Microbe underpins $10 million govt clean tech investment

I’m at NZBio (updates on twitter @smcnz), where day two has been been dominated by updates from some of the country’s most innovative alternative energy start-ups.

The back-story for Auckland-based Lanzatech is well known – the company was formed in 2005 with plans to extract clean fuel from biomass like waste wood and high-energy crops like corn, but soon realised there was a better business model in generating fuel from the waste flue gases of steel mills.

Lanzatech's test plant at the Glenbrook steel mill  source: Lanzatech
Lanzatech's test plant at the Glenbrook steel mill source: Lanzatech

Since then Lanzatech, which counts Warehouse founder Sir Stephen Tindall among its investors, has picked up funding from Silicon Valley luminary Vinod Khosla and from you and I in the form of $10 million in funding from the New Zealand Government.

Changing direction from more conventional biomass-type fuel stocks to using waste gas as its core ingredient required Lanzatech to turn to some sophisticated bio-chemistry for help. Co-founder and chief scientists Dr Sean Simpson spent two years developing a microbe that eats carbon monoxide and can generate energy by eating carbon derived from flue gas alone.The Lanzatech team sequenced the microbe’s genome, figured out its energy converting abilities and discovered that the microbe was incredibly immune to contaminants contained in flue gas emissions.

The key part of Lanzatech’s patented technology is the use of the microbes in the fermentation phase where the gas is converted to ethanol and chemicals.The process can also be used for processing biomass and municipal solid waste,  generating 380 litres of ethanol for each tonne of biomass.

Lanzatech has been trialling its waste gas to fuel conversation technology at the Glenbrook steel mill and Dr Simpson says the results suggest Lanzatech is ready for a commercial scale-up of the technology.

So where’s the market for this? In a word – China. With China producing over half the world’s steel, there’s a ready supply of flue gases which can be tapped for ethanol production. Speaking at NZBio, Sir Stephen Tindall said it was Lanzatech’s intention to partner with Chinese steel mills in revenue-sharing arrangements to produce ethanol from gases produced in the steel production process. He also said regualtory processes may in future see such use of waste gases from factories made mandatory by Governments.

“As regulations come on, companies will have to pay companies like Lanzatech to take away their emissions.”

The idea, said Dr Simpson was to keep the company’s intellectual property and R&D in New Zealand but work in joint-ventures with steel  mills around the world. By controlling the gas-to-fuel processing at the plants, Lanzatech hopes to keep its patented processes safe from being exploited by rivals, But Dr Simpson admitted that in the Chinese market where theft of IP and reverse-engineering of patented technologies is common, this would prove challenging.

A promising start-up then, and one ready to comemrcialise its technology. Lanzatech perhaps best sums up its commercial advantage itself, in this blurb from its website:

LanzaTech’s process varies significantly from the traditional corn-based ethanol process. Corn ethanol is produced via the fermentation of sugars. Corn kernels are broken down into sugars through milling and hydrolysis operations. LanzaTech’s ethanol is produced by the LanzaTech process. The key to LanzaTech’s proprietary technology is a microbial catalyst that can convert carbon monoxide to ethanol. Gas-to-fuel conversion with microbes has been under development for the last two decades. The commercialization barrier for these other processes has been the requirement for high amounts of hydrogen in the input gas stream. Elevated levels of hydrogen are not a feature of steel mill waste gases. LanzaTech therefore appears to have a window of opportunity not captured by competitors.


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