Portfolio project

LanzaTech, New Zealand

As developing countries industrialise, the world needs energy, fast. Throw climate change and  ‘peak oil’ into the mix and the future can look very bleak indeed. Yet a small biotechnology company in the US and New Zealand is convinced that one of the keys to staving off disaster is within its grasp. Don’t worry, says LanzaTech. Our microbes are here to help.

These remarkable bugs – developed and patented by the company – have a taste for carbon monoxide (CO), triggering a fermentation process whose end product is ethanol. CO, as it happens, is a flue gas, usually flared off the stack at steel mills. Put the two together and you have a biofuel made from rubbish. In fact you don’t even need a steel mill, as the process works equally well when you burn municipal, industrial, agricultural or forestry waste. Or, come to think of it, coal.

Founded in 2005 with redundancy money and employing just 85 staff, the firm has been making quite a name for itself in the past year, winning a dozen awards, securing $55m investment, signing key deals with the airline sector and building two facilities in China. “We want to change how the world views sustainable energy,” says Jennifer Holmgren, its Illinois-based CEO. When asked to consider LanzaTech’s growth potential, she pauses for a moment, then opines: “It’s limitless.”

Holmgren – formerly vice president of renewable energy and chemicals at UOP, part of the technology giant Honeywell – was offered the job in 2010 by LanzaTech’s co-founder and chief scientific officer, one-time plant biologist Sean Simpson. By that point the Englishman, who’d set up LanzaTech with another laid-off colleague from Auckland’s AgriGenesis Biosciences, had spent five years perfecting his alternative fuel, often in the face  of scepticism from potential investors. With $3.5m from Silicon Valley venture capitalist Vinod Khosla (the founding CEO of Sun Microsystems), however, in 2008 he’d set up a pilot plant at a steel mill south of Auckland.

“My charter was to turn that from a project into a commercial reality and to really extend the boundaries of where that technology would be applicable,” explains Holmgren. “We’ve not only shown that we can make ethanol, we’ve partnered with companies that can convert it to jet fuel. We also have shown in the lab – and this is something we’re really excited about – that we can make other molecules, not just ethanol, using these types of organisms.”

Since half the world’s steel is made in China, LanzaTech formed joint ventures with Shougang Group and BaoSteel to build two demonstration facilities there. “Both of those partners really want to get to commercial as quickly as possible,” notes Holmgren. The BaoSteel unit will become operational any day now, producing 100,000 gallons of ethanol annually. Two fully commercial, 30 million gallon facilities are planned for late next year.

With an eye on the jet fuel market, the company is also working with Boeing and Virgin Atlantic to meet stringent certification requirements. In December it signed a $3m contract with the US Federal Aviation Authority (FAA) “to improve the technology,” says Holmgren, “and to make enough large quantities of fuel to generate the data. What the FAA is trying to help us do is keep moving the technology along.”

Another landmark deal is with Concord Enviro Systems, a Mumbai firm that makes gasification units for the waste-disposal sector. “At the moment,” she says, “we’re making investments to put up the technology, and our revenues won’t come until we’re already in production. In the case of this project in India, it’s actually a licensing deal. They pay for the engineering and purchase a licence for our technology. For a company like ours to start getting revenues – that’s pretty significant.”

So too was the third-round funding of $55.8m (topping up $30m raised previously) agreed in January and largely supplied by the Malaysian Life Sciences Capital Fund, incorporating national oil titan Petronas. “It was a tough year to raise capital but we got a few investors who saw the potential and were willing to take the risk with us.”

Over the next six months, Holmgren plans to court the chemicals industry in earnest. “Now that we can modify our organism to make other molecules, we can make propanol [which can then be converted to propylene, a building block of polypropylene plastic]. We can also make 2,3-Butanediol, a precursor to things like isobutylene and butadiene, which are used in paint, rubber and nylon. We’ll soon be announcing partnerships, I hope, where the interest isn’t in ethanol at all.”

In some respects, her aims are idealistic, even altruistic. “Global energy demand is going to double over the next 40 years, we have to [manage that] in a low-carbon future, and those two things aren’t even the biggest challenge,” she says. “It’s the fact that as energy becomes less and less available and possibly more expensive, we’re creating an even bigger problem when it comes to what I call energy democratisation.

“Already there are billions of people who don’t have access to light, don’t have access to power. We worry about the price of gasoline, but they don’t have the ability to read a book at night, or to educate themselves, or to have a refrigerator. These are basic necessities, and so I sort of sit there and say: ‘Hey, what technologies can have a real big impact?’ To my mind, it’s technologies that bring new sources into the pool.”

Accolades such as a Platts Global Energy Award and a place in the Global Cleantech Top 100 have certainly helped to raise the company’s profile. “I want us to be really big players in fuels and chemicals and that means growing the base to hundreds of thousands of people,” Holmgren says. “Look at Apple as an example. They went from nothing to being the largest market cap company in 35 years. I’m not exactly comparing us, but I don’t see why we can’t have that ambition.”


David Ryan

Commanding Copy


Co Durham

07779 175215