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Who leads LanzaTech?
LanzaTech was founded in 2005 by Sean Simpson (now CSO) and Richard Forster (who worked with Simpson at a company called Genesis) to convert waste gases from steel mills into biofuels. Simpson previously worked in biomanufacturing at Roche, biologics at Sandoz, agech in Japan, and ethanol production at the Genesis R&D Corporation in New Zealand. Such a diverse array of experiences set up him to bring synthetic biology to energy.
The company started with a research paper found at the University of Waikato library. Simpson and Forste found work that described a microbe that converted carbon monoxide (CO) into ethanol. They ordered the microbe from a cell bank (DSMZ) in Germany for $1K. Their initial tests found that the microbe was pretty inefficient and very difficult to culture. But the initial results showed enough promise that the microbe could one day be scaled to consume waste emissions at scale.
The LanzaTech team began engineering the microbe to get to one version that can convert CO into ethanol without hydrogen. After producing 5 mL of ethanol from waste emissions, the team approached Ross Clark, a well known New Zealand biotechnology entrepreneur for advice and capital. These interactions were a pivotal point for LanzaTech to clarify the business, milestones, and connect the company to larger venture capital firms. The company was able to raise a $3.5M seed round and a lot more along the way.
As LanzaTech transitioned from biotechnology to chemical engineering and commercialization, Jennifer Holmgren was brought on as CEO in 2010. Holmgren was previously vice president of the Renewable Energy and Chemicals unit at UOP, a division of Honeywell and was essential for LanzaTech to close partnerships without giving up their IP. The company moved its headquarters to Chicago, where Holmgren was based, and announced a joint venture in 2010 with Baosteel.
What does LanzaTech do?
LanzaTech develops microbes to convert various industrial gases into fuels. This forms the basis of the company’s CarbonSmart product that can use CO with and without hydrogen and other gases with carbon dioxide and hydrogen to produce fuels and hundreds of chemicals. The product is an installation on an emissions source that feeds various gases to the microbial formulation:
Industrial off gases from places like a steel mill
Reformed biogas/methane residues
Syngas from biomass like agricultural and industrial waste from places like landfills
Over the last decade or so, LanzaTech has become a leader in carbon recycling. CarbonSmart enables the company to introduce several different product lines and partnerships. LanzaTech has been able to execute 50/50 revenue share deals with industrial manufacturers as well as develop their own internal products and do some IP licensing. This is really only scalable with a biological organism that can be designed and replicated pretty easily.
LanzaTech’s message to customers is focused on locking carbon into the circular economy. Their vision stands on 3 key parts: “waste mitigation, resource efficiency and value add through carbon reductions.” Because the company’s products are produced by a microbe, many of them can be recycled through gas fermentation. Since founding, LanzaTech has built up moats around microbial design, fermentation scaling, and chemical engineering to show one of the first applications of synthetic biology. By reducing carbon emissions across a supply chain, the company enables their customers to know which carbon source they want to use. Right now, LanzaTech is focused on commercial projects with places like natural gas providers and steel mills, but long-term, the company has a shot to introduce new low-carbon brands.
What makes LanzaTech unique?
LanzaTech is a unique business for showing a new application of biology and building a substantial moat around its installations. The company has the capacity to produce 10Ms of gallons of ethanol per year. LanzaTech has barely scratched the surface of its potential with 10Bs of gallons of annual ethanol capacity per year. CarbonSmart has shown an ability to convert carbon monoxide from manufacturing facilities into useful fuels. However, most CO comes from vehicles. The obvious next step is for LanzaTech to figure out a way to retrofit their carbon recycling product to cars one day.
Another important part of LanzaTech’s business is its installations. By directly integrating or co-locating CarbonSmart with an input gas, the company reduces capital expenditures and transportation/processing costs. Lock-in is created after LanzaTech retrofits a factory or mill. As long as the customer doesn’t have to deal with upkeep or maintenance, they are effectively generating extra revenue from their emissions. Just as important as the technology are the aligned incentives LanzaTech is establishing from the factory to the consumer. LanzaTech is establishing their own, carbon-neutral, supply chain to take in industrial gases, convert them into fuels and valuable chemicals, and sell their products providing a rebate/royalty to their carbon emitter.
Why I like what LanzaTech is doing?
LanzaTech is building a next-generation refinery to produce low carbon products. Biology allows them to work with a wide range of customers and expand the types of gases they can recycle. LanzaTech is developing a portfolio of hydrocarbon fuels and chemical building blocks to fuel planes and do a lot more down-the-line. The company is positioned to introduce things like low carbon plastic and rubber products. LanzaTech has shown an ability to reduce greenhouse gas emissions (GHG) from 50%-80% depending on the gas type. They do this without an impact on the food supply chain or land use. LanzaTech is a leading carbon recycling business and has built a business model that can continue to introduce new, low-carbon brands over the next decade.
You can find LanzaTech here.