Issue Date: August 27, 2012
Biobased Chemicals Without Biomass
In the crowded but still-young renewable fuels and chemicals sector, one start-up firm stands out. Unlike most other companies using biology to make chemicals, LanzaTech does not rely on biomass feedstocks.
Instead, LanzaTech, which was founded in 2005, makes its products from carbon monoxide found in emissions from steel mills and other industrial operations. The company’s specialized microbes consume the gas and spit out ethanol and 2,3-butanediol (2,3-BDO) in a continuous process. LanzaTech intends to compete with traditional fuel and chemical companies by doing this on a large scale.
“LanzaTech is a unique offering and a unique story,” comments Andrew Soare, an analyst who follows the firm for Lux Research. “It is using a feedstock that is very available and that no one else wants to touch. And it is doing something valuable with it.”
The company argues that its technology has more in common with traditional fuel refining than it does with most biomass fermentation processes, which occur in batches. “Though it is only similar, and not identical, you can leverage some refining knowledge,” says Jennifer Holmgren, LanzaTech’s chief executive officer. As it happens, Holmgren has plenty of refining know-how; she joined LanzaTech as CEO in 2010, after 23 years of developing refining methods at Honeywell’s UOP process technology division.
As in refining, the two important elements in LanzaTech’s production process are the reactor and the catalyst. In its case, though, the catalysts are microbes, designed using directed evolution and genetic engineering.
The reactor that houses the biological transformation is sandwiched between two physical processes. Before the biocatalysis can happen, the carbon monoxide-containing waste gas is fed into a watery broth in the reactor containing the microbes. After the microbes attack the gas and convert it into chemicals, the resulting solution goes through a traditional distillation to separate the products out.
In addition to ethanol and 2,3-BDO, LanzaTech plans to make isoprene, isobutyl alcohol, methyl ethyl ketone, and isopropyl alcohol for customers in markets including diesel, jet fuel, olefins, and plastics.
LanzaTech announced its first partner for a downstream product earlier this month. Invista, a global producer of polymers and fibers, will work with LanzaTech on making butadiene from 2,3-BDO. Butadiene is a critical raw material for Invista—the firm’s route to nylon 6,6 depends on huge supplies of it.
“As we’ve developed our own biotechnology capabilities, we’ve come to believe that LanzaTech has a novel technology and interesting value proposition. Using waste-gas molecules fits our corporate philosophy very well,” says Bill Greenfield, Invista’s executive vice president for nylon intermediates.
Indeed, many industry watchers point to LanzaTech as a renewables company that has a good chance of being cost-competitive with petroleum. Not depending on biomass is LanzaTech’s key differentiator, Soare says. Companies that use biomass face huge hurdles in the cost and logistics of gathering sufficient plant-based feedstock, he points out.
Meanwhile, waste-to-fuels firms that rely on gasification of feedstocks have had problems both with their technology and with high capital costs, according to Soare. One of them, Range Fuels, went out of business last year. “LanzaTech is cheaper. That is one of the selling points here,” he says.
Holmgren says another important differentiator for LanzaTech is its operating demonstration plant. The company is now producing ethanol at a 100,000-gal-per-year facility in Shanghai at Baosteel, China’s largest steelmaker. “For us, going to China as a first stop was a no-brainer,” Holmgren says. “Fifty percent of the world’s steel is being made in China.”
LanzaTech began with a pilot plant in New Zealand, where it produces both ethanol and 2,3-BDO. New Zealand is the home country of company founder and Chief Scientific Officer Sean Simpson.
In the U.S., LanzaTech plans to convert a former Range Fuels gasification facility into a demonstration plant for designing and testing microbes to make chemical intermediates.
Investors like LanzaTech’s plan, and Holmgren says the firm has plenty of cash on hand to finish the year without additional fund-raising. In January, it raised $55.8 million in a third round of venture funding led by Malaysian Life Sciences Capital Fund. Cleantech venture capital firm Khosla Ventures, an original backer, also participated.
There is a long list of things to like about LanzaTech. But Soare cautions, “the big question mark is how their organism can perform at larger scale. Can it take these flue gas streams without scrubbing and produce ethanol efficiently and in sufficient quantities?”
Still, LanzaTech has many more positives than most firms in its arena, Soare reckons. “LanzaTech has all the pieces in place—management team, partners, and a strong business model—to be successful.”
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