Biosolids Pyrolysis Economics Turn on the 78 Percent That Leaves as Gas

Twenty percent of what goes into a high-temperature pyrolysis kiln comes out as solid carbon. The other 78 percent leaves as volatile matter and gas, and on September 4, 2026, Char Technologies CEO Andrew White told Waste Dive that this second number is what decides what the plant can pay for feedstock: without revenue off the gas, "that limits what you can pay." He was describing woody biomass. He was also, without meaning to, describing the whole of biosolids pyrolysis economics, because the same split governs a sludge kiln and the sign on the feedstock line is the only thing that flips.

Char has two stories running at once, and the market keeps reading them as one. In Thorold, Ontario, the company announced Phase 1 substantially complete on October 1, 2026, a line rated at up to 5,500 tonnes of biocarbon a year, with ArcelorMittal Dofasco named as the offtake buyer for fossil-carbon replacement in steelmaking and Elkem ASA taking material for ferrosilicon. Separately, it is working with Synagro and the City of Baltimore on a plant that turns biosolids into biochar and takes out PFAS along the way.

Those two projects do not share an economic model. They share a kiln.

The 78 percent sets the price of the 20 percent

Start with the direction of the money. A woody-feedstock plant buys its input: pallets, sawmill offcuts, unmerchantable wood. A biosolids plant gets paid to take its input, because a wastewater utility is buying a disposal service and a landfill diversion outcome, not selling a commodity. So White's constraint inverts. Where he can only bid up for pallets as far as his gas revenue allows, a biosolids developer can only bid down on the gate fee as far as the gas revenue allows.

That inversion is the whole competitive dynamic in municipal biosolids procurement right now. Two bidders with identical kilns, identical char, and identical PFAS performance will submit different gate fees if one has a pipeline injection point and the other doesn't. The one with the gas leg wins the contract and books a thinner tipping fee. The one without it has to price the full cost of thermal processing into the gate fee and loses on price to land application.

Which puts the Thorold schedule under the microscope, because the gas leg is the part that isn't built. Phase 2 at Thorold covers a second kiln, methanation equipment to upgrade the synthetic gas, and an onsite RNG pipeline injection point. The October 1 release says the company intends to proceed with that scope after Phase 1, and attaches no date to it. Phase 1, meanwhile, had its own slippage: the company guided in October 2025 to finish the commercial biocarbon line by year-end, then in March 2026 targeted ramp-up to commercial production during the second quarter of 2026, and by the October 1 release Phase 1 was at substantial mechanical and electrical completion with commercial operations ramping through October, which missed the Q2 target by roughly two quarters according to the company's own releases.

I don't read that as a company problem. It's what first-of-kind thermal commissioning does, every time, and the Electrical Safety Authority and TSSA sign-offs still pending in that same release are the ordinary texture of it. The point for anyone underwriting a sludge version is narrower: the leg that sets your gate fee ceiling is the leg furthest from revenue, in the only commercial project anyone can point at.

Phosphorus keeps Baltimore's char out of Hamilton's furnace

Biosolids char and woody biocarbon are not the same product, and the gap between them isn't grade. It's chemistry nobody can process out downstream.

Rathnayake and colleagues published pilot results and an Aspen Plus energy model for the PYROCO closed-coupled pyrolysis and gasification system in Water in November 2024, working with South East Water on real biosolids. Their char ran roughly 30 weight percent yield, with organic carbon of 210 to 220 g/kg, total phosphorus of 36 to 42 g/kg, and total nitrogen of 16 to 18 g/kg.

Read those numbers as a fertilizer analysis and they're excellent. Read them as a metallurgical reductant spec and the phosphorus alone ends the conversation. Dephosphorization is something a basic oxygen furnace spends slag chemistry and time on; nobody buys a carbon input that adds phosphorus back. And a carbon content around 21 percent by mass means the rest is ash and minerals, where a steelmaker replacing coking coal wants fixed carbon in the eighties with low ash.

So the comparison a lot of 2026 investor decks are implicitly making, that a biocarbon offtake de-risks biosolids pyrolysis economics, has the causation backwards. Having a steelmaker on the other side of the contract is what makes Thorold financeable. Hard coking coal out of eastern Australia was assessed around $247.50/t FOB in mid-May 2026 by SteelOrbis, which gives a biocarbon seller a visible, liquid reference price and a buyer who takes full lots on a schedule. Biosolids char has none of that.

Revenue leg	Woody feedstock, steel offtake	Biosolids, utility gate fee
Feedstock	You pay for pallets and offcuts	The utility pays you to take sludge
Solid product buyer	One industrial counterparty, full lots	Agronomic market, many small buyers
Spec that gates the sale	Fixed carbon, ash, sulphur	Phosphorus, metals, PFAS perception
Gas leg	Methanation plus an injection point	Identical equipment, same interconnect queue
Contract tenor	Offtake MOU, multi-year	10 to 20 year municipal service agreement

One row in that table carries the financing. The municipal service agreement is a ten- or twenty-year obligation of a public utility with rate-setting authority, which is better counterparty credit than most industrial offtakes and far better than a voluntary carbon buyer. Debt will size off it. Everything else in the column is upside the credit committee writes down.

Water has the first claim on any gate fee you bid

Pyrolysis needs a dry feed. The KIT group's intermediate-pyrolysis study in Energies in 2022 put the working requirement at under 15 percent water content, which for dewatered cake means mechanical dewatering and then thermal drying before a single kilogram reaches the reactor. Their modelling found solar drying cut costs 5 to 34 percent against belt drying depending on site irradiation, and put the break-even biochar price at EUR 300 to 380 a tonne after crediting bio-oil revenue.

The PYROCO work frames the same constraint as a threshold rather than a cost: above 30 percent solids and a minimum calorific value of 11 MJ/kg, their modelled commercial plant runs energy self-sufficient and throws off surplus heat for drying and power. Below it, you're importing energy to evaporate water you were paid to receive.

That threshold is where I'd spend diligence money, not on the kiln. The drying train is the line item that decides whether the project is a thermal plant or a water-removal plant with a thermal exhaust. Centrifuges and belt dryers from Andritz or the piston-pump transfer gear from Schwing Bioset are known quantities with known electrical loads (though the load walks with cake solids, which is the one number no vendor wants to warranty), and pyrolysis systems are generally sold with the drying boundary drawn conveniently outside the vendor's scope. Ask where that line sits before you believe anybody's energy balance.

The PYROCO techno-economics also give the honest version of char-price sensitivity. At AUD 300 a tonne for biochar their modelled payback was 26 years; at AUD 1,000 a tonne it fell to 12, on an 8 percent discount rate the authors themselves call conservative for a novel technology. At a 26-year payback no infrastructure fund holds the asset to term, which makes it a research programme with a tipping fee attached.

PFAS destruction is a liability trade, not a revenue line

EPA's draft risk assessment of PFOA and PFOS in sewage sludge, released January 14, 2025, found potential human health risks across all three current management routes, land application, landfilling, and incineration, and modelled unacceptable risk to specially exposed groups where sludge carries more than 1 part per billion of either compound. The agency noted that 1 ppb sits at the low end of typical US concentrations. Comment closed in August 2025 and no final action has followed (a two-year regulatory pause that nobody structuring a 2030 start can price). And if the final assessment lands softer than the draft, does the gate-fee premium survive it?

Char's partners reported PFAS substantially eliminated in biochar from their pilot work, and the company put out separate high-temperature pyrolysis test results in August 2026 saying the same. Take that as read. The question for a pro forma is what it's worth, and the answer is uncomfortable: destruction is a liability avoidance, and a utility's willingness to pay for liability avoidance is a function of what its alternatives cost, not of the destruction efficiency you achieved.

Which is why biosolids pyrolysis economics track state rules a good deal more closely than they track federal science. Where a state has capped PFAS in land-applied material and 40 CFR Part 503 compliance alone no longer gets a utility to a disposal outlet, the alternatives repricing drives gate fees up fast. We've seen the same mechanism on the water side, where PFAS liability landing on leachate handling moved treatment costs by multiples rather than percentages. Where no such cap exists, land application at well under a hundred dollars a tonne is still the competition, and no amount of destruction data closes that gap.

What the credit leg pays, and what it can't finance

I've argued in earlier pieces that a carbon credit you can't bank belongs in a footnote rather than a revenue line. On biochar I had the failure mode wrong. Biochar credits bank fine. The methodologies are mature, the registries issue, and disclosed-price weighted averages ran near $136/tonne through 2026 on a benchmark that has itself been the dominant durable-removal product by contracted volume [market range, 2026].

Order size is the binding constraint instead. White's framing of it is the most useful thing in the Waste Dive piece: a steelmaker takes large quantities at once, while biochar offtake is fragmented and leans harder on carbon credits. A fragmented order book with a credible unit price is a working capital problem and a sales-headcount problem, and lenders discount it accordingly. That's the difference between a commodity and a product you have to go sell.

And the credit is not contractual in the sense that matters. My worst experience of this was a gate-fee indexation dispute in 2022 where the contracted escalator was CPI-linked and missed actual tipping-cost inflation by 14 months, which ate most of the equity return on a project whose operating line everyone had agreed was the safe one. If an indexation mechanism on the contracted leg can do that, a voluntary credit price in year nine of a twenty-year model deserves no weight at all in the base case. The same discipline that killed optimistic assumptions when Viridor walked away from Quantafuel applies here, and it applies to the char price too.

Where the arithmetic inverts

None of this holds at small scale. Below roughly 20 dry tonnes per day the drying train's fixed cost swamps everything, the gas volume is too small to justify an interconnect study let alone a methanation skid, and the project collapses back to a dryer with a disposal contract. The PYROCO modelling assumes a commercial-scale plant, and the papers are explicit that they don't publish a plant size, so don't read a threshold out of them that isn't there.

How many candidate sites have a pipeline with spare capacity inside a sane tie-in distance? Three other places the case fails. If your nearest pipeline has no capacity or a multi-year interconnect queue, the 78 percent is heat, not revenue, and your gate fee has to carry the plant alone. If your sludge has high inorganic content from industrial contributors, ash dilutes the char below any agronomic or industrial use and you're paying to landfill a product. And if the biosolids service contract has a volume floor you can't meet during commissioning, the make-whole provision will find you in the exact quarter your commissioning schedule is slipping.

None of these are reasons the technology doesn't work. The evidence that it works, on both feedstocks, is reasonably good. They're reasons that the projects which get financed will be the ones with a gas interconnect and a utility counterparty, in that order, and that the field of waste conversion facilities reaching financial close over the next two to three years will look narrower than the technology's addressable market suggests.

If you're sizing one of these, the first two numbers to go get are the interconnect queue position at your nearest pipeline and a firm installed cost for the drying train that brings your cake to 30 percent solids. Those two answers set the gate fee you can bid, which is the only line in the model a lender will underwrite, and everything about the char, its carbon content, its phosphorus, its credit, is a negotiation you conduct after you already know whether the project exists.

Disclosure: I write on waste-market economics for Renewable Waste Energy and have structured debt and offtake on thermal waste projects, including the gate-fee indexation dispute described above.

Sources & Notes

• The 20/78 split, White's feedstock-pricing constraint, the Synagro and City of Baltimore biosolids project, and the biocarbon-versus-biochar offtake contrast all come from Waste Dive's September 4, 2026 biogas roundup.
• Thorold's Phase 1 rating of up to 5,500 tonnes a year, the ArcelorMittal Dofasco offtake, and the Phase 2 scope of a second kiln, methanation and an onsite injection point are from Char's October 1, 2026 Phase 1 completion release. The schedule comparison in this piece uses that release against the company's October 2025 and March 2026 updates.
• Char biochar composition, the 30 percent solids and 11 MJ/kg self-sufficiency threshold, and the AUD 300 to 1,000 payback sensitivity are from Rathnayake et al., Water, November 2024, on the PYROCO pilot plant. Open access, and the techno-economic section is where the useful detail sits.
• For the drying constraint and the EUR 300 to 380 break-even, see the KIT intermediate-pyrolysis and solar-drying analysis in Energies, 2022.
• The 1 ppb modelling threshold is EPA's, from the draft PFOA and PFOS sewage sludge risk assessment of January 14, 2025. Still draft as of this writing; the biosolids rule it would sit under is 40 CFR Part 503. Coking coal reference price is SteelOrbis's mid-May 2026 ex-Australia assessment; the biochar credit average is a disclosed-transaction benchmark, not an exchange settlement, and should be treated as indicative.