AbstractWe estimate the profitability of producing biochar from crop residue (corn stover) for two scenarios. The first employs slow pyrolysis to generate biochar and pyrolysis gas and has the advantage of high yields of char (as much as 40 wt‐%) but the disadvantage of producing a relatively low‐value energy product (pyrolysis gas of modest heating value). The second scenario employs fast pyrolysis to maximize production of bio‐oil with biochar and pyrolysis gas as lower‐yielding coproducts. The fast pyrolysis scenario produces a substantially higher value energy product than slow pyrolysis but at the cost of higher capital investment.We calculate the internal rate of return (IRR) for each scenario as functions of cost of feedstock and projected revenues for the pyrolysis facility. The assumed price range for delivered biomass feedstock is $0 to $83 per metric ton. The assumed carbon offset value for biochar ranges from $20 per metric ton of biochar in 2015 to $60 in 2030.The slow pyrolysis scenario in 2015 is not profitable at an assumed feedstock cost of $83 per metric ton. The fast pyrolysis scenario in 2015 yields 15% IRR with the same feedstock cost because gasoline refined from the bio‐oil provides revenues of $2.96 per gallon gasoline equivalent. By 2030, the value of biochar as a carbon offset is projected to increase to $60 per metric ton and the price of gasoline is expected to reach $3.70 per gallon, which would provide investors with an IRR of 26%. © 2010 Society of Chemical Industry and John Wiley & Sons, Ltd