires set by one or another nefarious character for one or another nefarious reason. 2 In the case of Chiang Mai city, the thick smoke probably does come from forest fires. For the rest of the North, however, those with access to satellite imagery insist that 90% of the smoke derives from crop waste, mainly corn, burned by farmers in their fields. 3 Such burning is strictly forbidden during the burning season and offenders are threatened with fines, jail and even execution. Poor farmers burn anyway.
Poor farmers’ problem is obvious once one talks with them. Farmers say that they have no alternative to burning and that the threats are meaningless. They tell us that they know all the local policemen who would have to fine, arrest or shoot them—and who as farmers themselves must also burn. They tell Warm Heart that they are not concerned about satellites catching them because they know when the satellites pass overhead. (They may be poor farmers, but they are neither stupid nor out of touch. Asked how they avoid being caught, they say, ‘We have smartphones, too, and can check the website to know when the satellites are going over as well as anyone.’) 4
Why do they burn? Poor farmers burn because they have no other way to clear their fields of crop waste and weeds for the next planting. After the harvest, most healthy adults leave poor villages to find work elsewhere because there is no work at home. The infants, school children, disabled and elders left home cannot manage the steep slopes of bad fields, especially during the hot season when daytime temperatures routinely reach 41°–45° C (105°–115° F). Besides, they ask, what would we do with all the stalk and weeds if we did cut and collect them? Faster, more complete and much easier is just to burn. Light the lower border of a dry field and let the fire go.
The Solution: Paying for Biochar
An obvious practical solution exists for the burning problem—train farmers to make biochar from their crop waste instead of burning it. For those not familiar with biochar, it is ‘super charcoal’ made by heating any carbonous biomass (in this case, crop waste) extremely hot in the near absence of oxygen. With Warm Heart’s low-tech designs, the biochar-making equipment is so simple and low-cost that any farmer can make it anywhere in the developing world. Making biochar emits virtually no climate change gases or smoke. When the process is complete, the biochar left in the machine represents 40% of the carbon that the plant removed from the air through photosynthesis; biochar is, therefore, carbon negative. Put in the ground, it sequesters at least twice its weight in CO2. In the ground, it restores degraded soil, improves crop yields and mitigates climate change stresses. Added to animal feed, it promotes animal health, weight gain and productivity. Used in water filters it removes agricultural and industrial chemicals. At the time, we had been making biochar for some time, and biochar seemed the perfect solution.
Poor farmers objected immediately to the very idea. ‘Why,’ they asked, ‘should we do something that hot and hard for nothing?’ 5 To us, the obvious solution was to pay for the biochar they made. The notion of paying farmers not to burn, however, seemed too radical for many. On the one hand, many so dehumanize the rural poor that it simply never occurred to them that farmers merited any consideration. 6 Of course, most assumed, ‘they’ would also do what they were told. When farmers did not stop burning, the explanation morphed, but not the underlying thinking. Now it was that the poor were too stupid to understand the greater national and global value of reducing GHG and smoke emissions. On the other hand, we were routinely told that these half-savages ‘just like burning things’ and would continue to burn for the fun of it, rather than work for money. 7 In fact, poor farmers loved getting paid to make biochar and took to it immediately. In 2017, when we field-tested the idea, paying just $0.06/kg, farmers made 15,000 10 kg bags. We had to ask them to stop at that point because we had run out of funds.
Here we are back at money. The project was producing a lot of value. Every three tonnes of waste converted to biochar removed two tonnes of CO2 from the atmosphere, stopped huge amounts of smoke (PM2.5) from ever happening and so on. But what were we supposed to do with all the biochar we were buying? The only available solution was to sell the biochar in a more value-added form, but as an NGO, we were singularly unprepared to do so. What to do?
What Does This Have to Do with Warm Heart?
When a business development guy asked me recently what Warm Heart Biochar aspired to, I answered: ‘we want to create a self-growing, self-replicating model idea that will help to stop all crop waste burning globally, reduce GHG and PM2.5 emissions, improve public health across the developing world by reducing the particulate count and create jobs and new income streams for the poorest of the poor.’ 8 Here is a huge amount of value, but can you imagine how much this would cost? Can you imagine trying to raise the money to do something like this? Short answer: an impossible amount of money that no one wants to pay. (We are pretty good at fundraising and found no traction at all, no matter how we tried to pitch the project.)
The New Problem: Achieving Self-Sufficiency for Warm Heart
Things were not working at Warm Heart. Yes, Biochar got some small grants to keep operating, but in large measure, we robbed Peter to pay Paul and never covered costs. We also stayed focused on our old way of doing things: begging for donor support. Stupidly, we could not believe that with billions of dollars committed to fighting climate change, no one would not want to help us get our concept in the air. Luckily, no one was interested. The resounding lack of interest forced me beyond revising grant proposals to real thinking.
The more I thought, the more I understood that our model had too many working parts, all of which required our continued engagement. Thinking about this, I realized two things: (a) I had no desire to have Warm Heart or my own life swamped by managing lots and lots of village-scale biochar operations and (b) Warm Heart’s role was necessary only so long as we accepted the structure of global carbon markets. Warm Heart was the necessary buyer of biochar for poor farmers because they had no alternative. If we could give them access to a better sales alternative, they would not need us and could manage matters themselves. We would not be swamped—and would no longer be the binding constraint on growth.
Viewed ‘from outside’, the problem was clear and simple. The climate change world starts with a jaundiced view of humanity and a profound fear of cheating. It, therefore, has very tight regulatory systems. Global carbon markets begin with the assumption that those offering to sell either carbon emission reduction or removal credits are inherently untrustworthy. This leads to technically complex and costly verification and certification standards. Until recently, it also led to the exclusion of biochar as too variable to be properly quantified and qualified. All this has excluded poor farmers whose technology could never meet standards and who could not afford or even access the labs to conduct some of the verification tests. 9
Warm Heart had to develop an alternative path to certification in order to stop crop waste burning across the developing world and the exclusion of smallholders from global carbon markets. If we could, farmers across the developing world could get paid for making biochar without our involvement. The idea’s appeal was obvious: the more crop waste a farmer converted into biochar, the more money (s)he made, encouraging him/her and his/her neighbours to burn still less and make still more biochar in a virtuous cycle that would result in fewer GHG and PM2.5 emissions, more jobs and higher local incomes. But how to get there?
Biochar Markets vs. Carbon Emission and Carbon Removal Credits Markets
We need to establish an important distinction between biochar markets and carbon credits markets. They are very different and while related are not entirely co-dependent. ‘Biochar markets’ are where the actual stuff changes hands and where supply and demand reflect the understood utility of biochar. Although biochar markets are growing incredibly fast, there remains a remarkable lack of knowledge about biochar among politicians, policymakers, business leaders, farmers and the public at large. Not only is much of what is known simply wrong (for example, many estimates of the waste biomass currently burned or left to rot that might be converted to biochar grossly underestimate the amount available in the developing world), but most people have no idea of the climate change, public health, broad environmental and ecological benefits of widespread use of biochar or of its potential for reducing food insecurity. The resulting lack of active demand has slowed the development of biochar production, resulted in the industry’s inability to achieve scale and so raised costs further depressing demand. An immature biochar ‘ecology’ has long mitigated start-up success and innovation in the biochar.
What has recently changed the scenery dramatically is the scientific recognition of biochar’s potential as a mature means to remove carbon. Since the adoption of the Kyoto Accords in 1997, the world has focused on carbon emission reductions through the use of Certified [Carbon] Emission Reduction credits or CERs on the belief that if we reduced carbon emissions sufficiently, we could stay below the hoped-for 1.5° C increase in global temperature. The Kyoto system, in fact, did not actually cut emissions, but simply spread them more evenly through the atmosphere. Suppose, say, a German steel mill exceeded its EU CO2 emissions quota by 1,000 tonnes, it could ‘offset’ these 1,000 tonnes by buying CERs. These were generated by, say, a reforestation project in Laos that promised to cut the amount of CO2 emitted by that land by a similar 1,000 tonnes. (The ‘Certified’ bit referred to the complex and costly Clean Development Mechanism [CDM] system used to prove that the emissions were actually stopped.) The same 1,000 tonnes of CO2 went into the atmosphere, but they disappeared in an accounting manoeuvre that offset them against a CO2 ‘deficit’ in a different part of the atmosphere over Laos. As droughts, fierce storms, forest fires, sea rise and so on have demonstrated in the past few years, however, this has proved insufficient. Today the atmosphere and ocean are completely full. As the need to remove carbon from the atmosphere has become clear, attention has come to focus on ‘sinking’ or removing and ‘locking up’ carbon. The ‘Certified Carbon Removal Credits’ (often referred to as 2CRC) are also certified as actual but refer to the removal of CO2 from the atmosphere, not merely its transfer to a new location.
The 2CRC market works exactly like the CER market although it is still in its infancy because so many remain focused on CERs. Everything starts with an internationally recognized verification and certification system to ‘certify’ that the amount of carbon supposedly removed from the atmosphere and for sale has, in fact, been removed. Individuals with contacts and individual firms can buy directly from 2CRC producers. Commonly, 2CRC producers also work with carbon sale platforms that specialize in selling CERs and 2CRCs. They are often identified as ‘projects’ by the platform and described on their website. Buyers select a ‘project’ that interests them and buy in at a price per tonne of CO2 that is stated by the platform. The platform may advertise that the buyer can use investments to offset the carbon footprint of their home life, a vacation or whatever. While platforms are generally good about explaining the importance of the process, few reveal how they calculate the price charged.
The Warm Heart Difference
We try to be as transparent as possible through the use of a public blockchain. We do this very simply. 10 To start, we established an easily photographed measure of biochar dry weight that can be done by any farmer anywhere to the satisfaction of buyers. Biochar does not change volume with the addition of water. To set a standard 10 kg measure of dry biochar, we weigh 10 kg of super dry biochar on a scale. We then establish its exact volume using a 20 litre plastic tub that is found across the developing world. The inside of the tub is marked at the top of the biochar. For the specific type of biochar (say tree branches), this establishes the equivalency of this volume measured with this tub filled to this line to 10 kg of dry biochar (no matter how much the biochar in question actually weighs because of its water content). Farmers photograph the ‘weighing’ (voluming?) of their biochar and pour it out into separate piles in a row. When finished, they photograph the entire row of piles and upload both the number of piles and the final picture to Task.io (see below). The system totals the biochar produced, calculates the amount of CO2 sequestered and how much money the farmer is owed and pays him/her. The system also aggregates the amounts of biochar/CO2 produced by all farmers, initiates the ‘minting’ of STS tokens (crypto tokens, each unique and unchangeable, backed by one tonne of CO2 and containing links to all of the blockchain data regarding that tonne of CO2. For more detail, see below) and either credits them to an existing order or posts them for sale. The photos and totals are all visible on the blockchain during the process, for any given STS, and later for the owner of an STS.
Value Destruction
I must thank an anonymous reviewer for calling attention to an aspect of this situation that I had not considered as such: the ‘destruction’ of value and what further research does value destruction demand that we consider? To assert that value destruction has occurred in this case assumes that the carbon theory of climate change is correct. If one accepts climate science as it is today, then the value destroyed might be defined as all of the carbon needlessly added to the atmosphere beginning at the point at which we understood the actual effects of the Kyoto system. 11 In effect, value destruction occurred at every point that we could have acted but did not. At issue for any idea of value destruction is how fair any such judgement is. After all, first, it assumes that at some point, one knows the right answer to the problem and that from that point on, one can rightly look back to judge the rate at which critical stakeholders came to that conclusion. I submit that this is pretty tricky. By the same token, well beyond the realm of climate change, it is easy to identify lots of places in which the ‘logically’ or ‘scientifically’ appropriate paths are not being followed, leading to terrible losses in the eyes of the ‘right thinking’ majority. How does one measure value in such situations or its destruction? (As with climate change, none of this is worth thinking about except where the stakes are high. If we are talking about ‘value destruction’ we are talking about more than marketing. Should the US have stayed in Afghanistan? What should we do with anti-vaxxers? Mask mandate opposers? Lest this seem obvious, who today would have stood with Galileo?) I do not think that this is the place or that I am the person to take on value destruction, but I would suggest that as with all things in the fraught domain of value creation, getting a handle on such core issues and the research designs to sort them is critical.
Biochar Trust
The first step in achieving self-sufficiency required harnessing the value of this new system of biochar certification for c-sink credits (credits for the removal of CO2 from the atmosphere) to our income needs. This was accomplished by forming an independent company, Biochar Trust, to conduct verifications, provide certifications and sell the certificates to buyers. So long as Biochar Trust remains a private company/social enterprise owned but not limited by Warm Heart, it can expand and continue to do so while also growing the value of GHG and PM2.5 emission reductions and job and income creation without being bound by or impinging on Warm Heart’s operations.
Second, Warm Heart/Biochar Trust had to create a global market-accepted biochar quality and quantity verification and certification system. We already had ideas about how to build on the Task.io blockchain-enabled platform, but soon discovered a partner in the leader of the European Biochar Certification (EBC) system development team. 12 Along with others in the leadership of global biochar, he had come to see the inequality produced by the worldwide application of standards meant only for the West. We collaborated to solve a variety of problems ranging from a fool-proof way for poor farmers to ‘weigh’ their biochar accurately, to how to train large numbers of illiterate people to use the Task.io cell phone app. By establishing an EBC standard biochar verification and certification system and ensuring that it can be used worldwide, we succeeded in opening the door to millions of potential clients.
How exactly does this system work? It began with the shift in public attitudes toward climate change that has, in turn, led big companies (Amazon, Google, Microsoft, Shopify) to commit millions of CSR dollars to carbon removal. For a buyer in the market for a specific number of tonnes of carbon certifiably removed from the atmosphere, the key questions are: (a) where and how did this activity take place? (b) Exactly how many kilograms (kg) of biochar were produced? (c) What is the quality of the biochar—specifically, what is the carbon content of that biochar (how many kg of carbon per tonne of biochar)? and (d) what happens to the biochar once it is produced (how is it used)? The essential problem is how to provide answers to these questions that are trustworthy and immutable (verifiable and reliable). In the West, this can be accomplished by testing the large-scale, high-tech biochar-making machines used to produce biochar and then the biochar itself. In the West, such a testing system is efficient and cost-effective. It is impracticable in the developing world where individual farmers make biochar in tiny batches (10 kg or less), usually in isolation, and have little access to sophisticated labs for testing. This problem, once a major barrier, has given way in the face of developments in cell phone and blockchain technology.
To contain costs and ensure the participation even of isolated, illiterate farmers, we set out to answer buyers’ big questions using an existing, inexpensive and ubiquitous technology the cell phone—and to start, by expressing willingness to accept ridiculously unfavourable estimates of biochar yield and quality. Cell phone towers have proliferated globally and cell phones prices have dropped precipitously. This has meant that today even very poor farmers at the periphery can GPS and photograph their fields and take time, date and location stamped photos of making, weighing and using biochar. Companies such as Task.io (details below) have tamed blockchain technology and today provide a mobile app that makes it easy for poor farmers to upload geo-codes and photos to a blockchain where they cannot be modified. We worked with EBC to establish what data is required, organized training for farmers to teach them how to follow the procedures and hired outside verifiers to check on the veracity of farmers’ claims. When a farmer submits evidence of biochar produced, properly ‘sinked’ and approved by a site administrator, (s)he is paid immediately. His/her contribution is then bundled with hundreds of others and eventually sold on to either a carbon sales platform such as ClimatePartner or South Pole or directly to a company such as Microsoft or Shopify. The removed carbon is sold in the form an ‘STS’ token (a quasi-crypto coin) equivalent to a tonne of carbon that embeds immutable links to all of the actions uploaded to Task.io by the farmers who sequestered it. Anyone interested in buying an STS token, stopping the generation of a lot of smoke and GHGs, and helping poor farmers (who receive 75% of the proceeds) can visit the Biochar Trust website.
As for universality, we hope that in time organizations of farmers, even individual farmers, will join the Biochar Trust system simply by creating an account on Task.io. For those who wish to separate themselves from Warm Heart and Biochar Trust, the model is there and easy to copy. Any group and/or blockchain front-end company can run with their own system. The point is simple: there is nothing particularly difficult or closed-ended about this system. It permits individual farmers and groups too small to create their own system to participate in global markets on an equal footing. It is so simple that larger groups can develop their own system with either Task.io or any other blockchain company interested in building them a farmer-friendly front-end. It also permits a member of the public interested in making a permanent (as opposed to a temporary, often impractical, ‘plant a tree’) contribution to cooling the climate, cleaning the environment, improving public health and reducing rural poverty to buy a tonne—or more—of CO2.
In the future, achieving ultimate self-sufficiency and the elimination of all crop waste burning will require growing the global market for biochar, but only in the future. The global biochar market has a classic ‘collaboration game’ problem complicated by ignorance. On the one hand, the market is already full of biochar producers without markets big or secure enough and biochar users who fear that they will not find big or secure enough suppliers. The problem is coordinating supply and demand. On the other, few of the potential biochar buyers who would benefit hugely from using biochar know anything about it. As a result, the ultimate demand for biochar, post-sink, is minimal compared to what it could be. And because biochar can be used (sold) as fertilizer, animal feed or water filter media after being sold for c-sink credit, the lack of such a secondary market costs producers and/or buyers huge potential profits. For the very small farmers who depend on Biochar Trust, none of this matters. When you are as poor as they are, the value of making and simply burying biochar is more than enough. In the future, however, they may want more.
Value-Creation Beyond Biochar Trust
To go back, our aims are global, not private or local. Warm Heart aspires not just to be self-sufficient, but ‘to create a self-growing, self-replicating model idea that will help to stop all crop waste burning globally, reduce GHG and PM2.5 emissions, improve public health across the developing world by reducing the airborne particulates count, and create jobs and new income streams for the poorest of the poor’. No one company, Biochar Trust or any other, can hope to accomplish this alone—and that is not the point. The point is that once established, the certification system and the business ‘idea’ exist in the public domain for anyone, anywhere to imitate to create similar value. The world is large and full of waste biomass. Warm Heart/Biochar Trust currently operates in only three countries and has plans for just five more. There are billions of tonnes of crop waste, billions of tonnes of plantation forest and pulp and paper waste, billions of tonnes of sawdust and so on, to biochar in the developing world. The sale of carbon removal credits for biochar produced does not impinge on what a farmer can do with it afterwards (other than burning it). There is room for all. We can flourish unthreatened by the appearance of other, similar operations elsewhere. Anyone can access the EBC standard and build their own blockchain system imitating Biochar Trust. Or they may join Biochar Trust. Or they may simply create a project on Task.io and work with Task.io to create their own token. The essential points are these: Anyone can help small farmers help themselves and simultaneously reduce global GHG and PM2.5 emissions. Achieving self-sufficiency through social enterprise and creating value for all can and ought to go together.