Neural Network to Evaluate Nature-Based Climate Projects
Russian researchers have developed a web application for preliminary economic analysis of new biochar production projects.
Preventing dangerous levels of global warming, a subject of growing attention in recent years, requires more than reducing harmful emissions. It also calls for environmental projects that capture, store and use carbon dioxide (CO₂) and other greenhouse gases.
One such approach is biochar, a highly porous, carbon-rich material produced through the thermal decomposition of plant- or animal-based feedstocks. Biochar has a distinctive property: when applied to soil, it captures and sequesters CO₂ for centuries while also reducing emissions of the greenhouse gases N₂O and CH₄ from agricultural land. As a result, biochar production has become a recognized method for removing carbon dioxide from the atmosphere and addressing climate challenges.
The effectiveness of these processes is measured in carbon units, with one unit equivalent to 1 metric ton of CO₂ equivalent. Governments are now imposing strict emissions limits, but companies cannot always overhaul their production processes quickly. At the same time, some companies generate carbon units and place them on the market. Other businesses can purchase these units and count them toward their environmental impact obligations.
The challenge is that producers of carbon units have a hard time calculating in advance whether this kind of business will be economically viable. Digital technologies could make that analysis easier.
A Digital Tool for Economic Assessment
The Center for Digital Technologies at HSE University (Moscow) has developed a web application that combines production, climate and financial calculations for biochar projects. The platform can help evaluate the effectiveness of different models, design a climate project capable of paying for itself and bring it to the carbon-unit market.
The application can estimate potential biochar production and the resulting volume of carbon units, calculate the land area and investment required, and assess the economic return. Using a neural network, the digital platform evaluates feedstock logistics, the characteristics of thermal-processing equipment, potential carbon-unit prices and the project's financial outcome.
When modeling a project, an investor can now select a carbon-unit registry and assess its prospects using different price forecasts. The application can also factor in a range of economic variables, including inflation and the discount rate.
An Economist's Assistant
The application does not replace human expertise because its results provide broad, preliminary estimates. Even so, it can offer an early indication of a project's approximate implementation timeline and the level of investment needed to make it economically viable. That information can then be used to prepare a feasibility study or for the climate project's validation process.
The new application is expected to find demand because it helps evaluate projects involving a product with significant potential. “For large businesses, especially in the steel industry, decarbonization and carbon-footprint management are no longer simply part of the agenda but part of operational strategy. Severstal, for example, currently has a decarbonization strategy integrated into the company's corporate governance system. As part of that strategy, we are also deliberately implementing climate approaches that deliver measurable environmental benefits. We are studying the potential of different technologies capable of addressing carbon-emissions challenges effectively and reliably, including biochar,” said Roman Kazakov, Head of Climate at Severstal Management JSC.
Biochar producers, however, can sell more than carbon units. Farmers also need biochar because it improves the physical, chemical and biological properties of soil. In heavy clay soils, biochar improves aeration and structure, reducing erosion. It can also improve soil chemistry, making nutrients more readily available to plants. Together, these properties make the material valuable for improving soil fertility and combating land degradation.
A New Approach to Climate Projects
Russia's market for nature-based climate projects is only beginning to take shape and, in effect, is becoming digital at the same time. Developers are offering investors platforms for preliminary project analysis that can model proposed ventures and assess their economic prospects. HSE University researchers previously developed a specialized AI system that helps determine optimal parameters for tree-planting projects that absorb carbon dioxide and estimate their potential profitability.
Thus, different types of climate projects are gaining their own digital assessment models, encouraging Russia's tech industry to develop specialized software at the intersection of geographic information systems, climate data, monitoring and financial analysis.
All that could accelerate the development and launch of nature-based climate projects addressing major environmental challenges. Once digital platforms for assessing their economic potential have demonstrated their effectiveness in Russia, they are expected to find demand in CIS and BRICS countries developing their own environmental protection programs.
