AbstractThe state of California could play an important role in emerging markets for biochar, due in part to the availability of low‐value biomass resources and their potential for use in agriculture sector. In this study, we assess the scale of production and use, and comment on potential markets for biochar in California. We explore various sectors for the application of biochar produced from local biomass using surveys and a market‐sizing approach. A market‐oriented approach for biochar innovation and the ecosystem around a biochar producer is also discussed. Next, we identify barriers to biochar market success in the present and the near future based on a survey of local producers. Among the barriers analyzed, access to capital investment for scale‐up is the biggest barrier experienced by a majority of producers, followed by market and demand. When grouped under different categories, the extent of barriers decreased in the order: market > scale‐up > technical > socio‐political > environmental. Most producers anticipate that revenues from carbon offset credits would help them scale up their facilities and expand the biochar market. In the near future, soil‐based applications of biochar could be the most likely market for biochar, followed by filtration, livestock feed, and manure management. As the industry evolves, rewarding carbon credits, increasing awareness and improving production processes are expected to help commercialize biochar. Finally, we offer recommendations to promote the growth of biochar in California. © 2021 Society of Chemical Industry and John Wiley & Sons, Ltd